There are other critics who raise the question, is the Copyright Royalty Tribunal worth saving? That is a larger question because the scope of it goes well beyond this question alone. Do you have any view with respect to that?

Mr. HALL. Mr. Chairman, if they continue making rulings like they did here, increasing the amounts from the 0.625 to 3.75 of gross, I don't know whether it is worth saving or not. As I said earlier, they are increasing these amounts from 400 percent to 1,600 percent, which the industry and/or the public, I don't think, can sustain.

I believe that if we reduced the number of people on this Commission from five to three and gave them a little expert help, such as a general counsel and an economist, to give them some guidance, then I think it is something that can be saved. But I believe there are going to have to be some fundamental changes made in the structure of this Copyright Royalty Tribunal before it can be something that the industry and the public can live with.

Mr. KASTENMEIER. Your bills are different. Do you feel that if this committee were disposed to go forward in this area, that these bills are reconcilable? As I understand it, Sam, your bill is more specific. WTBS would seem to qualify under your bill; other systems would not. But presumably, if WTBS is carried, this would relieve the pressure of exclusion of other distant signals from even small systems.

On the other hand, Mr. Synar's bill is nonspecific with respect to distant signals and tends to prefer those markets in which one or two distant signals are permissible in the sense of not being subjected to 3.75-percent royalty rates.

Is there some common ground here that might be found?

Mr. HALL. Mr. Chairman, I think, if you are addressing it to me, this bill of mine and Congressman Synar's bill are compatible. In fact, in my district, the short-term effect if either bill were passed would be exactly the same. All systems would be allowed to carry three signals under my bill or under Mike's bill. My bill ensures that the copyright holder is receiving fair compensation for misuse of his product.

With reference to the second part of your question about whether or not the only signal to qualify the super station is the Turner WTBS, I think the answer to that is whether any station qualifies under this bill is up to the CRT's analysis under the standards established under the bill, those five things that I mentioned earlier, whether or not they qualify as a super station. I fully expect that TBS will apply for such exemption. It is entirely possible that WGN would elect to petition as well.

Nothing in my bill would discourage any station from complying. My bill is specifically designed to encourage more distant signal stations to carry it on cable, to be involved in the cable broadcast networks. WGN out of Chicago, WOR out of Newark, or any other broadcaster is able to qualify under this bill by simply making an active marketing decision to sell their cable audience. I don't think it does anything other than make an effort to have these other stations attempt to qualify as a super station.

So I don't think this bill is meant-my bill especially, or Mr. Synar's either-I don't think it is meant to try to help any one sta

tion. It is merely trying to keep the Government out of something that it has no business getting into since there have already been payments made to the copyright owners. It is a free marketplace decision, and I think it should remain that way.

Mr. KASTENMEIER. I have one more question, and then I will defer to my colleagues. You must realize that some members feel that the compulsory license itself should be eliminated and that cable systems should have to go to copyright proprietors or owners for clearances to carry any signals, which would be quite a different situation. There is sentiment along that line, I can assure you. They will argue with you and say if you want a free market system, that is what you should go to rather than have a compulsory license which is, in effect, governmental intervention. It is a situation in which you qualify other than for a market rate, because, presumably, these are not market rates per se.

Mr. SYNAR. I would make the argument, and I won't go into great detail, I don't think it is the intention of the chairman, and I don't think it is the intention of the subcommittee, to really go beyond this very narrow focus of what we are trying to do. I don't want to be a part of trying to rewrite the scriptures on copyright and compulsory license and everything else. I think there are other avenues and there will be other days for that.

What we are trying to do here with Sam's and my bill is to address a very limited narrow problem. My bill is 23 words long. It is based upon fairness, it is just as simple as that, why viewers in Muskogee, OK cannot get the same benefits as someone living in New York or Los Angeles. To go beyond that really is something that the subcommittee would have to go into great detail and great hearings and, as you and I both know, there is a lot of controversy there. Trying to avoid that controversy and letting this be the trade for every problem we have ever seen with that would probably not be the correct thing.

I would hope that we could just take out this little part. I don't think there is a lot of dissention. We have had this bill introduced for about 3 months and there hasn't been the opposition building or anything, that we could maybe move this under suspension in an effort to basically take care of this problem in fairness and address it that way. I recognize that we could be opening a Pandora's box here, but it is not my intention to do that.

Mr. KASTENMEIER. I just point that out.

Mr. SYNAR. You are right.

Mr. KASTENMEIER. There is a larger question in the background that was present during the last 2 years while we considered changes in the cable bill. The CRT decision, I think, was one of the factors that mitgated against being able to ultimately get that bill adopted in the Senate.

My complaint is that the CRT is not the FCC. The FCC is a policymaking body, as is the Congress; but the Copyright Royalty Tribunal was designed by us to adjust rates, not to make policy, not to put people out of business, and not to frustrate. We might disagree with the FCC decision in terms of how many distant signals should be carried. If we did disagree, then it is up to Congress to try to change that again by statute. We did not do so. But it was not up to the Copyright Royalty Tribunal to set fees in such a high quan

tum as to literally change the economics of the industry. That is a policy decision and the CRT is not competent to make it.

It talked about market rates. Market rates are irrelevant. No one authorized the CRT to make a market rate. If we are talking about market rates, we wouldn't have a compulsory license in the first place.

One of the reasons I have filed an amicus curiae brief is, because I thought the CRT attempted to assert a policymaking role that it did not have; and that it attempted to thwart both the Federal Communications Commission and to occupy what really is a congressional role in terms of policymaking, which it is not competent to do.

In any event, I am very interested, obviously. I could tell that this invariably would have tremendous impact. A cable operator just will not be able to charge 4 percent of gross on its base to import these distant signals.

The person who suffers most, I think, is your viewer, because the cable systems can live with it. That is to say the cable systems can start trying to sell premium channels at an extra $10 a month. They would just as soon do that if they could. That is where the money is.

But for the viewer these noncost distant signals are a loss, I think, in terms of their potential to view things. And I really do think the Copyright Royalty Tribunal exceeded its authority.

I yield to the gentleman from Michigan.

Mr. SYNAR. You ought to come down here and testify. That is great. [Laughter.]

Mr. SAWYER. Thank you, Mr. Chairman.

I enjoyed listening to both of you. Sam, as you know, I sponsored your bill. In the part dealing with the CRT, you go two-fifths of the way I would like to go. I would like to knock off the other three also. I am one of the people the chairman was alluding to that would like to see the whole artificial system abandoned over an orderly period of time.

Again, I also agree that the Copyright Royalty Tribunal is not in business to fix market rates. If it was market rates, we hardly need the Government when we got a market out there that can determine the rates. So it is almost a contradiction of terms.

I agree of course, not only the cable rate increase was up, but they jumped juke boxes from $8 to $50 at one crack, which was a pretty good multiple also.

But I totally agree. I think that the initial justification for cable was to reach those rural areas that do not have access to either any television market or any kind of a diverse or assorted television market, and it has certainly done that in addition to going far beyond that.

As I say, I would be more enthusiastic of your bill if, instead of eliminating two of those commissioners, we eliminated five of them. But I will buy the two until we can get the five.

I also agree with what Mike said that, no matter where we think we are going to ultimately go or where we would like to go, there is no reason not to take care of this problem while we are dealing with the far more controversial and far more complex problem, which is almost a Solomon-like situation. You have got the Turn

ers, you have the professional sports, you have got the broadcasters, the producers and the copyright owners and cable mixed up. How you can do justice to all of the legitimate interests-and all their interests are legitimate and deserve survival rights, in any event, because they are all performing useful functions-is something I don't think-I haven't heard anything that really fills the bill.

That is why I, on the rare occasions agree with Barney Frank, kind of lean in the direction of easing back and to letting the market take its course. But I am certainly willing to go with the Hall bill, in any event, to get rid of this interim solution. I am glad to have you gentlemen put it in.

I yield back, Mr. Chairman.

Mr. KASTENMEIER. The gentleman from Kentucky, Mr. Mazzoli. Mr. MAZZOLI. Thank you very much, Mr. Chairman.

I did not hear all the testimony, Sam or Mike, but I had a chance to more or less go over it. I very much appreciate your stand.

There seems to be a general belief-and I think it is in your statement, Sam-that the CRT acted arbitrarily and perhaps without foundation. I think the chairman has said in his statement today that he filed an amicus curiae brief, and he believes also that they exceeded their authority.

I don't know too much about it, but it seems to me that they did go into it under the direction of Congress, which was to establish an adjustment from what they did charge before to what they should charge in the future. I wonder if you might address the question of the arbitrariness, the exceeding of authority, the capriciousness of this thing? I think that is important.

Mr. HALL. Mr. Mazzoli, I think the answer to that is that in the present structure of this tribunal, they have no one except five people. They don't have any economists and they don't have any general counsel. What they did, they did strictly on their own. And the fact that they have put so many rural people out of the television business, as far as listening is concerned, without any justification, in my opinion, when you raise it a minimum of 400 percent to 1,600 percent, that is per se arbitrary and capricious.

Let me give you one example. In my area of Texas, in Texarkana, TX, where we have 17,000 subscribers, that cable system carried three distant signals, WTBS, Channel 11 in Dallas, and a Little Rock, AR signal. When this tribunal made the decision, they dropped WGN, KXTX in Dallas, and WFAA in Dallas. They were currently paying $50,000 in copyrights. If they had kept these three signals after the tribunal had acted, they would have had to pay an additional $100,000 a year in copyrights.

A little station in Henderson, TX, with 4,000 subscribers-they were grandfathered to a certain degree—but their payment would have increased from $480 a month to $3,800 a month. Now you magnify that over the Nation-I understand some of the big areas, I don't know what area, but some city in New York just dropped some of the cable systems.

In my opinion, when you have that many people in that many areas of the country dropping out because of a decision that has been made, something is wrong.

Mr. MAZZOLI. So you sort of look at it as a per se violation, a per se capriciousness, simply because of the vast difference between where they started and where they wound up?

Mr. HALL. When you increase from 0.0625 in 1976 to 3.75 and increase it from 400 percent to 1,600 percent, to me, that is arbitrary and capricious.

Mr. MAZZOLI. Mike, do you have any sort of——

Mr. SYNAR. Rom, I would just add that this is just totally contrary to what the FCC is trying to do with this whole industry. As the chairman pointed out, we didn't put the CRT into business to make policy. Policy was already developed.

Mr. MAZZOLI. You say that this decision of the CRT is a policy decision, not just a-

Mr. SYNAR. No question about it.

Mr. MAZZOLI. Where does that-how does that flow?

Mr. SYNAR. Basically by the economic impact of limiting the amount of distant signals that can go into certain parts of the country, they are determining who is going to see what.

Mr. MAZZOLI. Wasn't that decision made earlier? I don't understand the law as well as I should, perhaps. But wasn't that decision of the number of signals made earlier? Wasn't the CRT simply saying what you do carry you will pay for in a certain different way?

Mr. SYNAR. Yes. But by the determination of how much you pay for it, you are indeed changing the amount, as he points out.

Mr. MAZZOLI. You are changing the mix, but you are not changing what they can do. You are changing the mix.

Mr. SYNAR. Sure they are. If you look in your packet, look at what the impact was of just the CRT's decision on Kentucky. Mr. MAZZOLI. I did have some information. You are right. Mr. KINDNESS. Would the gentleman yield on that point. Mr. MAZZOLI. Yes, sure, Tom.

Mr. KINDNESS. Am I not correct in understanding that the FCC's deregulation with respect to the distant signal rule is what triggered the CRT's action, and it is claimed the effect of the CRT decision was to reinstate the distant signal rules that the FCC had discarded? In that respect, I think you have a policy question.

Mr. SYNAR. That is correct.

Mr. KASTENMEIER. If the gentleman will yield, may I say the rates for the first, second, and third distant signals and by markets is extremely complex. And the variations you get from 1976 to 1980 to 1982 are also very complicated. I think all of us are guilty of speaking in generalities about the sweep here. It is also quite technical.

The rates were set by statute in 1976 and revised in a proceeding in 1980, and then revised again in 1982. The 1982 proceeding occurred as a result of the FCC's decision. That is to say the FCC triggered the additional proceeding, which was an appropriate proceeding. No one is saying that they shouldn't have had a proceeding. But it is the result and effect, I think, which is at issue here. Mr. MAZZOLI. Sam, you were saying that the net effect in your district is that they have been dropping the distant signals? Mr. HALL. Yes.

Mr. Mazzoli. That the stations have dropped the distant signals.