ately reviewed as soon as the bill came into effect because of the fact they were considered so low and unfair by the copyright owners.

The position I am taking with respect to the initial review has nothing to do with that. It is simply that I do not think that that quick a review could be sustained administratively. This is a bureaucratic reason, but it is a very real one. I think that to start up an undertaking of this magnitude from scratch in a 6-month period is asking more than should be asked and would probably not produce a very effective result.

I am in favor of allowing the system to operate long enough for the Tribunal to have something to study. In other words I am not at all sure it would be able to come up with anything more meaningful than the results in the bill, unless it had time to do it. For that reason, I am not at all adverse to having the 3 years that are provided in the Senate version. The 10 years may be rather long. They are now talking about 7.

There has been some mention of the probability that some of the members who voted for that amendment were not fully aware that this was forever, 10-year intervals forever.

In other words, as we have seen, this is a very fluid situation, and if the FCC, for example, changed its rules, which is entirely possible, there might very well be something that needed studying sooner than 10 years.

As far as the Tribunal itself is concerned, I think I will leave it at the positions that are expressed here, although I would say on the whole that I think some sort of Tribunal review in this area is probably desirable.

The National Cable Television Association has proposed that, instead of exempting local signals, the bill exempt the first $25,000 in subscription system fees collected by a system from computation of copyright royalties. Variations of this proposal have been put forward from time to time in the past. We have no objection if Congress chooses to accept this proposal, nor do we affirmatively favor it.

I believe that there have been and continue to be proposals to let little systems out somehow, and this is probably as good a way as any. The other possibility that has been discussed over the years is to exempt systems up to a certain number of subscribers, and I do not see any opposition to this in principle. On the other hand, it is true that the fact that the scale of fees in the bill is a sliding one and is a half percent up to $40,000———

Mr. KASTENMEIER. On that point, some questions have been raised. If one exempted the first $25,000, the first $40,000, how that might apply; that is, would it apply to a large system such as Teleprompter, which operates in a number of so-called local systems, that is, each being exempted-it would be $25,000 or whatever number of thousand dollars it is or whether it would apply to the prior conglomerate system rather than each single operating system within the system.

Ms. RINGER. I think it would clearly have to apply to the entire system, and it would require a formula to accomplish this, but it would be very hard to defend a large system that had a number of different branches being completely exempted because each of the branches were small. I am not sure anyone is arguing that. They are arguing other things, but not necessarily that.

I take your point, Mr. Chairman; I agree with you.

I have one page to go.

An important element of the cable issue is section 501 (c), which in my opinion, is not really necessary. It was part of the consensus agreement, and it spells out that for a secondary transmission by a cable system, a television broadcast station holding a copyright or other license to transmit or perform the same version of that work, shall for purposes of subsection (d) of this section, be treated as a legal or beneficial owner if such secondary transmission occurs within the local service area of that television station.

I do not disagree with the principle of this, but I do not really think it is necessary because copyright under this bill is made completely divisible, and if you are the holder of an exclusive license for a particular geographic area, as a local broadcaster, you have the copyrightfor the purpose of maintaining suit. I believe that the reason this was included in the consensus agreement and the reason it has been a controversial issue is perhaps based in part on the experience with the old retransmission consent FCC regulation, which, under the present copyright law, produced the argument that a local broadcaster did not have a copyright and so could not give consent as to rights it did not have. I think this would probably be different under the present bill. Broadcasters are extremely anxious to preserve this condition. There was an amendment, not in 501, but in 111 in the Senate, which I am not sure accomplishes the desired result. It is in subsection (c), clause 2, which says that the willful or repeated secondary transmission to the public by a cable system is actionable as an act of infringement, and so forth.

The feeling was that this would insulate a cable system from liabil ity, as against a local broadcaster. I think they are talking about harassment if there was a one-shot negligent or mistaken carriage of a signal that was not authorized by the FCC. But if they could prove it was willful or repeated, then this would be fully actionable as a copyright infringement by the local broadcaster.

I think this is probably acceptable as a principle. But I have technical questions about whether this is the way to accomplish it. I think that you as a committee should consider both the policy involved and the technical method of accomplishing it.

With your permission, I am going to skip quickly over what was a rather major issue before you-organized sports. This has been with us since 1965.

The sport entrepreneurs that have come forward have differed from time to time. But essentially, they are still trying to preserve exclusivity and gate receipts. It was striking, at one point in a Senate version of the bill, to see all copyright material subject to compulsory licensing, except organized sporting events, which were subject to complete exclusivity. I am not sure this can be defended on policy grounds, although I think the practical problems of sports are undoubtedly real. They are certainly real to them. A compulsory license does not help their gate receipts.

And yet, if you are going to have a compulsory license as the basis for section 111, it does look peculiar and discriminatory to single sports

out as the sole subject of copyright that is entitled to exclusive rights. This did fall by the wayside in the Senate in 1974. It was rather vigorously debated on the floor, and was dropped completely and was not really revived in the markup earlier this month. I may be wrong, but I would suggest as a hypothesis that this may have passed as a major issue.

I think you obviously need to consider the arguments that were put forward. But I do not think that sports exclusivity is really part of the package as it now stands.

Finally, an important issue which I hope my long exegesis on this will have been made clear to you-the relationship between the FCC regulations and copyright. In the absence of court decisions or legislation, and in furtherance of national communications policy from its viewpoint, which is partly that of the House and Senate Commerce Committee, the FCC has promulgated rules protecting the rights of copyright owners. We did not advocate congressional action to abrogate those rules as inconsistent with Federal copyright policy, and I do not believe this was ever really suggested, although it may have

been hinted at.

We also tend to doubt whether an attack on the exclusivity rules would succeed on constitutional grounds. I think the argument could be made, but I doubt if it would succeed. However, we do very seriously question the wisdom of administrative rules giving copyright protection in cases where either the courts or Congress have chosen to withhold it. At the very least, we believe the Commission should carefully reconsider its 1972 exclusivity rules as soon as the revision bill has been enacted. In other words, we think there is some merit in the argument that cable operators make that the bill should not require them to pay for the carriage of signals which they must black out, or which they are not able to carry at all. I do think that the FCC should be abjured if possible to take another look at its rules. at the very least, in the light of the creation of copyright liability, if that is your decision.

The Teleprompter Corp. has put forward formally, I gather a proposal which does come very late in the game that would restructure the royalty rate bases, and the method for collecting and distributing the money, the method for computing the rates. And they are, I think, attacking the Royalty Tribunal in principle; they prefer to take the Rovalty Tribunal out of this, although I do not think that is the essential issue. As I read their proposal, it would cover only distant signals, and would not cover any network signals, and would compute the fees based on a formula that is intended to reflect the actual nonnetwork signals that are being carried, and to identify what they would be worth if they were off-the-air television signals.

In other words, the formula would be an attempt to approximate, on the basis of trade statistics, what the value of a broadcast signal is, based on counties.

Mr. KASTEN MEIER. Is that proposal, has it been advanced in Senate deliberations?

Ms. RINGER. NO. The Senate Judiciary Committee had finished its work when this was first broached. I put it forward simply because it is a new factor in the field. I do not endorse it. I think it is too early to take any real position with respect to it.

The first reactions I have heard to it have been somewhat unfavorable. But I do not want to go any further in commenting on it. I have studied it, and I think it has some attractive features and some unattractive features. I would say probably its most unattractive feature is its complexity.

Mr. KASTEN MEIER. On behalf of the committee, it might be useful for us if you would undertake to transmit that with any particular comments you would wish to make. Copies of the proposal-you say it comes off late in the game; but insofar as we have not heretofore received any proposal formally, it might be useful at least to have it in the discussion.

Mr. RAILSBACK. Mr. Chairman, I wonder if I might just add to that. I wonder if any objectors to the proposal who have not had a chance to register specific concerns about it-I think we ought to consider it. I think it ought to be before us, because I think we ought to hear from both sides.

Ms. RINGER. I agree.

Mr. KASTENMEIER. I am sure there would be no objection to that. Any other parties interested in appropriately commenting on the proposal, and care to do so, their views will be considered.

MS. RINGER. In fairness to Teleprompter, I should say this put forward only as a fallback from their basic position, which is that there should be no payment at all.

Mr. KASTEN MEIER. I think it is understood that many cable operators, depending on what organization they belong to, how they operate, what their personal view might be, vary from opposing any provisions to some sort of compromise. Furthermore, you did allude to concern that I think some of the copyright proprietors, broadcasters, filmmakers have; that, namely, in terms of the rate structure, that there be some flexibility considering the base computation, because of what some people foresee as radically altered bases for revenue in terms of cable television or pay television, or whatever it may be in the years ahead.

Some people, of course, see as I say a radically changed market, in which proprietors-owners of copyright material-may be dealing directly with pay TV or modified cable television operators. But the basis for revenue might be quite different than the subscription or the gross receipts tables that presently are in the proposed bill-I do not really know that we are prepared to make any judgment about that. But it is another late factor, it seems to me, in a consideration of this section.

Are there other comments or questions of the members of the committee?

Mr. DRINAN. Mr. Chairman, I wonder if you or Ms. Ringer could address themselves to whether that same jurisdictional dispute might exist between the Judiciary Committee and Commerce Committee concerning cable. I would be very happy to give cable to them, if the Commerce Committee would want it.

Mr. KASTEN MEIER. May I respond to that, because that is a good question. It is the posture of the Chair to maintain some sort of communication with the chairman of the subcommittee, of the Commerce Committee, the gentleman from Massachusetts, Mr. Macdonald, on this question. And as we proceed, we have to keep him not only fully

out as the sole subject of copyright that is entitled to exclusive rights, This did fall by the wayside in the Senate in 1974. It was rather vigorously debated on the floor, and was dropped completely and was not really revived in the markup earlier this month. I may be wrong. but I would suggest as a hypothesis that this may have passed as a major issue.

I think you obviously need to consider the arguments that were pat forward. But I do not think that sports exclusivity is really part of the package as it now stands.

Finally, an important issue which I hope my long exegesis on this will have been made clear to you-the relationship between the FCC regulations and copyright. In the absence of court decisions or legs a tion, and in furtherance of national communications policy from its viewpoint, which is partly that of the House and Senate Commere Committee, the FCC has promulgated rules protecting the rights of copyright owners. We did not advocate congressional action to abrogate those rules as inconsistent with Federal copyright policy, and I do not believe this was ever really suggested, although it may have been hinted at.

We also tend to doubt whether an attack on the exclusivity rules would succeed on constitutional grounds. I think the argument could be made, but I doubt if it would succeed. However, we do very serious ly question the wisdom of administrative rules giving copyright protection in cases where either the courts or Congress have chosen to withhold it. At the very least, we believe the Commission should carefully reconsider its 1972 exclusivity rules as soon as the revision bill has been enacted. In other words, we think there is some merit n the argument that cable operators make that the bill should not require them to pay for the carriage of signals which they must black out, or which they are not able to carry at all. I do think that the FCC should be abjured if possible to take another look at its rules, at the very least, in the light of the creation of copyright liability, if that is your decision.

The Teleprompter Corp. has put forward formally, I gather a proposal which does come very late in the game that would restrue ture the royalty rate bases, and the method for collecting and distrib uting the money, the method for computing the rates. And they are, I think, attacking the Royalty Tribunal in principle; they prefer to take the Rovalty Tribunal out of this, although I do not think that is the essential issue. As I read their proposal, it would cover only distant signals, and would not cover any network signals, and would compute the fees based on a formula that is intended to reflect the ac tual nonnetwork signals that are being carried, and to identify whit they would be worth if they were off-the-air television signals

In other words, the formula would be an attempt to approximate, on the basis of trade statistics, what the value of a broadcast signal is, based on counties,

Mr. KASTEN MEIER. Is that proposal, has it been advanced in Senate deliberations!

Ms. RINGER. No. The Senate Judiciary Committee had finished its work when this was first bronched. I put it forward simply because it is a new factor in the field. I do not endorse it. I think it is too early to take any real position with respect to it.