Requiring Records of Cable Operator Interests in Video Programming; Modernization of Media Regulation Initiative
| Published date | 18 November 2020 |
| Citation | 85 FR 73425 |
| Record Number | 2020-25007 |
| Section | Rules and Regulations |
| Court | Federal Communications Commission |
Federal Register, Volume 85 Issue 223 (Wednesday, November 18, 2020)
[Federal Register Volume 85, Number 223 (Wednesday, November 18, 2020)]
[Rules and Regulations]
[Pages 73425-73429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25007]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[MB Docket Nos. 20-35, 17-105; FCC 20-139; FRS 17157]
Requiring Records of Cable Operator Interests in Video
Programming; Modernization of Media Regulation Initiative
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission eliminates the rules
requiring that cable operators maintain records in their online public
inspection files regarding the nature and extent of their attributable
interests in video programming services, as well as information
regarding cable operators' carriage of such vertically integrated video
programming services on cable systems in which they have an
attributable interest.
DATES: Effective November 18, 2020.
FOR FURTHER INFORMATION CONTACT: Chad Guo, [email protected], or 202-
418-0652.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order (Order), FCC 20-139, in MB Docket Nos. 20-35, 17-105, adopted
on September 29, 2020, and released on September 30, 2020. The complete
text of this document is available electronically via the search
function on the FCC's Electronic Document Management System (EDOCS) web
page at https://apps.fcc.gov/edocs_public/ (https://apps.fcc.gov/edocs_public/). The complete document is also available for public
inspection at https://docs.fcc.gov/public/attachments/FCC-20-134A1.pdf.
To request materials in accessible formats for people with disabilities
(Braille, large print, electronic files, audio format), send an email
to [email protected] (mail to: [email protected]) or call the FCC's Consumer
and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-
0432 (TTY).
Synopsis
In this Report and Order (Order), we eliminate Sec. 76.1710 of our
rules, which requires cable operators to maintain records in their
online public inspection files regarding the nature and extent of their
attributable interests in video programming services. The current rule
also requires that the online public inspection files maintained by
cable operators contain information regarding
[[Page 73426]]
the operators' carriage of such vertically integrated video programming
services on cable systems in which they have an attributable interest.
We refer herein to both parts of this rule collectively as the ``cable
operator interests in video programming recordkeeping'' requirement.
Based upon comments received in response to the Notice of Proposed
Rulemaking (NPRM) (85 FR 18527, April 2, 2020), we find that the
recordkeeping obligations set forth in Sec. 76.1710 are outdated and
unnecessary. Therefore, we eliminate this regulation and revise our
rules to omit existing cross-references. By adopting our proposal to
repeal this rule, we remove a regulatory burden on cable operators that
no longer serves the public interest. Additionally, through this Order,
we continue our efforts to modernize the Commission's media
regulations.
Background. Section 76.1710 contains recordkeeping obligations with
respect to two categories of information. It requires cable operators
to maintain in their public inspection files, for a period of three
years, records regarding the nature and extent of their attributable
interests in all video programming services (the attributable interests
requirement) as well as information regarding their carriage of such
vertically integrated video programming services on cable systems in
which they also have an attributable interest (the carriage
requirement). As described in the NPRM, these recordkeeping
requirements were adopted in 1993 to aid in the enforcement of the
Commission's channel occupancy limits, which were reversed and remanded
to the Commission by the U.S. Court of Appeals for the D.C. Circuit in
2001. The Commission adopted the channel occupancy limits consistent
with section 11 of the Cable Television Consumer Protection and
Competition Act of 1992, which required the Commission to establish
reasonable limits on the number of cable channels that can be occupied
by a video programmer in which a cable operator has an attributable
interest. The court found that the Commission failed to justify its
channel occupancy limits as not burdening substantially more speech
than necessary. While the Commission did seek comment on reinstituting
the channel occupancy limits, it found the record inadequate to support
adopting a specific vertical limit on the ownership of video
programming sources by owners of cable systems. However, despite that
court decision, the cable operator interests in video programming
recordkeeping requirement has remained part of the public file
requirements for cable operators. The Commission reorganized its public
file rules in 1999 to reduce the regulatory burden faced by cable
operators with regard to recordkeeping requirements. As part of the
reorganization proceeding, the Commission sought comment on whether to
remove or consolidate any public file requirements.
The Commission transitioned the public file requirements for cable
operators to an online format in 2016, when the Commission expanded the
list of entities required to post public inspection files to the
Commission's online database. Since then, the cable operator interests
in video programming recordkeeping requirement has been part of the
online public inspection file to be maintained by cable system
operators.
Comments in the Commission's Media Modernization proceeding
identified cable operator interests in video programming as one of
several categories of information that parties felt were superfluous
and could be eliminated from the online public inspection file. In
February 2020, the Commission adopted the NPRM to seek comment on
whether to modify or eliminate Sec. 76.1710 and references to the rule
in other associated rule provisions. As the channel occupancy limits
were reversed and remanded by the D.C. Circuit over 18 years ago, the
NPRM sought comment on what purpose, if any, the rule serves today that
would justify its retention. The NPRM noted that, in the over 26 years
since the requirement was adopted, the Commission was aware of only a
single instance in which the rule has been invoked.
As discussed below, all but one commenter to the NPRM agree that
Sec. 76.1710 should be eliminated in its entirety. Three parties filed
comments in this proceeding in response to the NPRM. Verizon and the
National Cable Telecommunications Association (NCTA) support
eliminating Sec. 76.1710 in its entirety. ACA Connects--America's
Communications Association (ACA) advocates for retaining a portion of
Sec. 76.1710. The only point of contention in the record is whether
the attributable interests requirement (i.e., the requirement to
disclose attributable interests in video programming) should be
retained due to the potential usefulness of the information in the
context of program access complaints. Notably, no commenter asserts
that Sec. 76.1710 remains useful for its original purpose, which was
to aid in the enforcement of the channel occupancy limits.
Discussion. For the reasons discussed below, we repeal Sec.
76.1710 and all cross-references to it. Consistent with our
observations in the NPRM, the record indicates that the rule is of very
limited utility and there is little justification for its retention
after the D.C. Circuit reversed and remanded the channel occupancy
limits. Accordingly, we eliminate both the portion of the rule
requiring cable operators to maintain in their public inspection files,
for a period of three years, records regarding the nature and extent of
their attributable interests in all video programming services (the
attributable interests requirement) as well as the portion of the rule
requiring maintenance of records regarding their carriage of such
vertically integrated video programming services on cable systems in
which they also have an attributable interest (the carriage
requirement). No commenter supports retention of the latter, i.e., the
carriage requirement; indeed, even the lone commenter that put forth an
argument to retain the attributable interests requirement agrees that
the carriage requirement portion of the rule should be eliminated
because such information is widely available elsewhere. ACA cites to
the Commission's findings in an earlier Media Modernization proceeding
that found consumers were more likely to seek and access channel lineup
information from cable company websites, on-screen electronic program
guides, and paper guides. Therefore, we find that there is no dispute
as to whether cable operators should be required to disclose the
carriage information for vertically integrated programming in their
online public inspection files. We agree with commenters that this
requirement has become outdated and no longer serves the public
interest, and accordingly, we hereby eliminate it.
The only contested issue in the record involves Sec. 76.1710's
attributable interests requirement, i.e., the requirement that cable
operators maintain records regarding the nature and extent of their
attributable interests in all video programming services. While Verizon
and NCTA support eliminating this attributable interest recordkeeping
requirement completely, ACA advocates for retaining the attributable
interest record in a less burdensome way. ACA asserts that the
information is potentially useful in program access complaint
proceedings. As the Commission's program access rules prohibit unfair
practices by satellite cable programming vendors in
[[Page 73427]]
which a cable operator has an attributable interest, a prospective
complainant against a satellite cable programming vendor must
demonstrate that a cable operator has an attributable interest in such
a vendor. Thus, ACA contends that the attributable interests
requirement in Sec. 76.1710 assists prospective program access
complainants by providing ready access to information regarding cable
operators' attributable interests, information that complainants would
otherwise have to obtain on their own. ACA claims that requiring cable
operators to continue disclosing this information in the public
inspection file would be preferable to forcing program access
complainants to obtain this information from other, potentially less
reliable sources. NCTA disagrees, stating that ``entities seeking
attributable interest information can retrieve it from a variety of
readily available sources.'' NCTA also argues that it is unreasonable
to require all cable operators to keep compiling this information and
uploading it to the public file just because of ``the possibility that
at some future point it may spare a potential program access
complainant the burden of compiling ownership information on its own.''
We find that the public interest will be best served by eliminating
Sec. 76.1710 in its entirety, including the attributable interests
portion of the recordkeeping requirement. We note that no party
maintains that the information is useful or of interest to the general
public. The record indicates that it is only potential program access
complainants that might find such information useful. Furthermore, the
usefulness of such information in the program access context appears to
be theoretical at best, as there is no evidence in the record that this
information has ever actually been relied upon in a program access
complaint. Ultimately, we find that the narrow and specific
circumstances under which the attributable interests information could
benefit a small subset of industry, together with the availability of
other sources for ascertaining such information, weighs against
retaining the requirement that this information be included in the
public inspection file.
We agree with NCTA that there are other publicly available sources
from which information for program access issues could be obtained,
including Securities and Exchange Commission (SEC) filings and
industry-specific resources such as SNL Kagan. Although ACA may be
correct that, in general, this information is only available for
publicly held cable operators, and may not always be accurate if
available for smaller or privately held cable operators, we disagree
that this very narrow utility of the rule justifies its retention. This
is particularly true as smaller cable operators are less likely to be
subject to a program access complaint given that they are less likely
to have attributable interests in programming in general or, more
specifically, in the sort of programming that is highly rated and/or
considered ``must-have'' and thus more likely to be the basis for a
complaint. Commission reports also indicate that the most notable
networks affiliated with cable operators tend to be affiliated with
larger operators, which own several times more cable networks than
smaller operators. We also agree with NCTA that this information is
readily discoverable in the complaint context. Based on publicly
available sources, potential program access complainants could plead
that the programming at issue is vertically integrated with a cable
operator, and the cable operator in its answer would have to concede
that the assertion is true or provide evidence that it is untrue.
Finally, as the Commission's program access rules and procedures were
not adopted to work in conjunction with the attributable interests
recordkeeping requirements, we find that the program access rules would
still function as intended in the absence of attributable interests
information being available in cable operators' online public
inspection files.
We also agree with NCTA that the public interest would not be
served by requiring all cable operators to keep such information in
their public inspection files solely on the chance that a cable
operator becomes the subject of a program access complaint. We note
that in the past five years, the Commission has received only one
program access complaint. Therefore, we believe that requiring a cable
operator to keep these records on file even though the records are
likely never to be used by a program access complainant (or anyone
else), runs counter to our goal of eliminating unnecessary regulatory
burdens. As noted above, the Commission has received just one program
access complaint in the past five years. Although ACA questions whether
the recordkeeping requirement imposes any meaningful burden on large
cable system operators, it offers no evidence that undermines NCTA's
position.
Lastly, we disagree with ACA's proposal to modify the rule. ACA
proposes that the rule be modified to allow cable operators to post
their attributable interests once and then only post updates if the
interests change. ACA further suggests cable operators could post
``classes'' of ownership percentages so that they would not have to
update their filings based on minor ownership changes. No other
commenter supports this or any other modification of the rule. Indeed,
we find that the proposed modification is arguably more burdensome than
the current rule, as it would still require cable operators to
determine, prepare, and post some amount of attributable interest
information and would require updates that in some cases would go above
and beyond what is required by the current regulation. For example,
under ACA's proposal, a cable operator would have to file an update
when its ownership in a programmer increased from 70% to 80% even
though no such update is required under our current rules. Furthermore,
given the very limited utility, if any, of keeping attributable
interests information on file, we cannot find a justification in the
record for retaining any part of the rule, even in a modified or
reduced form.
For these reasons, we eliminate Sec. 76.1710 in its entirety. We
also eliminate from Sec. Sec. 76.504 and 76.1700 of the Commission's
rules the references to the recordkeeping requirement contained in
Sec. 76.1710. Note 2 to Sec. 76.504 contains a cross reference to
Sec. 76.1710. Section 76.1700 lists operator interests in video
programming as a component of the public inspection file and also
cross-references Sec. 76.1710.
Regulatory Flexibility Act. As required by the Regulatory
Flexibility Act of 1980 (RFA), as amended, an Initial Regulatory
Flexibility Certification was incorporated into the NPRM. Pursuant to
the RFA, the Commission's Final Regulatory Flexibility Certification
relating to this Report and Order is attached as Appendix B.
Paperwork Reduction Act. This Order does not contain proposed new
or revised information collection requirements subject to the Paperwork
Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In
addition, this Order therefore does not contain any new or modified
``information burden for small business concerns with fewer than 25
employees'' pursuant to the Small Business Paperwork Relief Act of
2002, Public Law 107-198, 44 U.S.C. 3506(c)(4).
Congressional Review Act. The Commission has determined, and the
Administrator of the Office of Information and Regulatory Affairs,
Office of Management and Budget, concurs, that this rule is ``non-
major'' under the Congressional Review Act, 5 U.S.C. 804(2). The
Commission will
[[Page 73428]]
send a copy of this Report and Order to Congress and the Government
Accountability Office pursuant to 5 U.S.C. 801(a)(1)(A).
Final Regulatory Flexibility Act Analysis. As required by the
Regulatory Flexibility Act of 1980, as amended (RFA), an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM in
MB Docket 20-35. The Commission sought public comments on proposals in
the NPRM, including comment on the IRFA. The Commission received no
comments on the IRFA. The present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.
Need for, and Objectives of, the Proposed Rules. This Order stems
from an NPRM released by the Commission in March 2020, seeking comment
on whether to eliminate or modify Sec. 76.1710 of the Commission's
rules. The parties that filed comments in the proceeding agree that the
recordkeeping requirement at issue is no longer necessary for its
original purpose. One party commented that the attributable interest
regulations should be retained due to the potential usefulness of that
information in the context of program access complaints. The Order
finds that the information on which program access complaints are based
can be obtained from sources other than the public inspection files
maintained by cable operators. The Order also finds that the usefulness
of such information in program access contexts is largely theoretical
because cable operators would have to maintain such information in
their public inspection files simply on the chance that the operator
might someday become the subject of a program access complaint.
Therefore, the Order does not find any compelling reason to retain the
rule.
By eliminating this rule, the Order reduces the burden of
maintaining the public inspection file on cable operators.
Specifically, the Order eliminates the requirement that cable operators
maintain records in their online public inspection file regarding the
nature and extent of their attributable interests in all video
programming services as well as information regarding their carriage of
such vertically integrated video programming services on cable systems
in which they have an attributable interest for a period of at least
three years. An attributable interest is an ownership interest in, or
relationship to, an entity that gives the interest holder a certain
degree of influence or control over the entity as defined in the
Commission's rules. Vertically integrated video programming is video
programming carried by a cable system and produced by an entity in
which the cable system's operator has an attributable interest. The
Order finds that eliminating this recordkeeping requirement will remove
an outdated and unnecessary regulatory burden on cable operators.
Summary of Significant Issues Raised by Public Comments in Response
to the IRFA. No comments were filed in response to the IRFA.
Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration. Pursuant to the Small Business Jobs Act of
2010, which amended the RFA, the Commission is required to respond to
any comments filed by the Chief Counsel for Advocacy of the Small
Business Administration (SBA), and to provide a detailed statement of
any change made to the proposed rules as a result of those comments.
The Chief Counsel did not file any comments in response to the proposed
rules in this proceeding.
Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply. The RFA directs agencies to provide a
description of, and where feasible, an estimate of the number of small
entities that may be affected by the proposed rule revisions, if
adopted. The RFA generally defines the term ``small entity'' as having
the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' In addition,
the term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act (SBA). A small business
concern is one which: (1) Is independently owned and operated; (2) is
not dominant in its field of operation; and (3) satisfies any
additional criteria established by the SBA. Below, we provide a
description of such small entities, as well as an estimate of the
number of such small entities, where feasible.
Cable Companies and Systems (Rate Regulation Standard). The
Commission has developed its own small business size standards for the
purpose of cable rate regulation. Under the Commission's rules, a
``small cable company'' is one serving 400,000 or fewer subscribers
nationwide. Industry data indicate that, of 4,200 cable operators
nationwide, all but 9 are small under this size standard. In addition,
under the Commission's rate regulation rules, a ``small system'' is a
cable system serving 15,000 or fewer subscribers. Industry data
indicate that, of 4,200 systems nationwide, 3,900 have fewer than
15,000 subscribers, based on the same records. Thus, under this
standard, we estimate that most cable systems are small entities.
Cable System Operators (Telecom Act Standard). The Communications
Act of 1934, as amended, also contains a size standard for small cable
system operators, which is ``a cable operator that, directly or through
an affiliate, serves in the aggregate fewer than one percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' As of 2019, there were approximately 48,646,056 basic
cable video subscribers in the United States. Accordingly, an operator
serving fewer than 486,460 subscribers shall be deemed a small operator
if its annual revenues, when combined with the total annual revenues of
all its affiliates, do not exceed $250 million in the aggregate. Based
on available data, we find that all but five cable operators are small
entities under this size standard. We note that the Commission neither
requests nor collects information on whether cable system operators are
affiliated with entities whose gross annual revenues exceed $250
million. Therefore, we are unable at this time to estimate with greater
precision the number of cable system operators that would qualify as
small cable operators under the definition in the Communications Act.
Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements. The Order eliminates a rule that requires
cable operators to maintain records of their attributable interests in
video programming in their online public inspection files. Accordingly,
the Order does not impose any new reporting, recordkeeping, or other
compliance requirements.
Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered. The RFA requires an
agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four
alternatives (among others): (1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for small entities; (3) the use
of performance, rather than design, standards; and (4) an exemption
from coverage of the rule, or any part thereof, for small entities.
The Order eliminates the obligation, imposed on cable operators, to
maintain records of their attributable interests in
[[Page 73429]]
video programming in their online public inspection files. Eliminating
this requirement is intended to modernize the Commission's regulations
and reduce costs and recordkeeping burdens for affected entities,
include small entities. Under the revised rules, affected entities no
longer will need to expend time and resources maintaining and updating
this portion of their online public inspection files.
Because no commenter provided information specifically quantifying
the costs and administrative burdens of complying with the existing
recordkeeping requirements, we cannot precisely estimate the impact on
small entities of eliminating them. By eliminating the rule, the Order
reduces the costs and burdens of compliance on all cable operators,
including small entities.
Report to Congress. The Commission will send a copy of the Report
and Order, including this FRFA, in a report to be sent to Congress
pursuant to the Congressional Review Act.
Accordingly, it is ordered that, pursuant to the authority found in
sections 1, 4(i), 4(j), 303(r), and 613 of the Communications Act of
1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 303(r), and 533, this
Report and Order is adopted. It is further ordered that Part 76 of the
Commission's rules is amended as set forth in Appendix A, and the rule
changes to Sec. Sec. 76.504, 76.1700, and 76.1710 adopted herein will
become effective as of the date of publication of a summary in the
Federal Register. It is further ordered that, should no petitions for
reconsideration or petitions for judicial review be timely filed, MB
Docket No. 20-35 shall be terminated and its docket closed. It is
further ordered that the Commission's Consumer and Governmental Affairs
Bureau, Reference Information Center, shall send a copy of this Report
and Order, including the Final Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration. It is
further ordered that the Commission shall send a copy of this Report
and Order in a report to be sent to Congress and the Government
Accountability Office pursuant to the Congressional Review Act, see 5
U.S.C. 801(a)(1)(A).
List of Subjects in 47 CFR Part 76
Cable television, Reporting and recordkeeping requirements.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 part 76 as follows:
PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE
0
1. The authority citation for part 76 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 153, 154, 301, 302, 302a, 303,
303a, 307, 308, 309, 312, 315, 317, 325, 339, 340, 341, 503, 521,
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549,
552, 554, 556, 558, 560, 561, 571, 572, 573.
Sec. 76.504 [Amended]
0
2. Amend Sec. 76.504 by removing Note 2.
Sec. 76.1700 [Amended]
0
3. Amend Sec. 76.1700 by removing and reserving paragraph (a)(7).
Sec. 76.1710 [Removed]
0
4. Remove Sec. 76.1710.
[FR Doc. 2020-25007 Filed 11-17-20; 8:45 am]
BILLING CODE 6712-01-P
