us copyright office: us-telecom-reply

8/14/2019 US Copyright Office: us-telecom-reply

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Section 109 Report to Congress Docket N o. 2007-1

Before theCOPYRIGHT OFFICELIBRARY OF CONGRESSW ashington, D.C.

REPLY COMMENTS OFTHE UNITED STATES TELECOM ASSOCIATIONThe United States Telecom A ssociation (USTelecom) is pleased to submit its reply

comm ents regarding issues related to the operation of, and continued necessity for, the cable andsatellite statutory licenses under the Copyright Act.' USTelecom is the premier trade associationrepresenting service providers and suppliers for the telecommunications industry. USTelecommem bers provide a full array of services, including broadband, voice, data, and video overwireline and wireless networks.

As others in this proceeding have noted, new en trants into the vibrant multichannel videoprogramm ing distribution (MVPD ) marketplace depend on the cable statutory license to enablethem to provide the broa dcast programm ing that is essential to their ability to compete with mo reestablished cable operators. 2 Absence the presence of the cable statutory license, competition inthe MPV D ma rketplace would suffer and consumers w ould be deprived the benefits arising fromincreased video com petition.

The extensive record in this proceeding highlights several important points. First, thecable statutory license remains as essential today if not more so than when it was firstimplemented nearly thirty years ago. Second , retention of the statutory license is critical in

S ee Section 109 Report to Cong ress, 72 Fed. Reg. 19,039 (Apr. 16, 2007) (Notice).2 See e.g.; Comments of A T&T Services, Inc., pp. 4 14 (AT& T Com ments); Comm ents of Verizon, pp. 2 6(V erizon Com ments); American Cable Association Comm ents, pp. 3 5 (ACA Commen ts ).


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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007today's MVPD marketplace as new w ireline providers begin to deploy video platforms in directcompetition to cable incumbents. These deployments by new, wireline video entrants arehelping to achieve the critical public policy goals of increased video com petition and expandedbroadband deployment. Third, application of the cable statutory license to these new videoentrants is appropriate and in full conforman ce with the statutory language and C ongressionalintent. Finally, some o f the sugge sted changes to the cable statutory license, particularly thoserelating to the use of ma rket-based negotiations, are ill-advised.

I. THE STATUTORY LICENSE IS ESSENTIAL FOR RETRANSMISSION OFBROADCAST SIGNALS BY MVPDS.

Several com menters in this proceeding co rrectly note that their ability to retransmitbroadcast signals thereby effectively competing in the MVP D m arketplace depends on thecable statutory license. 3 Absent this mechanism, MVPD providers would be faced with thedaunting task of: 1) identifying each copyrighted work em bedded in every bro adcast signal theywish to retransmit; 2) identifying the own er of each copyright; and 3) neg otiating contracts forthe terms and conditions to license the use of each work. Such an approach ha s been previously and appropriately viewed by the Register of Copyrights as "not realistic." 4

In this regard, numerous parties in this proceeding have o ffered ample support that thestatutory license achieves two important co pyright goals. First, by decreasing the transactionalcosts associated with retransmitting broadcast signals, the statutory license mec hanism increasesthe public's access to copyrighted works. As AT&T noted in its comments, "increasing public

3 See e.g. A T&T Comm ents, p. 1 (stating that "the statutory license is as relevant today as it w as when enacted over30 years ago); V erizon Com ments, p. 1 (stating that Verizon "dep ends on the cable statutory license to enable it toprovide the broadcast program ming that is essential to its ability to compete with m ore established cableoperators.").4 Hearing Before the Su bcomm ittee on Courts, the Internet and Intel. Prop. of the House Com mittee on theJudiciary, 108 th Cong., 2d Sess. (2004) (statement of Marybeth Peters, Register of Copyrights).

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USTelecom Reply Comm entsDocket N o. 2007-1Octobe r 1, 2007

access to creative works is a central purpose of copyright law generally, and Con gress hasspecifically found that the public has a strong interest in access to broadcast signals via cable andother technologies." 5 Second, and equally important, the statutory license ensures that copyrightowners are fairly comp ensated for their works. Absent the benefits of the cable statutory license,these important public policy goals wo uld be difficult to achieve.

Strong evidence ex ists that the need for the cable statutory license is greater today thanwhen it was first implemented in 1976. Congress has recognized this by expanding its scopesince the adoption of the statutory license in 197 6. 6 Moreover, numerous commenters stressedthe practical realities they would fac e absent the bene fits of the statutory license.

For example, the National Cable & Telecommunications Association (NCTA) notes thatthe "[cable] operators throughout the country now carry more broadca st stations on moresystems than in 1976, making any n otions of private negotiations for these rights that much morecomplicated" and that "the total numb er of television stations has also grown, from 960 stationsin 1976 to more than 1,750 stations thirty years later." NCTA concludes that absent thecompu lsory license, "[t]here is every reason to believe that . . . 65 million cable customers w ouldbe deprived of access to some o f the programs broad cast on these signals." 8

In this context, and assuming a privately negotiated copyright scheme , many comm entersnote the problems that would arise for cable operators and other MVPDs w hich would have toidentify the owner of each cop yright, and individually negotiate the terms and cond itions of a

5 A T&T Comm ent s, p. 4 (citations omitted).6 As noted by AT& T, Congress expanded its use through implementation of the Section 119 license that allowssatellite providers to re transmit superstation and network station broadcast signals to their subscribers, and againwith the S ection 122 license that allows satellite carriers to retransmit the signal of a television station into thatstation's local market. A T & T Co m m e n ts , p. 9.7 NCTA Comm ents, pp. 20 21.8 1d., p. 21.

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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007license to use each work. 9 Many commenters correctly note that such an approach would resultin an unwieldy and "impo ssible" 10 process whereby thousands of MVPD s would be forced tonegotiate with thousands of copyright holders. While this would present a daunting task for anyMV PD, the American C able Association (ACA) notes that negotiating separate copyrightlicenses would "overwhelm small and medium-sized cable companies.""

Ultimately, the cable statutory license is as relevant and n ecessary today as it wa s whenenacted over thirty years ago. The presence of the cable statutory license has enabledprogramm ers and MVP Ds alike to meet the public demand for varied content and competitivechoices, and should therefore be retained.II. THE STATUTORY LICENSE IS CRITICAL TO ACHIEVING THE IMPORTANT

PUBLIC POLICY GOALS OF INCREASED VIDEO COMPETITION ANDGREATER BROADBAND DEPLOYMENT.

The Cop yright Office asks in its Notice whether there a ny new justifications for theretention of the statutory licenses for cable and satellite carriers. 1 2 USTelecom notes that the

statutory license supports the two critical public policy goals of increasing video comp etition andfostering greater broadband deploymen t. USTelecom urges the Copy right Office to consider thecorrelation between these im portant public policy goals and the cab le statutory license, as itprepares its recommendations to Congress.

According to a recent estimate in the W all Street Journal, telecom com panies arepreparing to spend $70 b illion in the next year on upgrading their netw orks to support a full array

9 See e.g. V erizon Com ments, pp. 4 6; A T&T Comm ents, pp. 6 10.I A T & T Co m m e n ts , p. 7 (citing testimony of James P. Mooney, President NC TA) (AT& T Comm ent s, n. 23).11ACACommnsp 312 Notice, p. 19050.

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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007of voice, video and broadband services. 13 However, this investment is dependent uponcompanies be ing able to obtain a sufficient return, and the revenues from video services are anessential component of this investment strategy.

In the video market, increased wireline video comp etition is fostering tremendousbenefits to consumers, including lower subscription costs, improved cu stomer service and mo readvanced service offerings. Of critical importance to the C opyright Office as it examines themerits of the statutory license, is the intrinsic link between the dep loyment of v ideo andbroadband offerings. 14 This fundamental link has been acknowledged by the FederalCommunications Commission (Commission) 15 and others. In the broadband market, increasedbroadband deployment garners among other things significant economic and nationalsecurity benefits.

The statutory license is a key component that enables new entrants to obtain access tocritical video programm ing. These video services increase the potential revenues for newentrants 16 and therefore ca n result in a market structure that w ill support more facilities-basedentry. 17 Absent the acce ss to video content that the cab le statutory license affords, new entrants'ability to build new fiber-rich infrastructure will be sub stantially curtailed.

1 3 Editorial, Broadband Breakout, Wall Street Journal, February 16, 2007. See also V erizon Com m ents, pp. 4 5(citing Statement of Marybeth Pe ters that such an approach "was no t realistic for cable operators."); A CAComments, pp. 3 4.14 S ee Ex Parte Notice of UST elecom, at pp. 1 - 2, filed in MB D ocket No. 07-29 (May 16 , 2007); Comm ents ofUSTelecom, filed in GN Docket No. 07-45 (M ay 16, 2007); Comments of UST elecom, filed in MB Docket No. 06-189 (November 29, 2006); Comments of USTelecom, at pp. 4-19, filed in MB 05-311 (February 12, 2006).1 5 See e.g. Report and Order and Further Notice of Proposed Rulemaking, Implementation of Section 621(a)(1) ofthe Cable Com m unications Policy A ct of 1984 as amen ded by the Cable Television Consum er Protection andCom pet it ion A ct of 1992, 22 FCC Rcd. 5101, FCC 06-180, 51 (released March 5, 2007).1 6 More prec isely, video services offer contributions to investment in the form of increme ntal revenue (from allsources) that exceeds the increm ental cost (from all sources) of providing the a dditional services.1 7 G.S. Ford, T.M. Koutsky and L.J. Spiwak, Com petition after Unbundling: Entry, Industry Structure andConvergence, Phoenix Center Policy Paper No. 21, (http://www.phoenix-center.org/pcpp/PCPP21Final.pdf (July2005) (Phoenix Center Paper #21).

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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007Consum ers are reaping tremendous benefits from this increased video and broadba nd

competition. Cable incumbents have increased broadband speed s and 18 have begun to explorenew, advance d technologies that that increase channel capacity and provide other features,including more channels of high-definition TV and increased offerings of video-on-deman dservices. 19 Even more important, consumer costs for video services have fallen dramaticallywhere telecom entrants have entered the MVPD market. A survey by Bank of America reportsthat incumbent cable operators have respo nded to Verizon's deploym ent of its FiOS videoservice by cutting prices by 28-42% in those areas where FiOS v ideo is available. 20

These important public policy benefits of increased broadband pen etration and greatervideo comp etition are possible in part through the application of the cable statutory license.These public policy goals present impo rtant considerations for the Copy right Office as itconsiders retention of the statutory licenses for cable providers.

III . TELECOM PROVIDERS DEPLOY ING VIDEO NETWO RKS ARE ELIGIBLE FORTHE STATUTORY LICENSEIn the Notice, the Copyright Office acknow ledges the recent technological advances that

are occurring in the MVPD market. 21 In recent years, a number of USTelecom members haveentered the MV PD m arket, offering video services over various types of platforms ranging fromfiber-based networks to interne protocol-based technologies. These advanced video networksare being deployed by telecom providers ranging in size from some o f the largest companies in18 See, e.g., David DeKok, Com cast boosts speed of basic cable-m odem Internet service, The Patriot-News, July 13,2005; Ed Gubbins, Cable Speeds Close In On FiOS, Telephony, July 11, 2005, at; Marguerite Reardon, Broadbandspeed w ar emerges; Cable providers are increasing speeds as V erizo n rolls out its fiber-to-the-hom e netw ork,CNET N EWS.com , July 1, 2005; Doug LeDuc, Com cast increases broadband speed; A s battle w ith V erizo n nearsfor cable service, company plans change, Fort Wayne N ews Sentinel, July 19, 2005, at 5.19 Peter Grant, Cable Operators Rush Services To K eep Edge, Wall St. J., July 21, 2005, at B 1.20 State-by-State Breakdown o f the Consum er Welfare Cost of Franchise R eform D elay, Phoenix Center PolicyBulletin No. 13, (available at: http://www .phoenix-center.org/PolicyBulletin/PCPB 13StBrkdw nFinal.pdf (February,2006) (visited October 1, 2007).21 Notice at 19,054.

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USTelecom Reply Comm entsDocket N o. 2007-1Octob er 1, 2007the country, to small, rural providers serving only a few thousand lines. In light of this increaseddeploymen t, the Copyright Office asks whether "new types of video retransmission services,such as IPTV-b ased service . . . may avail themselves of an y of the existing statutory licenses." 22

USTelecom maintains that its membe r companies that are deploying video networkstoday may avail themselves of the benefits inherent in the cable statutory license. Based upo nprevious Copyright O ffice actions and the language contained in Section 111, these networksclearly satisfy the statutory standard.

Many of USTelecom's members are deploying advanced video networks over two typesof infrastructure: 1) IPTV platforms; or 2) fiber-based platforms. Under Section 111(c) of theCopyright Act, "cable systems" are defined as:

"a facility located in any S tate, Territory, Trust Territory, or Possession,that in whole or in part receives signals transmitted or programs broa dcastby one or m ore television broadcast stations licensed by the FCC, andmakes seconda ry transmissions of such signals or programs by wires,cables, microwave, or other com munications channels to subscribingmem bers of the public who pay for such service." 23Based upon these criteria, USTelecom's member com panies that are deploying video

networks should be ab le to avail themselves of the benefits inherent in the cable statutory license.At AT& T notes in its comments, the Copyright Office has previously divided its definition of acable system into five discrete elements. 24 Specifically, the retransmission system must: 1) be afacility; 2) be located in any State, Territory, Trust Territory, or Possession; 3) receive signals orprograms from an FCC licensed broadcast station; 4) make retransmission of those signals or

22 Id.2 3 17 U.S.C. 111(c).24 See A T&T Com ment s, p. 17 (referencing Notice of Proposed Rulem aking, In re Cable Com pulsory License;Definition of Cable System s, 56 Fed. Reg.31,580, 31,592 (Lib. Cong. July 11, 1991 (Compulsory License N PRM )).

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USTelecom Reply Comm entsDocket N o. 2007-1October 1, 2007programs by w ires, cables, microwave, or other commu nications channels; and 5) make thoseretransmissions to subscribing mem bers of the public who pay fo r such services. 25

Exam ining each of these compo nents individually, the telecom video entrants deployingthese video netw orks fulfill all elements of the definition and thereby ca n avail themselves of thestatutory license. Such systems use "facilities" to retransmit the broadcast signal orprogramming. USTelecom's members are deploying these video facilities throughout the UnitedStates, thereby satisfying the second criteria. In addition, whether thro ugh retransmissionconsent or must-carry regulation, these same c ompanies are receiving these signals or programsfrom FC C licensed broadcast stations, and then making those signals available over theirnetwork infrastructure, whether IPTV , fiber or some other "com munications channel[]." Finally,USTelecom member companies deploying such services are making them available tosubscribing members of the public who pay for such se rvices.

IV. THE COPY RIGHT OFFICE IS THE APPROPRIATE FORUM FOR ADDRE SSINGAPPLICATION OF THE STATUTORY LICENSE TO NEW ENTRANTS

Some in this proceeding have recomm ended that Congress is the proper body todetermine w hether new p latforms and services should be subject to the cable statutory license. 26Such an approac h would be ill-advised and contrary to the language contained in Section 111(c)of the Copyright Act.

Section 111(c) w as carefully crafted by Congress to e nsure that rigid statutory language

did not stunt the development of adva nced netwo rk architectures. Rather, by carefully craftingits language to cov er all manner of network platforms (i.e. "wires, cables, microwave, or other

25 See Com pulsory License NPRM , at 31,592.26 Testimony of Fritz E. Attaway, Exe cutive Vice President and Spe cial Policy Advisor, Motion Picture A ssociationof Ame rica, p. 6.

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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007

comm unications channels") Congress was clearly envisioning the deployment of as-yetunforeseen video platforms. Indeed, Congress recognized that it was "important to encourage . .. new technologies because they w ill become real competitors of cable TV in the marketplace." 2 7

Furthermore, the C opyright Office has all the authority it requires to apply the cablestatutory license in appropriate circumstances. The current statutory language clearly encourage sthe Copyright Office to act in this capacity, and, contrary to the recommen dations of others, theCopyright Office sho uld exercise this authority. 2 8

V. PROPOSALS FOR IMPLEMENTING MARKET-BASED NEGOTIATIONS AREUNREALISTIC

Finally, USTelecom agrees with those comme nters who correctly note that the cablestatutory license is essential to their ability to retransmit broa dcast signals. Absent the statutorylicense, MV PD providers wo uld be faced with the impractical and unduly burdensome task ofnegotiating separate rights agreemen ts with the "thousands of copyright owners overretransmission rights." 29 Recommendations to replace the statutory license with a system ofindependently negotiated agreements, 30 simply ignores the realities of the MV PD m arket.

Retention of the cable com pulsory license is the most efficient means to clear copyrightsand com pensate rights holders for retransmission of broadcast signals over cable systems. AsVerizon noted in its comments, "[u]nder a system of full copyright liability, cable operatorswould be forced to identify the existence of each copyrighted work embed ded in the broadcast

27 Satellite Home Viewer Act of 1994, 140 Cong. Rec. 9268-02 at 9270 (statement of Rep. Moorhead).28 As the C opyright Office is well aware, technological advances in recent years have been advancing at a meteoricrate. Any suggestion that statutory fixes can keep pace w ith technological advancements, is simply unrealistic.Indeed, in 1994, Congress overturned a Copy right Office determination that denied the statutory license to MMD Sproviders. In doing so, it revised the statute to "broaden the scope of that license and adapt it to the realities of thecurrent marketplace." S. Rep. No. 103-407, at 7 (1994).29 AT&T Comments, p. 7 (citing James P. Mooney testimony).3 See e.g.; Program Suppliers' Comments, pp. 20 21; Comm ents of Joint Sports Claimants, p. 9.

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USTelecom R eply Com mentsDock et No. 2007-1October 1, 2007signals they wished to retransmit, identify the owner of each cop yright, and individuallynegotiated the terms and cond itions of a license to use each work." 31 But even moreproblematic, cable operators cannot know in advance all of the programs that will be included inany given broadcast and thu s face the "obvious difficulty . . . of obtaining advance clearance forall of the copyrighted m aterials contained in a broadcast." 32

Ultimately, the current statutory license scheme reflects the most pragm atic andreasonable approach to ensuring that copy right holders are compensated for the retransm ission oftheir works. Replacement of this current system with private negotiations would have adevastating impact on copyright holders and MVPD s alike.VI. CONCLUSION

USTelecom urges the Copyright Office to recomm end to Congress that the statutorycopyright licensing scheme applicable to the retransmission of broadcast programm ing bemaintained.

31 Verizon Comments, p. 4.32 U.S. Copyright Office, Supplementary R egister's Report on the General Revision of the U.S. Copyright Law at 42(1965).

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USTelecom Reply Comm entsDock et No. 2007-1October 1, 2007

Respec tfully submitted,UNITED STATES TELECOM ASSOCIATION

By:J o n a t h a n B a n k sDavid CohenKevin Rupy

Its Attorneys607 14 th Street, NW, Suite 400Washington, DC 20005(202) 326-7300

October 1, 2007

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