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Three statutory licenses governing the retransmission of traditional broadcast television signals by cable and satellite TV service providers should be phased out and replaced by market-based licensing mechanisms, according to a 168-page report to Congress submitted Aug. 29 by Maria A. Pallante, register of copyrights.
The report, Satellite Television Extension and Localism Act: §302 Report: A Report of the Register of Copyrights, was produced pursuant to a directive issued by Congress when it last renewed the statutory licenses.
The report labeled statutory licensing an “artificial construct created in an earlier era,” and encouraged Congress to begin setting deadlines for phasing out the statutory licenses, starting with the licenses that allow cable and satellite services to import “distant signals” and retransmit them to subscribers. The report says that elimination of retransmission of “local” signals should be part of a second phase.
The report notes that many of the market-based options—such as sublicensing, collective licensing, and direct licensing—have not been implemented in any practical manner in this industry, but that they are “feasible” options. However, other possible alternatives should not be ruled out either.
“Business models may emerge that incorporate these concepts in part or in combination, and technology will continuously inform the practices of both licensors and licensees,” the report said. “Over time, marketplace licensing should evolve in a variety of innovative ways, subject to investment and experimentation in the marketplace.”
The Copyright Office warned that the industry should be given a “sufficient transition period” before the statutory licenses are eliminated, so that service providers and broadcasters are given sufficient time to negotiate new terms.
The Copyright Office has long advocated the use of market mechanisms and negotiated licenses as a substitute for statutory licenses, especially with regard to the retransmission of broadcast TV on cable and satellite systems.
Section 302 of the Satellite Television Extension and Localism Act of 2010, Pub. L. No. 111-175, 124 Stat. 1218, which extended the satellite TV license, directed the Copyright Office to report to Congress on the question of replacing statutory licenses with market-based mechanisms. Specifically, the statute asked the Copyright Office to address the potential phasing out of the licenses created by 17 U.S.C. §§111, 119, and 122.
STELA extended to 2014 the statutory licenses allowing satellite TV service providers to retransmit broadcast TV programming to subscribers located within a broadcast station's local market area. The statute also allows satellite TV providers to offer broadcast network signals to subscribers who cannot receive such signals through the use of a conventional TV antenna.
STELA was passed after months of short-term extensions of the licenses. For more than a year, the Commerce and Judiciary committees in both the House and Senate struggled over multiple versions of legislation to renew the licensing scheme, with considerable pressure from satellite providers and broadcasters to alter provisions to favor their respective industries. Additionally, the Copyright Office and several members of Congress expressed support for the idea that the licenses have been made unnecessary by the promulgation of alternative methods of distributing TV programs.
In its Aug. 29 report, the Copyright Office said:
•that copyright owners should be given the flexibility to develop negotiated licensing options to replace the statutory licenses,
•that sublicensing, while largely untried in this industry, may be feasible,
•that there may be options other than sublicensing, collective licensing, and direct licensing that the parties should be explored,
•that Congress should set a “date-specific trigger” to phase out and repeal the distant signal licenses, based on Congress's evaluation of “the concerns of stakeholders who operate with limited resources in the broadcast programming distribution chain,” and
•that repeal of the local-signal retransmission provisions should be kept on for a longer period than the distant-signal provisions.
In March, the Copyright Office initiated an inquiry seeking information from the public on several issues that are central to the scope and operation of Section 302 and critical to the Copyright Office's analysis of the legal and business landscapes pertaining to video programming.
The notice of inquiry posed a series of questions for commenters regarding the feasibility and implications of several market-driven proposals, such as allowing broadcasters the opportunity to seek permission to sublicense copyrighted works, requiring retransmitters to seek private licenses directly from copyright holders, and allowing copyright holders to arrange collective licenses such as those in the music industry.
The Copyright Office hosted a public hearing June 10 to seek views on the issue.
By Anandashankar Mazumdar
Text of the report can be found at http://pub.bna.com/ptcj/section302reportAug29.pdf .
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