*Pages 1--6 from Microsoft Word - 14525.doc* Federal Communications Commission DA 02- 231 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: The Long Family Partnership v. EchoStar Communications Corporation Request for Mandatory Carriage of Television Station WHKY- TV, Hickory, North Carolina ) ) ) ) ) ) ) ) ) ) ) CSR- 5764- M MEMORANDUM OPINION AND ORDER Adopted: January 29, 2002 Released: January 31, 2002 By the Deputy Chief, Cable Services Bureau: I. INTRODUCTION 1. The Long Family Partnership, licensee of commercial television station WHKY- TV, Channel 14, Hickory, North Carolina (“ WHKY” or the “station”) filed the above- captioned must carry complaint against EchoStar Communications Corporation (“ EchoStar”), pursuant to Section 338 of the Communications Act of 1934, as amended (the “Act”), and Section 76.66 of the Commission’s rules 1 for its refusal to carry the signal of WHKY on its satellite system. 2 WHKY states that EchoStar is providing “local- into- local” satellite service pursuant to the statutory copyright license in the Charlotte, North Carolina market, which is the designated market area (“ DMA”) where station WHKY operates. 3 In its complaint, WHKY alleges that EchoStar has failed to meet its must carry obligations under the Commission’s satellite broadcast signal carriage rules. WHKY requests that the Commission order EchoStar to carry the station’s signal on EchoStar’s satellite system. EchoStar filed an opposition to the complaint and WHKY filed a reply. 4 For the reasons set forth below, we grant WHKY’s complaint. 1 47 C. F. R. § 76. 66. We note that on December 7, 2001, the U. S. Court of Appeals for the Fourth Circuit unanimously upheld the constitutionality of Section 338 of the Act, and Section 76. 66 of the Commission’s rules. See SBCA v. FCC, Nos. 01- 1151, 01- 1271, 01- 1272 and 01- 1818, 2001 WL 1557809 (4 th Cir. Dec. 7, 2001). 2 Cable Special Relief and Show Cause Petitions, Report No. 0016 (Oct. 15, 2001). 3 See 17 U. S. C. § 122( a); 47 U. S. C. § 339. A satellite carrier provides “local- into- local” satellite service when it retransmits a local television signal back into the local market of that television station for reception by subscribers. 47 C. F. R. § 76. 66( a)( 6). 4 Under Section 76. 66( m)( 3) of the Commission’s rules, a local television broadcast station that disputes a response by a satellite carrier that it is in compliance with its must carry obligations may obtain review of such denial or response by filing a “complaint” with the Commission in accordance with Section 76. 7. 47 C. F. R. § 76. 66( m)( 3). Although styled a “complaint,” a carriage complaint filed against a satellite carrier is treated by the Commission as a petition for special relief for purposes of the Commission’s pleading requirements. See 1998 Biennial Regulatory Review: Part 76 – Cable Television Service Pleading and Complaint Rules, 14 FCC Rcd 418 (continued....) 1 Federal Communications Commission DA 02- 231 2 II. BACKGROUND 2. Section 338 of the Act, adopted as part of the Satellite Home Viewer Improvement Act of 1999 (“ SHVIA”), 5 requires satellite carriers, by January 1, 2002, to carry on request all local television broadcast stations’ signals in local markets in which the satellite carrier carries at least one local television broadcast signal pursuant to the statutory copyright license. 6 For the initial election cycle, broadcast stations were required to notify satellite carriers by July 1, 2001, of their mandatory carriage election for carriage to commence by January 1, 2002. 7 A station’s market for satellite carriage purposes is its DMA, as defined by Nielsen Media Research. 8 In November 2000, the Commission adopted rules to implement the provisions contained in Section 338. 9 3. Under the Commission’s broadcast signal carriage rules, each satellite carrier providing local- into- local service pursuant to the statutory copyright license is generally obligated to carry any qualified local television station in the particular DMA that made a timely election for mandatory carriage, unless the station’s programming is duplicative of the programming of another station carried by the carrier in the DMA. 10 One television station’s programming is generally considered duplicative of another station’s if both stations simultaneously broadcast identical programming for more than 50% of (... continued from previous page) (1999). Responsive pleadings filed in this context, therefore, must comply with the requirements set forth in Section 76.7( b)( 1). 5 See Pub. L. No. 106- 113, 113 Stat. 1501, 1501A- 526 to 1501A- 545 (Nov. 29, 1999). 6 See 47 U. S. C. § 338. 7 See 47 C. F. R. § 76. 66( c)( 3); see also 76. 66( c)( 4) (“ Except as provided for in paragraphs 76. 66( d)( 2) and (3), local commercial television broadcast stations shall make their retransmission consent- mandatory carriage election by October 1 st of the year preceding the new cycle for all election cycles after the first election cycle.”). 8 A DMA is a geographic area that describes each television market exclusive of others, based on measured viewing patterns. See 17 U. S. C. § 122( j)( 2)( A)-( C); see also Implementation of the Satellite Home Viewer Improvement Act of 1999: Broadcast Signal Carriage Issues; Retransmission Consent Issues, 16 FCC Rcd 1918, 1934 (2000) (“ DBS Must Carry Report & Order”); 47 C. F. R. § 76.66( e) (“ A local market in the case of both commercial and noncommercial television stations is the designated market area in which a station is located, and (i) in the case of a commercial television broadcast station, all commercial television broadcast stations licensed to a community within the same designated market area within the same local market; and (ii) in the case of a noncommercial educational television broadcast station, the market includes any station that is licensed to a community within the same designated market area as the noncommercial educational television broadcast station.”). 9 See generally DBS Must Carry Report & Order, 16 FCC Rcd at 1918 et seq. The Commission later affirmed and clarified its carriage rules. See Implementation of the Satellite Home Viewer Improvement Act of 1999: Broadcast Signal Carriage Issues, 16 FCC Rcd 16544 (2001) (“ DBS Must Carry Reconsideration Order”). 10 See 47 C. F. R. § 76. 66. Commercial television stations are required to choose between retransmission consent and mandatory carriage by July 1, 2001; NCE stations, on the other hand, must simply request carriage. The first retransmission consent- mandatory carriage election cycle is for a four- year period commencing on January 1, 2002 and ending December 31, 2005. 47 C. F. R. § 76. 66( c)( 1). To facilitate the carriage process, satellite carriers are required to respond to a television station’s carriage request within 30 days, and state whether they accept or deny the carriage request. Those stations licensed to provide over- the- air service for the first time on or after July 1, 2001 are considered new television broadcast stations for satellite carriage purposes. See DBS Must Carry Report and Order, 16 FCC Rcd at 1933. A new television station is required to make its initial election between 60 days before commencing broadcast and 30 days after commencing broadcast. Assuming the station meets all of the requirements under Section 338 and the Commission’s rules, the satellite carrier shall commence carriage within 90 days of receiving a carriage request from the television broadcast station or whenever the new television station provides over- the- air service. See id.; 47 C. F. R. § 76. 66( d)( 3). 2 Federal Communications Commission DA 02- 231 3 the broadcast week. 11 If the stations’ programming is duplicative, the satellite carrier may choose which duplicating signal it will carry. 12 Furthermore, under the SHVIA, a television station asserting its right to carriage is required to bear the costs associated with delivering a good quality signal to the designated local receive facility of the satellite carrier or to another facility that is acceptable to at least one- half the stations asserting the right to carriage in the local market. 13 To be considered a good quality signal for satellite carriage purposes, a television station must deliver to the local receive facility of a satellite carrier either a signal level of –45dBm for UHF signals or –49dBm for VHF signals at the input terminals of the signal processing equipment. 14 4. Whenever a local television broadcast station believes that a satellite carrier has failed to meet its obligations under Section 338 of the Act or our implementing regulations, such station shall first notify the carrier, in writing, of the alleged failure and identify its reasons for believing that the satellite carrier has failed to comply with its obligations. 15 Within 30 days after such written notification, the satellite carrier must respond in writing and comply with its obligations or state its reasons for believing that it is already doing so. 16 The Commission does not require satellite carriers to conduct tests or present specific measurements to broadcasters in response to requests for mandatory carriage. At the same time, however, the satellite carrier is required to have a reasonable, good- faith basis for denying carriage and is obliged to convey that information to the broadcast station affected. As the Commission stated: “It is not consistent with the SHVIA or our rules to attempt to place the burden on the broadcast station to prove why it is entitled to carriage in the absence of a legitimate reason for questioning its eligibility.” 17 Specifically with respect to disputes over signal quality, a station should not be rejected for carriage unless, based on a knowledge of the facts and circumstances involved, there are engineering reasons for doubting that a good quality signal is likely to be available. 18 Should a station fail to provide the required over- the- air signal quality to a satellite carrier’s receive facility, it still may obtain carriage rights if “the station responds with a promise to provide or pay to provide a good quality signal in the future.” 19 5. If Commission action is needed, as WHKY alleges here, a broadcast station may file a complaint with the Commission within 60 days after the satellite carrier submits a final rejection of the station’s carriage request. 20 If a satellite carrier provides no response to a must carry election, the 60 day 11 See 47 C. F. R. § 76. 66( h)( 1) ( “A satellite carrier shall not be required to carry upon request the signal of any local television broadcast station that substantially duplicates the signal of another local television broadcast station which is secondarily transmitted by the satellite carrier within the same local market, or the signals of more than one local commercial television broadcast station in a single local market that is affiliated with a particular television network unless such stations are licensed to communities in different States.”) 12 See 47 U. S. C. § 338( b)( 1). See also 47 C. F. R. § 76. 66( h); DBS Must Carry Report & Order, 16 FCC Rcd at 1949- 51. 13 47 C. F. R. § 76. 66( g)( 1). See DBS Must Carry Report & Order, 16 FCC Rcd at 1938- 45. See also DBS Must Carry Reconsideration Order, 16 FCC Rcd 16568- 70 (affirming previous holding that selection of an alternative receive facility is based on the vote of the majority of the stations entitled to carriage in each affected market, not just the stations actually electing mandatory carriage). 14 47 C. F. R. § 76. 66( g)( 2). See DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16559- 61. 15 See 47 U. S. C. § 338( f)( 1); see also 47 C. F. R. § 76.66( m)( 1). 16 See 47 C. F. R. § 76. 66( m)( 2). 17 DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16574. 18 Id. at 16572. 19 Id. at 16573. 20 See 47 C. F. R. § 76. 66( m)( 6); DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16574. A television station seeking a finding on the facts and a resulting determination of whether it is entitled to carriage pursuant to (continued....) 3 Federal Communications Commission DA 02- 231 4 period commences after the time for responding as required by the rule has elapsed. 21 Below, we consider the complaint filed by Station WHKY. III. POSITIONS AND DISCUSSION 6. In support of its Complaint, Station WHKY states that EchoStar improperly denied WHKY’s election request on signal quality, failure to provide community of license and substantial duplication grounds. 22 WHKY objects to the July 30, 2001, form letter used by EchoStar which indicated that the station “fail[ ed] to prove [its] signal meets [the] legal standard of quality necessary for mandatory carriage,” “fail[ ed] to provide community of license” and that the carrier “ha[ d] reason to believe that [WHKY] ‘substantially duplicates’ the signal of another station assigned to [its] DMA.” 23 WHKY asserts that in the DBS Must Carry Reconsideration Order the Commission found that the use of form letter denials, such as that used here by EchoStar, do not comply with the Commission’s DBS must carry rules. 24 Specifically, WHKY criticizes the denial letter it received in so far as it (1) does not provide a reasonable basis for denial, (2) requires WHKY to prove the existence of a good quality signal, and the non- existence of substantial duplication, as a prerequisite to carriage, (3) incorrectly alleges that WHKY did not identify its community of license in its election letter. 25 7. WHKY also objects to a second denial letter sent by EchoStar. 26 Following the release of the DBS Must Carry Reconsideration Order, the carrier nominally rescinded its entire July 30, 2001, denial in a September 12, 2001, letter which simultaneously reinstated a denial solely on signal strength grounds, citing as support an unspecified signal strength test. 27 WHKY contends that the rescission by EchoStar of its substantial duplication grounds for denial is undercut by the carrier’s express reservation of its right to renew such denial following additional programming analysis. 28 8. We note that WHKY does not allege in its Complaint that it provides a good quality signal to EchoStar’s local receive facility. Rather, the station states that it “has committed, and again commits, that it will deliver a good quality signal, by off the air or other means, to EchoStar’s designated local receive site.” 29 9. In its Opposition, EchoStar contends that it rescinded its July 30, 2001, denial of WHKY’s carriage request on substantial duplication and failure to identify community of license (... continued from previous page) Section 76. 66 of our rules may file a complaint with the Commission. If, however, a television station that is not being carried seeks damages or other form of monetary or injunctive relief under Section 338( a) of the Act or Section 501( f) of the Copyright Act, then the United States District Court is the exclusive forum for adjudicating the merits of its claim. DBS Must Carry Report & Order, 16 FCC Rcd at 1974. 21 See DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16574. 22 Complaint at 2. 23 See id. at Exhibit B. 24 Id. at 5; see DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16573. 25 Complaint at 2, 4- 7. 26 Id. at 3. 27 Id. at Exhibit C; see also Opposition at Exhibit B. 28 Complaint at 3. EchoStar’s September 12, 2001, letter states that (1) the failure to identify community of license ground for denial is still pending, and (2) the substantial duplication ground may be reinstated following further review. Id. at Exhibit C; see also Opposition at Exhibit B. 29 Complaint at 5. 4 Federal Communications Commission DA 02- 231 5 grounds. 30 EchoStar’s September 12, 2001, letter reformulated its objection on signal strength grounds by stating that WHKY’s “signal strength as received at the designated local receive facility falls below the objective signal strength threshold mandated by federal regulations … based upon an initial survey of your station’s signal by EchoStar utilizing sound engineering practices.” 31 EchoStar maintains that it had a reasonable, good faith basis for denying WHKY’s election request. 32 EchoStar argues that the 44 mile distance between its local receive facility and WHKY’s transmitter raises a substantial question as to the quality of its signal strength since it places EchoStar’s local receive facility almost 20 miles outside WHKY’s Grade B contour. 33 In addition, EchoStar jointly performed engineering tests with WHKY on September 13, 2001, which indicated WHKY’s signal strength was at –81. 75 dBm, 36.75 dBm below the minimum –45 dBm threshold for UHF stations. 34 EchoStar’s test report, which was signed by a representative of WHKY, indicates that the station was operating at one- half power during the procedure. 35 10. In reply, WHKY accepts EchoStar’s rescission of its earlier objections on substantial duplication and failure to identify community of license grounds. 36 WHKY challenges the validity of the testing performed by EchoStar on September 13, 2001, as not having used sound engineering practices and lacking authentication by a qualified engineer. 37 As such, WHKY argues that these test results cannot substantiate EchoStar’s denial on signal strength grounds. 38 Nonetheless, WHKY reiterates its commitment to providing a good quality signal to EchoStar’s local receive facility and states that it has equipment “on hand and ready for installation in accord with plans long known by EchoStar.” 39 WHKY argues that EchoStar’s refusal to carry the station is unjustified pursuant to the DBS Must Carry Report & Order and DBS Must Carry Reconsideration Order and asks that the Commission impose sanctions upon EchoStar. 40 11. Based on the record, we grant WHKY’s petition. As an initial matter, we note the rescission by EchoStar of its denial on substantial duplication and failure to identify the community of 30 Opposition at 2- 3, Exhibit B; see also Complaint at Exhibit C. EchoStar clarified in an October 8, 2001, letter to WHKY that the carrier had rescinded both these objections. Opposition at Exhibit E. 31 Opposition at Exhibit B; see also Complaint at Exhibit C. 32 Opposition at 2- 5. 33 Id. at 4. 34 Id. at Exhibit D; see also Complaint at Exhibit D. 35 The test report also indicates that WHKY would provide a pre- amplifier and antenna to improve signal reception. Id. at Exhibit D; see also Complaint at Exhibit D. WHKY acknowledges, but does not explain why, its transmitter was temporarily at one- half power during the September 13, 2001, test. Complaint at n. 9. 36 Reply at 1- 2. 37 The grounds upon which WHKY criticizes EchoStar’s test include: (1) failure to indicate the point of measurement and include a diagram of it; (2) failure to include a description of the methodology used for processing the signal; (3) failure to list the model and serial numbers, manufacturing and calibration dates and ages of the equipment used; (4) failure to describe the equipment used, including the transmission line, the antenna direction and range, radiation pattern, the bearing of the antenna’s orientation and how it was polarized; and (5) failure to make multiple readings after the initial reading was less than –51 dBm. Id. at 2- 4. 38 Id. at 4- 5. 39 Id. at 5. 40 Id. at 5- 7. 5 Federal Communications Commission DA 02- 231 6 license grounds, and therefore need not reach the merits on these points. 41 12. The question presented in this proceeding is whether and under what conditions WHKY is entitled to have its signal carried within the Charlotte, North Carolina market over the facilities of EchoStar. As stated in our DBS Must Carry Reconsideration Order, “stations are entitled to carriage if they qualify based on the applicable statutory and regulatory provisions.” 42 WHKY has qualified for mandatory carriage by making a timely election under Section 338 of the Act and 76.66( c)( 2) of the Commission’s rules. 43 However, we have also stated that a satellite carrier is not required to carry a television station that does not provide a good quality signal to the carrier’s local receive facility. 44 13. We believe that WHKY has tacitly conceded that it does not currently provide a good quality signal to EchoStar’s Charlotte, North Carolina local receive facility. Nowhere in the record does WHKY allege that it provides such a signal. Rather, by its repeated statements to the Commission that it is “committed … to deliver a good quality signal, by off the air or other means” and that it has equipment “on hand and ready for installation” in order to improve its signal reception, WHKY implicitly acknowledges this deficiency. 45 WHKY is entitled to mandatory carriage on EchoStar’s satellite system within 75 days from the date it delivers a good quality signal to EchoStar’s local receive facility. With regard to WHKY’s request that we impose sanctions on EchoStar, in recognition that this is the first DBS must carry election period, we do not find such action to be warranted at this time. IV. ORDERING CLAUSES 14. Accordingly, IT IS ORDERED, pursuant to Section 338 of the Communications Act, as amended, 47 U. S. C. § 338, and Section 76.66 of the Commission’s rules, 47 C. F. R. § 76. 66, that the must carry complaint filed by the Long Family Partnership, licensee of commercial television station WHKY-TV, Hickory, North Carolina, against EchoStar IS GRANTED to the extent indicated herein. 15. IT IS FURTHER ORDERED that EchoStar shall commence carriage of Station WHKY’s signal within 75 days from the date on which WHKY provides a good quality signal to EchoStar’s local receive facility. 16. This action is taken by the Deputy Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission’s rules, 47 C. F. R. § 0.321. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau 41 We anticipate that in future election periods satellite carriers will fully state their grounds for denial and the underlying reasonable bases in a single correspondence and need not reserve certain grounds for later analysis. 42 DBS Must Carry Reconsideration Order, 16 FCC Rcd at 16572. 43 Complaint at Exhibit B; see 47 U. S. C. § 338( a); see also 47 C. F. R. § 76.66( c)( 2). 44 DBS Must Carry Order, 16 FCC Rcd at 1947. 45 Complaint at 5; Reply at 5. 6