The Copyright Office has recommended phasing out the distant signal compulsory license, and exploring phasing out the compulsory license for local signals as well. That would require cable and satellite operators to negotiate individually with copyright owners or TV stations for carriage of programming they deliver to their customers.
That came in a report released Aug. 29 and mandated by Congress in its May 2010 passage of the Satellite Television Extension and Localism Act, which extended the distant license for another five years.
It was not a big surprise, since the office recommended phasing out the distant signal license in its 2008 report related to the previous extension of the license by Congress back in 2004, when the office concluded that "the current distant signal licenses have served their purpose but are no longer necessary."
The blanket license allows cable and satellite operators to pay into a pool to compensate copyright holders for distant and local TV station programming rather than negotiate the rights individually.
As part of a contentious STELA renewal process, and to assuage opponents of the compulsory license regime, the legislation charged the Copyright Office with coming up with suggestions on how to move phase out the blanket license.
Calling it a "construct of an earlier era," the Copyright Office report concluded that Congress should provide a "date-specific trigger" for the phase out of the distant signal license, but hold off on phasing out the local signal license "to a later time." It is only a recommendation, but one the cable industry opposed in its comments on the report. Cable operators, not looking to have to conduct individual negotiations for programs, suggested the license was hardly an anachronism, but instead a balance of the competing interests of operators and programmers.
"The compulsory copyright license, for its part, still works as Congress intended," said the National Cable & Telecommunications Association in its comments last April. "Indeed, some 35 years after its enactment, Section 111 remains far superior to any of the proposed alternatives as a means for cable operators of varying sizes and circumstances to obtain the myriad copyright clearances needed to retransmit broadcast stations to more than 60 million cable-subscribing households."
NCTA had also said that if the Copyright Office makes changes, it should take into account other related rules, like must-carry and retransmission consent.
The Copyright Office added plenty of caveats to its suggestions. While it offered up three options to the blanket license: collective licensing, direct licensing, and collective licensing, it said those are not the only options, or mutually exclusive, and that the marketplace should help decide the evolution of the payments.
The National Cable & Telecommunications Association had not commented on the report at press time, but the American Cable Association was not happy.
"ACA is troubled that the Copyright Office would target the 'distant' TV license for elimination in its new report," said ACA President Matthew Polka. "As ACA and others have made clear, abolishing this license would harm consumers, particularly those who reside in rural areas and value receipt of out-of-market TV signals."
But ACA also pointed out that the recommendation was nothing new. "The Copyright Office first recommended abolishing the cable license in 1981," said Polka. "It has made this same recommendation to Congress numerous times in reports over the last 30 years, most recently in 2008. Yet, despite these many suggestions, Congress has always decided that the best course of action for consumers was to renew the license. ACA hopes that Congress will once again stay this wise course."
"NAB supports the Copyright Office's recommendation that the distant signal compulsory licenses for cable and satellite be eliminated by Congress on a date certain," said the National Association of Broadcasters in a statement. "While NAB favors retention of the local signal compulsory licenses, we appreciate the Office's sensitivity to the importance of these licenses for local viewers as expressed in the Office's recommendation to defer consideration of elimination those licenses. Regarding the Report's discussion of communications signal and program carriage rules, NAB agrees that ultimately the Copyright Office must defer to the FCC. Congress should avoid considering any changes to must-carry and retransmission consent rules, which are working just as lawmakers intended."