In the order, the Commission granted two waiver requests - one for just a month and a half as the cable system simply had a misunderstanding of what they needed to do to achieve compliance, and the second until the end of May because a TV station was in the middle of a studio move, and promised to install the new compliant equipment at the new studio. The Commission also reminded stations that there are two kinds of waivers available – automatic waivers, upon request, for small stations (those with under $14 million in annual revenue or in a TV market from number 150 to market 210) and small cable systems; and other waivers for stations facing specific problems, including financial hardships. Those who do not qualify as small stations would need to demonstrate the specific hardship justifying the waiver. So any stations or systems seeking a waiver have a last chance to do so, by Thursday.

All such waiver requests must be submitted through the FCC’s Electronic Comment Filing System.  Waiver applicants must demonstrate that purchasing the required equipment would result in “financial hardship.”  Such waivers, if granted, will be valid for one year and may be renewed for one additional year.  The FCC also retains the authority to issue a waiver for good cause.  “Small stations” are eligible for a streamlined waiver process for demonstrating financial hardship.

So, if you are interested in filing a waiver, do so fast. Otherwise, be ready to be in compliance by December 13.

The specific requirements for compliance with the new rules depend on whether the advertisements that are being broadcast are originated by the station or system, or whether they come embedded from some third-party program provider. For commercial insertions by the station or MVPD, compliance is assumed if they install the equipment required by A/85, use it in connection with their insertions, and maintain and repair it as necessary to keep it in good working order. For embedded commercials, stations can run all the programming through some sort of real time processing to ensure that the audio loudness is uniform. However the Commission was concerned would audio processing would degrade the audio quality of the programming provided by third parties. Thus, the Commission offered an alternative safe harbor with respect to embedded advertising. To comply with the safe harbor, stations and systems would either:

• Rely on widely available certifications from networks and other program suppliers that they have complied with the standards necessary to assure that the commercials are no louder than the programming in which they are embedded, or
• The stations and systems will need to perform “spot checks” on programming for which they have obtained no certification. Spot checks are done as follows:
  • Large stations (with over $14 million in annual 2011 revenue based on BIA Media Access Pro information) and very large MVPDs ( those with over 10 million subscribers) needs to annually spot check 100% of their non-certified programming. Large MVPDs (those with between 500,000 and 10 million subscribers) need to spot check 50% of their programming. Small stations and systems are exempt from regular spot check obligations
  • The spot check is a once-a-year obligation, requiring the station or system to do 24 hours of monitoring within a 7 day period, including at least one complete program from each non-certified program supplier, to ensure that the programs comply with the A/85 standards
  • Spot checks will phase out over 2 years as more and more programming is brought into compliance
  • If a spot check reveals an issue, the station or system needs to notify the program provider and the FCC, and do another spot check of the non-compliant programming within 30 days . If the programming continues to be noncompliant, then the programming is outside the safe harbor (meaning that, if a station or system continues to run it, they can be subject to fines)

The Order also set out additional details about what kinds of programming are subject to the rules, the complaint process for those who believe that stations or systems are not complying with their obligations, and waivers for small stations and systems.  These matters are discussed below.

• Noncommercial stations are exempt from the CALM Act rules (unless they have commercial programming in their ancillary and supplementary digital services)
• Political ads are considered commercials for purposes of these rules. The FCC determined that any limits on the volume of these spots are not editorial changes that would violate the no censorship provision of Section 315 of the Communications Act (see, e.g. our articles here and here on the no censorship provisions of the Act)
• Station promotional announcements and program length commercial programming are subject to the new rules
• Successor standards to those currently set out in A/85 will be reviewed by the Commission. If minor, they will be adopted by Public Notice and become part of the compliance obligations of stations and systems. If they are more substantial changes to the current standards, they will be subject to public comment before they can be adopted
• The FCC will not audit stations for compliance. Instead, enforcement will be on a complaint-driven basis. If there are a pattern of complaints about the compliance of a station or system, the FCC will notify the station or system, which will then need to certify that their equipment is in place and has been properly maintained. The station or system will also need to demonstrate compliance with the safe harbor, and potentially it may need to do some spot checks on compliance
  • The complaints, to be considered by the FCC, must be very specific as to the station or system, channel, program, network and nature of the problem for the FCC to investigate
  • Stations and systems do not need to buy monitoring equipment, but may instead rent it for spot checks or when there are complaints that the FCC brings to their attention. 
• While the rules go into effect next December, waivers are available for small stations and systems, and for larger entities that can demonstrate actual financial harm from the implementation. A small station or system can get a one-year waiver by certifying that they are small and that the financial burden of compliance would be great. Larger stations and systems actually have to document the financial hardship through the filing of financial statements and cost estimates. A second one-year waiver may be granted on the same basis as the first waiver. Waivers should be filed 60 days in advance of any compliance deadline

All in all, the FCC has adopted rules that, thus far, have received positive reviews from the entities that will be regulated by the rules. But the rules are detailed, so stations and systems should carefully review their implementation obligations.  Over the next year, look for commercials to have more consistent volume levels as these rules are implemented. 

Another recent proceeding of interest to television operators is the recent Order of the FCC dealing with the digital conversion of LPTV stations, Class A TV stations and TV translators.  We wrote about that proceeding here.  That Order sets deadlines this year for stations still operating in the portions of the television band that have already been reclaimed for use by wireless companies (Channels 52 to 69).  Any LPTV or TV translator still on these channels must file for a construction permit to move to the core television band by September 1 of this year.  The Order further requires that these stations stop operating on their current channels by the end of this year.  So that Channels 52 to 69 can be cleared on this very quick schedule, the FCC is expediting this proceeding, and has already published the Order in the Federal Register.  While this publication triggers the effective date of the Order (August 26 except for the portions dealing with fees for ancillary and supplemental services, which will be set at a later date), it also signals the start of the period in which Petitions for Reconsideration or Court appeals can be filed.  A not-so-fearless prediction - some sort of appeal will be filed, but it seems unlikely that it will be resolved by the September 1 filing deadline absent very unusual Court or Congressional intervention.  But watch for the filings in any event but, if you operate one of these stations on any channel between 52 and 69, be prepared to vacate the channel if nothing unusual changes the FCC's collective mind between now and then.

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Update - 7/28 - from an alert reader on the location of the new ATSC protocol:

I checked the ATSC website and the Recommended Practice is there.  Look under "Standards" and drop to "Recommended Practices".  There is probably confusion because the ATSC's A/85 is not a "Standard" but a "Recommended Practice".

recommended-practices/185-a85-techniques-for-establishing-and-maintaining-audio-loudness-for-digital-television

The FCC link is wrong

The NPRM raises a broad array of implementation issues, ranging from deciding exactly which broadcast stations and which MVPDs are subject to its terms, to the establishment of safe harbors for technical compliance. As discussed in more detail below, the Commission also asks whether stations and systems can shift the burden for compliance with these rules to program suppliers, such as broadcast and cable networks, and whether contractual means of guaranteeing compliance (such as indemnification provisions in contracts between networks and affiliates) are sufficient to ensure compliance by these program providers. Questions about how MVPDs deal with retransmission of broadcast programs, and who is responsible for noncompliant broadcast programming, are also asked. Finally, the FCC suggests processes for consumer complaints and the grant of waivers to stations and systems that cannot quickly comply with the new rules.

The questions set forth below will demand much attention from broadcasters, cable systems, satellite providers, program suppliers, and advertisers. Comments will be due 30 days after this Notice is published in the Federal Register, with replies 15 days later. Expect that these dates will not shift much if at all, so that the Commission can meet the December deadline for adoption of new rules. The specifics of the Commission’s proposals are set forth below.

Definitional Issues

The Commission first asks questions about which entities are subject to the law, and about the meaning of specific phrases in the statute. The issues on which comment are sought include the following:

• Though the Commission does not believe it has any discretion but to adopt ATSC A/85 RP as the basis of the new rules, ATSC has already adopted a successor document, so the NPRM asks what weight to give standards contained in that update, tentatively concluding that future updates of the standard will automatically become part of the rules;
• The FCC tentatively concludes that stations and cable systems are responsible for the compliance of all commercials with this standard, not just the commercials that they insert locally (more on how this conclusion is to be implemented below);
• As the statute addresses only the insertion of commercial advertisements, the FCC tentatively concludes that noncommercial television stations are exempt from the application of the new rules – but asks how the rules might apply to the digital streams of noncommercial stations in which some commercial material may be present;
• The Commission concludes that cable systems that do not use the AC-3 transmission standard are nevertheless required to comply with the Act, but asks how such systems can comply with the requirements of ATSC A/85 RP (noting, however, that the ATSC update of the standard may address how non AC-3 cable systems can deal with loud commercials).

Compliance and Enforcement

The NPRM then addresses the heart of the matter – how the rules should be set up to allow stations and systems to demonstrate compliance with the new statutory requirements. The FCC first proposes a “safe harbor,” adherence to which will be deemed to constitute compliance, though stations and systems may be able to demonstrate compliance through other methods if they can convince the FCC that the same results are achieved. The safe harbor would require that the stations and systems install and maintain their own equipment and software necessary “in a commercially reasonable manner” to achieve compliance with ATSC A/85 RP. This would require that the station or system install its own equipment, and not simply rely on networks and other program suppliers to meet the obligations of the statute. The FCC asks for comments on this tentative conclusion.

In addition, the FCC asks a number of other questions about compliance issues, including:

• Whether the safe harbor can work given that industry sources have suggested that stations and systems can use ATSC A/85 RP equipment on site to regulate loudness of the commercials that they insert into commercials themselves, but not commercials that have already been inserted by networks or other program suppliers; 
• What is a “commercially reasonable manner”? Does this mean compliance with a general industry standard, or are there specific issues that must be evaluated for each station or system?
• The Commission proposes to require that stations and systems insure that the equipment that they purchase works in a manner that secures compliance with ATSC A/85 RP, yet the Commission does not propose to certify equipment that would be sold to ensure such compliance. Thus, the Commission seeks comments on how stations and systems can ensure compliance. Similar questions are asked about how stations and systems can insure that installation and maintenance is carried out in a manner that insures compliance with ATSC A/85 RP;
• What evidence of compliance will be necessary from a station or system to respond to a complaint, beyond simply relying on the installation of equipment compliant with ATSC A/85 RP? 
• In perhaps the most important proposal for most stations and systems, the Commission proposes that, for compliance purposes, they be able to rely on those of their program suppliers which “ensure” that their programs meet the required standards (e.g. program networks). But, as the individual station or system will be ultimately responsible for compliance, how will they be able to “ensure” that the programming supplied by others really meets these standards? The FCC asks for comments on the following:
  • Are contracts between stations and systems and their program suppliers sufficient to ensure that the standards will be met?
  • Will stations and systems be able to get indemnification provisions in contracts from program suppliers to cover penalties for their noncompliance?
  • How long will such indemnities take to negotiate, and should the Commission take that time into account in its implementation timetable?
  • Are contractual solutions available to small systems? Do they receive sufficient metadata from program suppliers to ensure compliance?
• Are there other practical compliance issues? The Commission indicates that parties have indicated issues including:
  • How can cable systems insure the compliance of programming that they receive from television stations, and other programming received with no time for prior review before it is transmitted by the system?
  • Do television stations face that same problem with respect to network programs?
  • If a complaint is received about a loud commercial contained in an over-the-air television station’s program that is being retransmitted by a cable system, who should be responsible for any violation – the TV station or the system?
  • Are there any special issues with legacy programs, or with political commercials?
  • Are there any copyright implications to enforcing any of these rules?

Complaint and Enforcement Process

To enforce these rules, the NPRM sets out a proposed process for consumer complaints and FCC enforcement.  The Commission asks for comments on the following:

• A consumer driven complaint process, as opposed to one based principally on FCC inspections.
• A standard complaint form that is available online, and can be filed electronically, or by mail or by fax. That complaint form would require that the consumers with complaints provide the following:
  • Their name and their contact information, including their email address and phone number
  • The call sign of the TV station about which they are complaining, or information about which MVPD transmitted the loud commercial
  • The date and time of the loud commercial
  • The program in which it aired
  • The network that was being watched
  • The name of the commercial sponsor
  • A description why the commercial was objectionable
• What records need to be maintained for stations and systems to respond to complaints?
• Should stations and systems be required to designate specific employees who are tasked to respond to complaints?
• The FCC concludes that TV stations should keep complaints in their public file, but asks if cable systems should also provide that information in a public file.
• The FCC expects that it will fine stations and systems for noncompliance, and asks whether it should establish a base fine and, if so, what that base fine should be.

Waiver Standards

The Act specifically provides for waivers for stations and systems that cannot afford to comply with the new rules. The Commission asks a number of questions about the waiver process, including:

• How to demonstrate the need for a financial hardship waiver? The FCC suggests that a petition for waiver that would need to include:
  • Financial statements for the business;
  • Cost estimates for compliance;
  • A statement detailing how and when the station or system will be able to come into compliance;
  • Public interest reasons why a waiver is justified in these circumstances.
• Whether there are there specials issues that would arise for an MVPD that is carrying a broadcast station that has a compliance waiver?
• Should there be a streamlined process for small MVPDs and small broadcasters? Would a standard that automatically grants waivers to a non-network TV station outside the Top 100 markets, or to an independent cable system with fewer than 15,000 subscribers, be appropriate?
• Are there other waiver issues that should be addressed?
• The Commission tentatively proposes that waiver requests be due 180 days after the effective date of the new rules.

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Clearly, for a seemingly straightforward statute, there are many issues that need FCC attention on a very tight timeframe to meet the Congressionally mandated requirement that these rules be in place by mid-December. If any of these issues may affect your operations, consider filing comments in this proceeding. 

Congressional estimates are that the costs of necessary equipment range from a few thousand dollars to $20,000 per device, for an aggregate industry cost of tens of millions of dollars. Congress anticipated that the costs may be burdensome for small cable operators and smaller market television broadcasters, and provided that waivers may be granted for financial hardship for one year renewable terms  The Commission may also grant waivers or exemptions from the rule that it adopts for classes of broadcasters and multichannel video programming distributors under the FCC’s general waiver authority.

This legislation has been very popular in Congress, as it apparently the source of many complaints from constituents.  So expect the FCC to move quickly to adopt the necessary rule to implement the legislation.  Watch for this implementation process to begin in the coming months, and start planning for your transition in the not too distant future.