NPR Labs has announced that it is going to conduct a further study, financed by the Corporation for Public Broadcasting, of the potential of interference from a proposed increase in the power of HD Radio operations.  Last year, NPR had raised issues with the proposal by Ibiquity and a number of commercial broadcasters for power increases in the digital radio operations of FM radio stations.   At the end of last year, the FCC asked for comments on the proposal for increased HD radio power, and on NPR’s concerns about the power increase.  As set forth in this week’s NPR press release, the new study will be conducted in conjunction with other broadcasters in an attempt to arrive at a way to increase HD radio power without creating undue interference to the analog operations of existing stations.

While the FCC comment period in this proceeding has ended, the FCC is always willing to accept informal comments until a decision is reached.  The Commission is particularly interested in informal comments if those comments propose a way to resolve the conflict between parties to a proceeding.  If NPR is able, though this testing, to come up with a solution that will protect analog operations while allowing for a power increase in some or all HD radio operations, you can expect that the results will be reflected in the FCC’s final action.  Thus, this study may have important ramifcations for the future of HD Radio. 

The FCC today issued a long-awaited public notice, clarifying the relationship between FM educational stations and the analog Channel 6 TV stations that have or will be disappearing after the digital transition.  As we’ve written before, the question of whether noncommercial FM stations could seek improvements in their facilities based on the imminent disappearance of the Channel 6 stations has been pending for quite some time.  In the Public Notice issued today, the FCC made clear that no application for an improvement in a noncommercial FM station will be accepted before the DTV deadline unless it provides full protection to analog Channel 6 stations.  Even after the transition, applications will only be accepted after procedures are established in another public notice to be issued by the FCC at some later date.  Applications that are currently pending which don’t comply with the current rules that require educational stations to protect Channel 6 TV operations (either protecting them from interference or having unequivocal consent from the TV station to the construction at any time of the FM station not conditioned on the digital transition) will be dismissed.

The dismissal will be particularly crucial in deciding between competing applications still being processed as past of the 2007 window for filing for new noncommercial FM stations.  In that window, many applicants submitted applications ignoring the existence of Channel 6 TV stations, while others protected those stations.  Those who ignored the Channel 6 operations would have received significant comparative coverage advantages had the FCC not taken the action announced today – dismissing those applications who ignored the Channel 6 operations. While this notice seems to be definitive – given the processing issues on these applications so far – we probably have not heard the last of this issue.

As we have written, by April 2, broadcasters who are streaming need to file with SoundExchange a written election in order to take advantage of the SoundExchange-NAB settlement.  For broadcasters who make the election, the settlement agreement will set Internet radio royalty rates through 2015.  One aspect of this agreement that has not received much attention is the waiver from the major record labels of certain aspects of the performance complement that dictates how webcasters can use music and remain within the limits of the statutory license.  When Section 114 of the Copyright Act, the section that created the performance royalty in sound recordings, was first written in the 1990s, there were limits placed on the number of songs from the same CD that could be played in a row, or within a three hour period, as well as limits on the pre-announcing of when songs were played.  These limits were placed seemingly to make it more difficult for listeners to copy songs, or for Internet radio stations to become a substitute for music sales.  In conjunction with the NAB-SoundExchange settlement, certain aspects of these rules were waived by the 4 major record labels and by A2IM, the association representing most of the major independent labels.  These waivers which, for antitrust reasons, were entered into with each label independently, have not been published in the Federal Register or elsewhere.  But I have had the opportunity to review these agreements and, as broadcasters will get the benefit of the agreements, I can provide some information about the provisions of those agreements.

First, it is important to note that each of the 5 agreements is slightly different.  In particular, one has slightly more restrictive terms on a few issues.  To prevent having to review each song that a station is playing to determine which label it is on, and which restrictions apply, it seems to me that a station has to live up to the most restrictive of the terms.  In particular, the agreements generally provide for a waiver of the requirement that stations have in text, on their website, the name of the song, album and artist of a song that is being streamed, so that the listener can easily identify the song.  While most of the labels have agreed to waive that requirement for broadcasters – one label has agreed to waive only the requirement that the album name be identified in text – thus still requiring that the song and artist name be provided.  To me, no station is going to go to the trouble of providing that information for only the songs of one label – so effectively this sets the floor for identifying all songs played by the station and streamed on the Internet.

Continue Reading With April 2 Webcasting Election Due for Broadcasters – A Look at the Record Label Waivers of the Performance Complement

With all the recent discussion of the NAB-SoundExchange settlement (see our post here) and the recent Court of Appeals argument on Copyright Royalty Board decision on Internet Radio royalties, we have not summarized the "settlement" that SoundExchange agreed to with a few very small webcasters.  That agreement would essentially extend through 2015 the terms that SoundExchange unilaterally offered to small webcasters in 2007, and make these terms a "statutory" rate that would be binding on all copyright holders.  The deal comes with caveats – that an entity accepting the offer would be prevented from continuing in any appeal of the 2006-2010 royalties and from assisting anyone who is challenging the rates in the CRB proceeding for rates for 2011-2015, even if the webcaster grows out of the rates and terms that SoundExchange proposes.  Once it signs the deal, it cannot have any role before the court or CRB in trying to shape the rates that his or her company would be subject to once they are no longer a small webcaster until after 2015.  Even with these caveats, the deal does provide the very small webcaster the right to pay royalties based on a percentage of their revenue, and even provides some recordkeeping relief to "microcasters", the smallest of the small webcasters.  Parties currently streaming and interested in taking this deal must elect it by April 30 by submitting to SoundExchange forms available on its website for "small webcasters" (here) and "microcasters" (here).

The Small Commercial Webcasters that I represented in the Copyright Royalty Board proceeding did not negotiate this deal.  In fact, no party who participated in the CRB case signed the "settlement", yet it has become a deal available to the industry under the terms of the Webcaster Settlement Act as SoundExchange and some webcasters agreed to it.  My clients have been arguing for a rate that allows their businesses to grow beyond the limits of $1.25 million in revenue and 5 million monthly aggregate tuning hours set forth in this agreement.  But for very small webcasters not interested or able to participate in regulatory efforts to change the rules, and who do not expect their businesses to grow significantly between now and 2015, this deal may provide some opportunities.  The webcaster pays 10% of all revenues that it receives up to $250,000, and 12% of revenues above that threshold up to $1.25 million.  If it exceeds the $1.25 million revenue threshold, it can continue to pay at the percentage of revenue rates for 6 months, and then it would transition to paying full per performance royalty rates as set out by the CRB.   A service would also have to pay for all streaming in excess of 5 million monthly ATH at full CRB rates.  Microcasters, defined as those who make less than $5000 annually and stream less than 18,067 ATH per year (essentially an audience averaging just over 2 concurrent listeners, 24 hours a day 7 days a week), need pay only $500 a year and, for an additional $100 a year, they can be exempted from all recordkeeping requirements.

Continue Reading SoundExchange “Settlement” With Microcasters – A Royalty Option for the Very Small Webcaster

A few weeks ago, we wrote about just how outmoded the FCC’s prohibitions on the cross ownership of newspapers and broadcast stations were in an era when newspapers seem to be going out of business at an alarming rate.   We quoted a DC trade press reporter who had mused that the newspaper-broadcast cross-ownership rule could well outlast the newspaper itself.  According to a report in Bloomberg News today, the Commission may well be revisiting the issue, according to statements made by Chairman Copps, in light of the economic turmoil in the newspaper industry.  But what would a review of the issue bring from the FCC?  That is unclear from the article – and unclear from the prior statements of the Acting Chairman.

In late 2007, Acting Chairman Copps was active in his opposition to the Commission’s very limited relaxation of the cross-ownership prohibitions.  See our summary of the FCC debate on that relaxation, here.  But would he take the same position today in light of the current economic climate for newspaper publishers?  As the Bloomberg article pointed out, House of Representatives Speaker Nancy Pelosi has suggested that the Justice Department might want to relax antitrust review of newspaper combinations given their economic plight.  Other legislative fixes have been suggested – including allowing papers to operate as non-profit, tax-exempt entities to which charitable contributions could be made.  With these kinds of legislative efforts underway, perhaps a change in direction at the FCC is indeed possible.  One more issue to watch in the coming months. 

The FCC today released a Public Notice announcing that, after many false starts, it is making effective the new schedule of higher application fees on April 28.  We wrote about the on-again, off-again effectiveness of these new fees which, this time, seem quite clearly to be about to become effective.  The schedule of new fees can be found appended to the FCC’s order adopting the fees, here.  Common application fees include a $940 fee for the submission of an application for a minor technical change to a broadcast station (FCC Form 301), or for a transfer of control (FCC Form 315) or assignment of license (FCC Form 314).  The fee to submit an ownership report (FCC Form 323) will be $60 per station, and a request for Special Temporary Authority will be $170.  To avoid having applications rejected for insufficient fees, be sure to be prepared for the new fees for any application submitted on or after April 28.

According to a recent article from the Des Moines Register, a station in Iowa recently fired two employees who, during what they thought was a break in programming, got into a heated, profanity-laden exchange which, luck would have it, ended up on the air as their mikes were live.  Fearing an FCC fine, the station owner fired the duo, hoping to mitigate any fine that the FCC might impose.  We will have to wait to see what impact the employers action will have on any action the FCC might take.  But the action demonstrates two things – first, mistakes happen and will happen whenever there is live programming.  Even clear station policies that absolutely ban such actions and make clear that they are a firing offense (as were apparently in place here) can’t stop human beings from messing up.  Second, the case reminds all on-air employees that they need to respect a microphone, and need to assume that a mike that can pick up sounds is in fact doing so.  Even Presidents seem to have had problems remembering that fact, but these live-mike slip ups can lead to FCC indecency fines.

The action also reminds us that, with the new administration now in place, we don’t know how the new FCC will enforce the indecency policy.  We are waiting for decisions on several court appeals of FCC indecency cases, and on the appointment of new FCC Commissioners.  Until we see the decisions in those cases, and find out who the new Commissioners are and how aggressively they want to enforce the rules, we will likely not know how cases like this one will be treated in the next few years. 

In the last 5 days, the US Court of Appeals in Washington, DC has held two oral arguments on appeals from decisions of the Copyright Royalty Board – one from the Board’s decision on Internet Radio Royalties and the other on the royalties applicable to satellite radio.  The decisions were different in that, in the Internet Radio decision, the appellants (including the group known as the "Small Commercial Webcasters" that I represented in the case) challenged the Board’s decision, arguing that the rates that were arrived at were too high.  In contrast, at the second argument, SoundExchange was the appellant, arguing that the Board’s decision set royalties for satellite radio  that were too low.  But, in both arguments, an overriding question was whether the Judges on the CRB were constitutionally appointed and thus whether any decisions of the Board had any validity.  While the question was expected and specifically raised in the webcasting proceeding (see our post here when that issue was first raised), the discussion at the satellite radio argument was somewhat of a surprise, as the issue had not been raised by either party, and the Appeals Court judges were not even the same judges who had heard the Internet radio argument.  Yet one of the Judges raised the issue, unprompted by any party, by asking if the Copyright Royalty Judges were properly appointed and indirectly asking if their decision would have any validity if the constitutional issue was found to exist.

Will the Court decide the constitutionality issue, and what would it mean?  No one knows for sure.  One of the issues raised by the Court in the Internet radio case was whether the issue had been raised in a timely fashion.  In both cases, the possibility of requiring additional briefing on the issue was also raised by the Court, though no such briefing has been ordered – yet.  Even if the Court was to find that the Board was not properly appointed, there are questions as to whether the existing decisions should nevertheless be allowed to stand, while blocking new decisions until a new appointment scheme is found.  Alternatively, Congress might have to intervene to resolve the whole issue and, if it was to do that, would Congress simply ratify the current decision, or would there be new considerations that would affect any Congressional resolution?  The issue raises many questions, and we’ll just have to wait to see what the resolution will be.

Continue Reading Two Court of Appeals Arguments on Sound Recording Music Royalty Rates – And the Real Question is Whether the Copyright Royalty Board is Constitutional

The FCC today released another Public Notice announcing the random audit of the EEO performance of a number of broadcast stations – listing both radio and television stations that have to respond, with stations spread throughout the country.  The FCC has promised to annually audit 5% of all broadcast licensees to assess their compliance with the FCC’s EEO rules.  These rules require the wide dissemination of information about job openings at their stations and "supplemental efforts" to educate their communities about employment opportunities at broadcast stations, even in the absence of employment openings.  The FCC’s audit letter requires the submission of two years worth of the Annual Public File reports that stations prepare each year on the anniversary date of the filing of their license renewal applications.  These reports are placed in the station’s public file and posted on their websites (if they have websites).  The FCC’s public notice about this audit emphasizes the requirement for posting the Annual Report on a station’s website, perhaps confirming rumors that we have heard about the FCC’s staffers browsing station websites to look for these reports.

Stations are given until May 4 to complete the audit responses and submit them to the Commission.  Note that information needs to be supplied not just for the station named on the list, but also for all other stations in the same "station employment unit," i.e. a group of stations under common control, that serve the same general geographic area, and which have at least one common employee.  As recent audits have led to significant FCC fines (see our story here about fines issues just before the holidays), broadcasters who are listed on this audit list should take care in preparing their responses.  The audit notice should also remind other licensees who are lucky enough to avoid having been selected for inclusion on this audit list to review their EEO programs for FCC compliance purposes, as they could very well find themselves not so fortunate when the next FCC audit is announced.

Continue Reading FCC Launches New Round of EEO Audits – Highlights the Requirment for Posting Annual Report on Station’s Website

On Friday, the FCC released its further Report and Order addressing the termination of analog service between now and June 12th, and revising the current DTV Consumer Education Requirements.  Despite the apparent success of the February 17th turn-off of approximately one-third of the analog television stations in the country, the FCC has now ratcheted up the DTV Consumer Education requirements at the eleventh hour.  The FCC has expanded and revised its rules significantly, so stations should review the Commission’s Order carefully and adjust their efforts and the content of their spots, crawls, etc., as necessary.  These new requirements will go into effect starting April 1st.  The full copy of the FCC’s Order is available here, and a summary of the new DTV education requirements is as follows:

First, in one of the few moves to reduce the burden on stations, the FCC has eliminated the requirement for most stations to continue broadcasting DTV transition educational information after they have terminated analog service and are operating in digital only.  Thus, stations that have completed construction of their full-authorized, post-transition digital facilities and are operating exclusively in DTV do not need to continue with the general DTV Consumer Education announcements.

Second, for those stations that have not yet terminated analog, the FCC has expanded the DTV Education requirements in order, in the FCC’s words: “to ensure that consumers will receive the information they need to make proper preparations for the digital transition of the stations on which they rely for television service.”  Specifically, beginning April 1, 2009, the stations must comply with the following rules:

1. Loss Area Notices– If the FCC’s Signal Loss Report — available here  — predicts that 2 percent or more of the population in a station’s Grade B analog service contour will not receive the station’s digital signal, then the station must air service loss notices to inform viewers of exactly where (i.e. which communities or what sections of the market) an analog signal is received today, but won’t receive a digital signal after the transition. These notices are in addition to the existing consumer education requirements. The FCC estimates that there are 213 stations still operating in analog that will lose more than 2 percent of the current population when they switch to digital-only. Thus, stations should review the FCC’s Signal Loss Reports and determine how best to convey information about "loss areas" (if any) to their viewers. For stations needing to air information about loss areas, the notices must be no shorter than 30 seconds and must be aired at least once per day between 8 AM and 11:35 PM. These spots are in addition to other on-air informational requirements.

2. Antenna Information– All stations must include information about the use of antennas as part of their consumer education campaign, including information concerning a station’s change from the VHF to UHF bands, and the need for additional or different equipment to avoid loss of service. Antenna info can be included in existing DTV consumer education efforts, such as in news programs and longer format pieces. Information must be provided at least once per day, in a message lasting at least 15 seconds, with at least three of those messages a week airing during prime time. 

Continue Reading FCC Adds More DTV Consumer Education Requirements