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Monday, January 31, 2011

How the Satellite Television Extension and Localism Act (STELA) Updates Copyright and Carriage Rules for the Retransmission of Broadcast Television Signals

Charles B. Goldfarb
Specialist in Telecommunications Policy

The Satellite Television Extension and Localism Act of 2010 (STELA), P.L. 111-175, modifies the copyright and carriage rules for satellite and cable retransmission of broadcast television signals. The legislation was needed to reauthorize (through December 31, 2014) certain expiring provisions in the Copyright Act and the Communications Act and to update the language in those acts to reflect the transition from analog to digital transmission of broadcast signals, as well as to address certain public policy issues. Had the expiring provisions not been reauthorized, satellite operators would have lost access to a statutory compulsory copyright license and to statutory relief from retransmission consent requirements. This would have made it difficult, if not impossible, for them to retransmit certain distant broadcast signals to their subscribers, including signals providing otherwise unavailable broadcast network programming.

The Copyright Act and Communications Act distinguish between the retransmission of local signals—the broadcast signals of stations located in the same local market as the subscriber—and distant signals. Statutory provisions block or restrict the retransmission of many distant broadcast signals in order to foster local programming. These provisions typically take the form of defining which households are “served” or “unserved” by local broadcasters, with unserved households eligible to receive distant signals. But there are many grandfather clauses and other exceptions built into the rules that allow households to receive otherwise proscribed distant signals. STELA generally retains, and in some cases expands upon, these grandfathered and exceptional cases.

STELA provides broadcasters two new incentives to use their digital technology to broadcast multiple video streams (to “multicast”). It clarifies that royalty fees are payable to copyright owners of the materials on non-primary digital voice streams as well as primary streams, thus encouraging broadcasters (who often hold some of those copyrights) to expand their multicasting. STELA specifically gives broadcasters the incentive to undertake such multicasting to offer otherwise unprovided network programming in so-called “short markets”—markets that do not have network affiliates for all four major networks. It does this by defining households that can receive the programming of a particular network from the non-primary multicast video stream of a local broadcaster as being served, rather than unserved, with respect to that network, thus prohibiting satellite operators from retransmitting to those households distant signals that carry that network’s programming. The local broadcaster can then seek retransmission consent payments from satellite operators. Several other provisions in STELA also are intended to reduce the number of short markets or increase the flow of distant network signals into short markets.

Today, satellite operators are allowed, but not required, to offer subscribers the signals of the broadcast stations in their local market. Until enactment of STELA, the satellite operators chose not to offer this “local-into-local” service in many small markets, preferring to use their satellite capacity to provide additional high definition and other programming to larger, more lucrative markets. The costs associated with providing local-into-local service in small markets may exceed the revenues. STELA provided DISH Network, which had been subject to a permanent court injunction that in effect prohibited it from retransmitting to its subscribers the signals of distant broadcast stations, the opportunity to have that injunction waived if it provided local-intolocal service in all 210 local markets in the United States, which it began doing on June 3, 2010.

STELA does not address the issue of “orphan counties”—counties located in one state that are assigned to a local market, as defined by the Nielsen Media Research designated market areas, for which the principal city and most or all of the local broadcast stations are in another state.

Date of Report: January 10, 2011
Number of Pages: 27
Order Number: R41274
Price: $29.95

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