Issues

Broadcasting & FCC Licensee Obligations

DBS Public Interest Obligations — Summary of FCC's Order Implementing the DBS Operator Public Interest Obligations, December 1998

On November 30, 1998, six years after Congress passed a law requiring DBS providers to meet certain public interest obligations, the FCC released its decision implementing it. Embodied in Section 25 of the 1992 Cable Act, the law has two parts. Section 25(a) directs the FCC to adopt public interest obligations for DBS providers, which, at a minimum must include "reasonable access" for federal candidates and "equal time" for all political candidates. Section 25(b) requires DBS providers to reserve channel capacity for noncommercial educational and informational programming.

Who is Subject to the Public Interest Rules

The FCC found that all major DBS providers, including DirecTV, USSB, Echostar, and Primestar, must comply with the new rules. DBS providers with fewer than 25 channels are exempt. The FCC will also apply the rules to foreign licensees that provide direct broadcast satellite service to the United States. The FCC emphasized that the individual or entity that holds the license is responsible for making sure that the law and the Commission's rules are followed, even if another company or a separate corporate arm of the licensee actually programs the channels. Therefore, programmers seeking to use the DBS noncommercial set-aside should notify the licensee if any significant problems arise in obtaining access to the set-aside.

Section 25(a) -- Political Broadcasting Rules or Other Obligations

In its decision, the Commission required DBS providers to:

offer reasonable access to all candidates for federal office;
offer equal opportunities for all candidates for a single office if they provide access to one candidate for that office; and
offer to political advertisers the "lowest unit charge" or, the lowest rate charged to other advertisers for comparable time.

The FCC determined that DBS providers would be allowed to make "reasonable good faith determinations" in complying with these rules, but declined either to permit or prohibit DBS providers from segregating political speech on a separate channel or channels, opting instead to make case-by-case determinations if a candidate files a complaint. The FCC also required DBS providers to maintain public files at their headquarters with information about their compliance with the political broadcasting rules. The noncommercial set-aside is not subject to the political broadcasting rules.

The FCC declined to adopt any additional public interest requirements. The FCC reasoned that placing additional obligations on the relatively young DBS industry would not help it compete with cable television.

Section 25(b) -- Set-Aside for Noncommercial Educational and Informational Programming

Section 25(b) directs the FCC to require DBS providers to set aside 4 to 7 percent of their channel capacity for noncommercial educational and informational programming. The Act requires DBS providers to make this capacity available to "national educational programming suppliers" at rates that do not exceed 50 percent of a DBS provider's total direct costs of providing the capacity.

Amount of capacity set aside. The FCC concluded that all DBS providers should reserve the minimum 4 percent of channel capacity for noncommercial programming. (For example, for every 25 channels offered, one set-aside channel must be provided.) If the four percent calculation creates any fraction of a channel, that number must be rounded upward. The FCC concluded that it would calculate the total amount of the set-aside based on "the total channel capacity that is being, or could be, used to provide video programming." DBS providers must make this information available in a public file at their headquarters.

Programmers eligible for access to the set-aside. Under the Act, only national educational programming suppliers are eligible to place programming on the set-aside. These entities include: noncommercial educational broadcast stations (public television stations), governmental and non-profit public telecommunications entities¹, and public and private educational institutions. In addition, the Commission concluded that any noncommercial entity with an educational mission meets the definition of a national educational programming supplier. This definition excludes for-profit entities. All non-profits under the U.S. tax code automatically meet the noncommercial requirement, but an entity that is not a non-profit may ask the FCC to determine, on a case-by-case basis, that it is nonetheless eligible. The FCC concluded that joint ventures must comply with the same rules.

Selection of Programmers and Programming. The Act prohibits DBS providers from exercising "any editorial control" over the set-aside. Thus, MAP had argued that a separate entity, such as a nonprofit consortium, should select programming for the set-aside. The FCC concluded, however, that if a DBS provider does not have enough available channels for all entities seeking space, it may select the programmers, but not the programming, that will appear on its set-aside. Under the FCC's rules, a DBS provider may consider factors relating to programming, such as the programmers' experience, reliability, and reputation for quality programming, but DBS providers may not influence the actual selection of programs. Moreover, DBS providers are not allowed to pre-screen the programming before it appears on the air. The FCC further prohibited a DBS provider from refusing to air specific programming for any reason (including a belief that a program is indecent), unless it holds good-faith belief that the programming does not qualify for carriage because it is not noncommercial educational or informational programming. The DBS provider may apply the same technical quality standards to programming on the set-aside that it applies to other programming appearing on its system.

One channel per programmer limit. To offset its decision permitting DBS providers to choose programmers on the set-aside, the FCC decided that a DBS provider may not choose a single programmer to program more than one channel until all qualified entities seeking access have been offered a channel. To enforce this rule, the FCC determined that each programmer assigned a channel must not be directly or indirectly under common control or ownership of another programmer, as defined under the Commission's ownership rules.

Public Information. DBS providers must maintain public inspection files concerning the noncommercial set-aside. The file must identify entities that request access, entities to whom noncommercial capacity is being provided, the amount of capacity being provided to each entity, the conditions under which it is being provided, the rates, if any, being paid by the entity, and, if access is denied, a brief description of the reason or reasons.

Cost of access to the set-aside. The Act requires the Commission to limit the costs charged to noncommercial programmers to 50 percent of the direct costs of making the set-aside channel available. Consistent with the Act's legislative history, the FCC adopted a narrow definition of direct costs that includes only those costs that "are directly related to making the capacity available to noncommercial programmers." These costs include: incremental labor required for traffic management at the uplink facility and for authorizing viewers to receive particular programming, incremental compression equipment, any backhaul costs actually incurred by the DBS provider, and the costs of an authorization center or procedure used solely for noncommercial channels. The FCC concluded that it would not directly set the rates described above. Instead, the FCC will rely on programmers and DBS providers to negotiate rates, subject to FCC review in the event of a dispute.

What programmers should do to obtain access to the set-aside. Programmers should contact DBS providers directly to determine how to obtain access. For links to two major DBS providers, link back to the page with the links to the DBS providers.

¹ A "public telecommunications entity" generally includes public broadcast stations or entities that disseminate public telecommunications services by means other than primary broadcast stations, such as cable television.(back)

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