Page:H.R. Rep. No. 94-1476 (1976) Page 176.djvu

 the average number of distant signal equivalents per subscriber) no increase in the royalty fee to offset this reduction is permitted. The limitation does not, however, preclude any change in the rates that may be required to maintain the real constant dollar level of royalty fees per subscriber because of national monetary inflation or deflation or changes in the average rates charged subscribers for the basic service of providing secondary transmissions.

The Commission may also consider, in its discretion, any other factor relating to the maintenance of the real constant dollar level of royalty fees per subscriber and need not increase the royalty rates to the full extent, provided it can be demonstrated that the cable industry has been restrained by subscriber rates regulating authorities from increasing the rates for the basic service of providing secondary transmissions.

Increase in the Number of Distant Signals

Under Section 801(b)(2)(B), the Commission may adjust the rates established in Section 111(d)(2)(B) if the rules and regulations of the FCC are amended at any time after April 15, 1976, to permit the carriage of additional distant signals. In this event the Commission may ensure that the rates for the additional distant signal equivalents resulting from such carriage are reasonable in light of the changes effected by the amendment to the FCC rules and regulations.

The purpose of this provision is to give the Commission broad discretion to reconsider the royalty rates applicable to (but only to) the carriage of any additional distant signals permitted under the rules and regulations of the FCC after April 15, 1976. The present FCC rules limiting the number of distant signals that may be carried by cable systems have the effect of protecting copyright owners by restricting the amount of television broadcast programming retransmitted into distant markets. If these in the future to allow additional cable carriage of television programs it is the Committee’s judgment that the royalty rates paid by cable systems should be adjusted to reflect such changes. At the same time, Section 801(b)(2)(B) makes clear that the royalty rates may not be adjusted with respect to (1) distant signals permitted under FCC rules and regulations in effect on April 15, 1976; (2) distant signals of the same type (i.e., independent, network or noncommercial educational) substituted for such permitted signals; or (3) distant television broadcast signals first carried after April 15, 1976, pursuant  an individual waiver of the FCC rules and regulations as such rules and regulations were in effect on April 15, 1976. Royalty adjustments with respect to any distant signal equivalent or any fraction thereof represented by the carriage of such distant signals may be made pursuant to Section 801(b)(2)(A).