June 21, 2021 The Honorable Patrick Leahy Chairman Senate

June 21, 2021

The Honorable Patrick Leahy

Chairman

Senate Committee on Appropriations

United States Senate

437 Russell Building

Washington, DC 20510

The Honorable Richard Shelby

Vice-Chairman

Senate Committee on Appropriations

United States Senate

304 Russell Building,

Washington, DC 20510

The Honorable Rosa DeLauro

Chair

House Committee on Appropriations

United States House of Representatives

2413 Rayburn Building

Washington, DC 20515

The Honorable Kay Granger

Ranking Member

House Committee on Appropriations

United States House of Representatives

1026 Longworth Building

Washington, DC 20515

Dear Chairman Leahy, Chair DeLauro, Vice-Chairman Shelby, and Ranking Member Granger:

I am pleased to deliver a letter describing the results of the Copyright Office’s study on

the market effects of the Satellite Television Community Protection and Promotion Act of 2019

(“STCPPA”).

In December of 2019, the House and Senate Appropriations Committees asked the

anticipated expiration of the distant signal compulsory license contained in section 119 of the

carriage of distant broadcast network signals was undercutting the incentive for satellite

companies to provide local broadcast network signals. In the end, the section 119 license did

not expire entirely, as scheduled. Instead, Congress enacted the STCPPA, which, allowed

certain uses of the section 119 license to sunset, but made others permanent.

Hence, in the present study, the Office sought information on the effects of the STCPPA,

which went into full effect on June 1, 2020, as experienced by satellite companies, satellite

subscribers, and network broadcasters. As described in more detail in the attached letter, we

found that use of the section 119 license has sharply declined, accelerating an existing decrease

in use over time. We are not able, however, to disaggregate the impact of STCPPA from other,

non-copyright factors shaping the current satellite television landscape. The decline in the use

of the section 119 license reflects, albeit in much greater numbers, the overall decline in the

number of satellite subscribers nationwide. This broader decline can be tied to several factors

exogenous to section 119, which, combined with STCPPA, may play a role in determining

whether satellite subscribers have access to distant or local broadcast signals. The primary

exogenous factor appears to be the changing nature of the video service industry through “cord

cutting” and the existence of various internet television options. Other factors include

broadcast channel ownership concentration and changing corporate priorities of the satellite

providers in reaction to broader market realities. Finally, there is only limited data available

about post-STCPPA changes to the marketplace—we received relatively few public comments,

and statistical data is only available for approximately six months post-STCPPA (the second

half of 2020), which coincided with a pandemic. Thus, at present, it is too early to tell how the

changes made to the section 119 license by the STCPPA will ultimately play out in the

marketplace.

Please do not hesitate to contact me if you have any questions about this study.

Respectfully,

Shira Perlmutter

United States Copyright Office

Enclosure

U.S. COPYRIGHT OFFICE STUDY OF THE MARKET EFFECT OF THE SATELLITE

TELEVISION COMMUNITY PROTECTION AND PROMOTION ACT OF 2019 (“STCPPA”)

June 21, 2021

I. Background

A. The Section 119 Statutory License Before the Satellite Television Community

Protection and Promotion Act of 2019

In 1988, Congress enacted the Satellite Home Viewer Act (“SHVA”),

which created a

temporary statutory license (codified in section 119 of the Copyright Act) allowing satellite

carriers to retransmit distant network and certain non-network broadcasts to subscribers with

satellite dishes. Distant network retransmissions were available only to those subscribers living

in “unserved households.”

This statutory license (also known as a compulsory license)

allowed satellite carriers to retransmit broadcast signals without the network’s permission, as

long as they paid a government-determined royalty rate.

It was intended to encourage satellite

carriers to develop and flourish in the absence of a mature marketplace

and was scheduled to

expire at the end of 1994.

Satellite Home Viewer Act of 1988, Pub. L. No. 100–667, 102 Stat. 3949 (1988).

The SHVA defined “unserved households” as households of individuals who live in an area where they cannot

receive a “grade B” television signal via a rooftop antenna, and have not, at the time they become subscribers to a

satellite service that carries a network signal, subscribed within 90 days to a cable system that provides the signal of a

station affiliated with that network. See U.S. COPYRIGHT OFFICE, THE CABLE AND SATELLITE CARRIER COMPULSORY

LICENSES: AN OVERVIEW AND ANALYSIS 104–05 (1992), https://www.copyright.gov/reports/cable-sat-licenses1992.pdf.

The section 119 definition of “unserved households” has evolved as the license was extended over the subsequent

26 years.

Since 1989, the Copyright Office has administered the section 119 license, which includes collecting statements of

account and royalties from satellite carriers and distributing the royalties to the appropriate rightholders, based on

allocations determined by the Copyright Royalty Board. See Statutory License for Secondary Transmissions for Satellite

Carriers—Section 119, U.S. Copyright Office, https://www.copyright.gov/licensing/sec_119.html.

H.R. Rep. No. 887, 100th Cong., 2d Sess., pt. 1, at 15 (1988). See also H.R. Rep. No. 116–354, at 5 (2019) (“Congress

created the section 119 license during the satellite industry’s nascency to allow satellite television to better compete

with cable.”).

Satellite Home Viewer Act of 1988, Pub. L. No. 100–667 § 207, 102 Stat. 3949, 3960 (1988).

Instead of expiring as scheduled, the section 119 license created by SHVA was extended

for successive five year periods in 1994,

1999,

2004,

2010,

and 2014.

With each extension,

Congress also modified the statutory terms of the license. For example, by the time of the 2014

enactment of the STELA Reauthorization Act, the statute defined multiple types of unserved

households—in addition to those originally covered—that were eligible to receive distant

broadcast signals, including owners of recreational vehicles, commercial trucks, and households

in so-called “short markets” (markets where one of the four most-viewed networks is not

available from a local carrier).

In the five years following STELAR’s reauthorization of the section 119 license, use of

the license sharply decreased. Royalties paid by one of the two satellite carriers in this market,

AT&T’s DIRECTV, decreased by 86.75% between 2014 and 2018.

Royalties paid by the other

satellite carrier, DISH Network, decreased by 85% during the same reporting period.

In terms

of gross numbers, as of 2019, between 500,000 and 870,000 households received at least one

Satellite Home Viewer Act of 1994, Pub. L. No. 103–369, 108 Stat. 3477 (1994).

Satellite Home Viewer Improvement Act of 1999 (“SHVIA”), Pub. L. No. 106–113, § 1002, 113 Stat. 1501A–523, 527

(1999).

Satellite Home Viewer Extension and Reauthorization Act of 2004 (“SHVERA”), Pub. L. No. 108–447, § 101, 118 Stat.

3394 (2004).

Satellite Television Extension and Localism Act of 2010 (“STELA”), Pub. L. No. 111–175, § 102, 124 Stat. 1218, 1221

(2010).

STELA Reauthorization Act of 2014 (“STELAR”), Pub. L. No. 113–200, § 101, 128 Stat. 2059, 2060 (2014).

See U.S. COPYRIGHT OFFICE, ANALYSIS AND RECOMMENDATIONS REGARDING THE SECTION 119 COMPULSORY LICENSE 2

(June 3, 2019), https://www.copyright.gov/laws/hearings/views-concerning-section-119-compulsory-license.pdf.

See id. Since the 2018 reporting periods, satellite receipts have further declined. According to information from the

U.S. Copyright Office’s Licensing Division, total satellite receipts in 2019 were down 20.8% from 2018, and total

satellite receipts for the first half of 2020 were down 20% from the first half of 2019. For the second half of 2020,

receipts were down 83.6% from the second half of 2019 to under $700,000. As discussed below, this latter decline is

due, at least in part, to AT&T’s decision not to use the statutory license after the transition period expired at the end

of May 2021. In total, satellite royalty receipts were down more than 50% in 2020 compared to 2019. See LICENSING

DIVISION, U.S. COPYRIGHT OFFICE, REPORT OF RECEIPTS 5/31/2021 2, https://www.copyright.gov/licensing/receipts.pdf.

distant signal under the section 119 license.

It is believed that most of these subscribers live in

rural areas of the United States.

This decline in use of the section 119 license has been attributed primarily to the

transformation of the television marketplace since 2014, as exemplified by increased consumer

uptake of ‘‘over-the-top’’ (‘‘OTT’’) television services that offer broadcast network

programming over the internet. These include Hulu + Live TV, YouTube TV, and Sling TV,

none of which rely upon a statutory license to operate but instead negotiate licenses with

broadcast networks in the marketplace.

B. The Satellite Television Community Protection and Promotion Act of 2019

With STELAR about to expire at the end of 2019, Congress debated whether to

reauthorize the statutory license. The broadcaster community argued that the license was no

longer necessary to facilitate satellite coverage and should be allowed to expire.

The

The satellite industry, supported by public interest groups such as Public Knowledge, argued in

favor of reauthorizing the license. In part, they asserted that the statutory license allowed

carriers to provide service at a lower cost to subscribers.

Several different bills were

The 500,000 subscribers estimate is from the National Association of Broadcasters. See Narrow Satellite Legislation

Should Expire as Congress Intended, NAT’L ASS’N OF BROADCASTERS 2 (Sept. 2018),

http://www.nab.org/documents/newsRoom/pdfs/NAB_STELAR_expiration.pdf. The 870,000 subscribers estimate is

from the Satellite Broadcasting and Communications Association. See Reauthorize and Revitalize the Satellite Home

Viewer Act, SATELLITE BROAD. & COMMC’NS ASS’N 1, http://www.sbca.org/documents/Rural_Sat_Act.pdf (last visited

May 18, 2021). The actual number of subscribers who receive distant signals under the current license is not publicly

available.

See H.R. Rep. No. 116–354, at 4 (2019); Letter from Timothy P. McKone, Executive Vice President, Federal Relations,

AT&T, to Jerrold Nadler, Chairman, and Doug Collins, Ranking Member, H. Comm. on the Judiciary at 1

(Apr. 19, 2019), https://www.copyright.gov/laws/hearings/views-concerning-section-119-compulsory-license.pdf.

See H.R. Rep. No. 116–354, at 6 (2019); U.S. COPYRIGHT OFFICE, ANALYSIS AND RECOMMENDATIONS REGARDING THE

SECTION 119 COMPULSORY LICENSE 2 (June 3, 2019), https://www.copyright.gov/laws/hearings/views-concerning-

section-119-compulsory-license.pdf. Sling TV is operated by DISH Network.

See John Eggerton, Nets Agree to Graham’s STELAR Expiration Plan, NEXTTV (Nov. 8, 2019),

https://www.nexttv.com/news/nets-agree-to-grahams-stelar-expiration-plan.

See U.S. COPYRIGHT OFFICE, ANALYSIS AND RECOMMENDATIONS REGARDING THE SECTION 119 COMPULSORY LICENSE 5

(June 3, 2019), https://www.copyright.gov/laws/hearings/views-concerning-section-119-compulsory-license.pdf.

See, e.g., Jenna Leventoff, Everything You Need to Know About STELAR (Dec. 9, 2019),

https://www.publicknowledge.org/blog/everything-you-need-to-know-about-stelar/?; Testimony of Rob Thun, AT&T

Senior Vice President for Content and Programming, before the H. Comm. on Energy and Commerce, Subcomm. on

Communications and Technology at 2 (June 4, 2019), https://energycommerce.house.gov/sites/democrats

.energycommerce.house.gov/files/documents/Testimony_Thun.pdf; https://fmcadventure.com/wp-content

/uploads/2019/07/RV-Coalition-letter-STELAR-final-10-22-19.pdf (letter from RV coalition supporting renewal of the

section 119 license).

introduced in Congress relating to the expiring section 119 license.

Ultimately, Congress

enacted an amended a version of the license in the Satellite Television Community Protection

and Promotion Act of 2019 (“STCPPA”).

STCPPA altered the existing license in several ways.

First, it eliminated several categories of “unserved households” from the statutory definition:

 households that cannot receive a local over-the-air signal via an antenna;

 households that receive a waiver from a local network affiliate to receive a distant

signal;

 “grandfathered” households that received distant signals via a section 119 license on or

before October 31, 1999;

and

 households eligible for the statutory exemption related to receiving ‘‘C-Band’’ satellite

signals.

Second, it reauthorized, and made permanent, the statutory license for a limited group

of “unserved households”:

 households in “short markets”

and

 recreational vehicles and commercial trucks.

Use of the new license was made contingent on the carrier providing “local into local”

network signals for all 210 designated market areas (“DMAs”),

although the statute allowed

See Jenna Leventoff, Everything You Need to Know About STELAR (Dec. 9, 2019),

https://www.publicknowledge.org/blog/everything-you-need-to-know-about-stelar (citing the Satellite Television

Access Reauthorization Act of 2019, S. 2789, introduced by Sen. Ralph Wicker, the Television Viewer Protection Act

of 2019, H.R. 5035, introduced by Rep. Michael F. Doyle, and the Satellite Television Community Protection and

Promotion Act of 2019, H.R. 5140, introduced by Rep. Jerry Nadler).

Pub. L. No. 16–94, 133 Stat. 2534, 3201 (2019).

17 U.S.C. § 119(d)(10)(A) (text repealed and replaced by Public Law 116–94, 133 Stat. 2534, 3202 (2019)).

17 U.S.C. § 119(d)(10)(B) (text repealed and replaced by Public Law 116–94, 133 Stat. 2534, 3202 (2019)).

17 U.S.C. § 119(d)(10)(C) (repealed 2019).

17 U.S.C. § 119(d)(10)(E) (repealed 2019).

17 U.S.C. § 119(d)(10)(B). According to information supplied to the Copyright Office by the National Association

of Broadcasters (“NAB”), there are eight short markets in the United States. Those markets are Alpena, Michigan;

Glendive, Montana; Harrisonburg, Virginia; Mankato, Minnesota; Ottumwa, Iowa; Kirksville, Missouri; Parkersburg,

West Virginia; Presque Isle, Maine; and Zanesville, Ohio. E-mail from Garrett Levin, Deputy Gen. Counsel for

Intellectual Property Law and Policy, NAB, to Regan Smith, General Counsel, U.S. Copyright Office (Feb. 11, 2019,

10:20:01 am). The House Committee Report on STCCPA lists seven short markets. H.R. Rep. No. 116‑354 at 5 n.8

(Dec. 17, 2019). The discrepancy appears to be the omission of Ottumwa, Iowa, from the House Report.

See 17 U.S.C. § 119(d)(10)(A).

See https://www.fcc.gov/consumers/guides/receiving-television-broadcast-stations-satellite-tv-companies

(describing “local into local” service). DMAs are geographic areas of the United States that represent different media

markets. Their size and population determine advertising rates for television stations in a particular DMA.

carriers to provide service to subscribers who were made ineligible for the license by the

STCPPA until the earlier of May 31, 2020, or the date on which the carrier provided local-into

local service to all DMAs.

By tying the section 119 license to the provision of local-into-local

service, Congress believed that it was “account[ing] for the need to prioritize access to local

programming and acknowledg[ing] the vulnerabilities that some households might face in a

purely market-based system.”

In amending section 119, Congress was particularly concerned with satellite subscribers’

ability to access local network stations. Congress believed that the section 119 license, operating

under government-set royalty rates, risked undermining rural communities’ access to local

broadcast stations because it encouraged satellite carriers to carry distant-into-local instead of

local-into-local broadcast signals.

Congress was concerned that subscribers in some

communities were being deprived of important information from local broadcasts, particularly

local news, weather, and emergency reports.

In its Committee Print accompanying the Further Consolidated Appropriations Act,

2020, the Committee on Appropriations of the U.S. House of Representatives, in agreement with

the U.S. Senate, expressed a “concern that the distant signal provision contained in the STELA

Reauthorization Act of 2014 [“STELAR”] . . . may provide a below market incentive for a

mature satellite industry to restrict local news transmission.”

The statement went on to

recognize that STELAR was due to expire at the end of 2019, and directed the Register of

Copyrights to “conduct a study on the impact on the market post expiration,” and deliver the

results to the House and Senate Committees on Appropriations by June 20, 2021.

AT&T/DIRECTV has negotiated license agreements to provide local-into-local network

service in all but 12 of the 210 DMAs.

Thus, after May 31, 2020, it was not entitled to use the

Pub. L. No. 116–94, Title XI, § 1102(b), 133 Stat. 3203 (2019).

H.R. Rep. No. 116–354 at 6 (Dec. 17, 2019).

See id. at 4, 7.

See id. at 4.

Staff of H.R. Comm. on Appropriations, 116th Cong., Further Consolidated Appropriations Act, 2020, Legislative

Text and Explanatory Statement (Comm. Print 2020).

Id.

AT&T/DIRECTV, Comments Submitted in Response to U.S. Copyright Office’s Jan. 6, 2021, Notice of Inquiry at 2

(Mar. 8, 2021) (“DIRECTV Comments”).

section 119 license at all.

Our understanding is that DISH Network provides local-into-local

service in all DMAs and is eligible for the statutory license.

II. Notice of Inquiry

The Copyright Office launched its inquiry into the market effects of the STCPPA on

January 6, 2021, with a notice of inquiry (“NOI”) published in the Federal Register

and made

available on the Office’s STCPPA policy study page.

The Office additionally prepared a

questionnaire to be distributed to unserved households, which was also made available on the

policy study page.

In the NOI the Office presented four groups of questions. Generally, all of the questions

taken together were intended to determine “(a) whether the STCPPA appropriately incentivizes

satellite carriers to provide local network signals to their residential subscribers, and (b) the

impact of the changes to the section 119 license on RVers and commercial truckers.”

The first

group of questions was directed to all respondents, with each of the other three groups directed

to specific segments of the satellite television ecosystem: satellite television subscribers, satellite

television providers, and broadcasters.

The first group consisted of five questions regarding the overall effect of the STCPPA on

the satellite television market. The questions asked about the effect of the STCPPA on the

receipt of local network broadcast stations via satellite for unserved households that were

covered under section 119 both pre- and post-STCPPA. They also asked whether the STCPPA’s

policy goal of improving satellite subscribers’ access to local broadcast stations had been

achieved.

The second group of questions was directed to satellite television subscribers. The NOI

sought to determine what changes each group of unserved households—again, using the

definitions of that term from section 119 both before and after the STCPPA amendments—had

experienced with regard to satellite transmission of local broadcast stations. Specifically, the

Office asked whether subscribers had previously received either local or distant broadcast

stations via DISH Network or AT&T/DIRECTV, and if this situation had changed after the

Between January 1, 2020, and May 31, 2020, AT&T/DIRECTV was only able to provide service under the section 119

license to subscribers who were made ineligible for the license by STCPPA.

See Dish to Offer Locals in all 210 DMAs, SATELLITEGUYS: FORUMS, https://www.satelliteguys.us/xen/threads/dish-to-

offer-locals-in-all-210-dmas.214783/ (May 27, 2010) (last visited May 28, 2021). According to the records of the

Licensing Division, DISH Network filed a section 119 Statement of Account for the last half of 2020.

Notice of Inquiry, 86 Fed. Reg. 578 (Jan. 6, 2021).

Study on the Impact of the Satellite Television Community Protection and Promotion Act of 2019, U.S. COPYRIGHT OFFICE,

https://copyright.gov/policy/119/.

Notice of Inquiry, 86 Fed. Reg. 578, 580 (Jan. 6, 2021).

STCPPA took full effect on June 1, 2020. We also asked if the price of their satellite subscription

had changed, if they had switched satellite providers, and if they had switched from satellite to

another method of television delivery.

Because a notice of inquiry published in the Federal Register and made available on the

Office’s website has limited reach, the Office also prepared a questionnaire directed to satellite

television subscribers, which asked substantively the same questions as those in the second

group of questions in the NOI. Our intention was to have associations that had previously

demonstrated an interest in the section 119 revision issue—such as those representing rural and

farming community interests and those representing RVers and commercial truckers—

distribute this questionnaire to their members.

Unfortunately, none of the associations that the

Office approached expressed an interest in distributing the questionnaire to their members.

Hence, this study does not benefit from a survey of the experiences of satellite television

subscribers.

The third group of questions in the NOI were directed to satellite carriers—specifically

DISH Network and AT&T’s DIRECTV, the only two entities who made use of the section 119

license. We asked if the carriers were continuing to rely upon the section 119 license after the

STCPPA went into effect, if they were abiding by the STCPPA requirement of providing local

broadcast service to all 210 DMAs in order to use the license, and if they took advantage of the

STCPPA transition license between January 1 and May 31, 2020.

Finally, the fourth group of questions was directed to broadcasters. We asked whether

the STCPPA amendments had affected their ability to provide service to unserved households

that were now excluded from section 119.

III. Responses to the Notice of Inquiry

The Office received five responses to the NOI: one from AT&T/DIRECTV, one from the

National Association of Broadcasters (“NAB”), and three from interested individuals, one of

whom identified herself as a satellite television subscriber.

The House Judiciary Committee and AT&T both expressed their belief that satellite subscribers covered by the

section 119 license tended to reside in rural communities. See H.R. Rep. No. 116–354, at 4 (2019); Letter from Timothy

P. McKone, Executive Vice President, Federal Relations, AT&T, to Jerrold Nadler, Chairman, and Doug Collins,

Ranking Member, H. Comm. on the Judiciary 1 (Apr. 19, 2019), https://www.copyright.gov/laws/hearings/views-

concerning-section-119-compulsorylicense.pdf. Both RVers and commercial truckers are explicitly listed in

section 119’s definition of unserved households. See 17 U.S.C. § 119(a)(8)(A)(i).

The Office did receive two responses from a self-described satellite subscriber, described below, but it appears that

this subscriber was responding to the NOI, not the questionnaire.

All comments to this study are available at https://www.regulations.gov/document/COLC_FRDOC_0001-

0152/comment.

The NAB’s response emphasized its view that the STCPPA’s amendments to section 119

were both necessary and successful. Consistent with its assertions made while the STCPPA was

being considered in Congress, the NAB reiterated the belief that the section 119 compulsory

license as it stood prior to the STCPPA constituted a below-market subsidy for satellite

companies that provided an incentive for them to retransmit distant broadcast licenses instead

of local ones.

While it stopped short of declaring that the STCPPA has solved this problem,

the NAB averred that the revisions to section 119 have “already encouraged a more active

market for collaboration with section 119 licensees.”

The NAB went on to say that if unserved

households are still not receiving local broadcast stations through their satellite subscription, “it

is not because of technological infeasibility on the part of section 119 licensees or a lack of will

on the part of broadcasters.”

In contrast to the NAB’s view of the post-STCPPA market, AT&T/DIRECTV’s response

to the NOI was distinctly less optimistic. AT&T/DIRECTV first pointed out that, due to the fact

that they do not provide local broadcast channels to each of the 210 DMAs in the U.S., they are

no longer allowed to use the section 119 license to provide distant broadcast channels to the

remaining categories of unserved households.

AT&T/DIRECTV chalked up this fact to the

expense—which they estimate is in the billions of dollars—of paying to directly license local

broadcast channels in the remaining 12 DMAs, an expense that they asserted is “exacerbated by

the broken retransmission consent regime and the loopholes in regulations that have allowed

broadcasters to own two or three network affiliates in a market.”

Despite the lack of access to

the section 119 license, AT&T/DIRECTV reported that it was successful in negotiating private

National Association of Broadcasters (“NAB”), Comments Submitted in Response to U.S. Copyright Office’s

Jan. 6, 2021, Notice of Inquiry at 2 (Mar. 8, 2021) (“NAB Comments”).

Id. at 4.

Id.

DIRECTV Comments at 2. Based on the Copyright Office’s review of information made available to potential

subscribers, as of June 2021, the DMAs that do not receive local broadcasts from DIRECTV include Cheyenne-

Scottsbluff, Wyoming; Grand Junction-Montrose, Colorado; Bowling Green, Kentucky; Presque Isle, Maine; Alpena,

Michigan; Glendive, Montana; North Platte, Nebraska; San Angelo, Texas; Victoria, Texas; and Casper-Riverton,

Wyoming. See Local Channels Lookup, DIRECTV,

https://www.directv.com/DTVAPP/packProg/localChannels.jsp?assetId=cms_local

_channels&_ga=2.19585208.1617137532.1591539052-1057042063.1591278848. Three of these—Presque Isle, Maine;

Alpena, Michigan; and Glendive, Montana—are also short markets. See supra note 25.

Specifically, AT&T/DIRECTV states that “[a]lmost all of the mostly rural and sparsely populated DMAs where

DIRECTV has found it uneconomic to launch local stations have station groups that own two or more of the top four

stations. Specifically, a single broadcaster owns three top-rated network affiliates in five of these markets and owns

two top-rated network affiliates in six of these markets.” DIRECTV Comments at 3. Of the markets for which

AT&T/DIRECTV does not offer local broadcast networks identified by the Copyright Office, Gray Television owns or

operates one or more stations in Cheyenne-Scottsbluff (CBS); Grand Junction-Montrose, Colorado (ABC/NBC);

Bowling Green, Kentucky (ABC/Fox); Presque Isle, Maine (CBS/Fox); North Platte, Nebraska (CBS/Fox/NBC); and

Casper-Riverton, Wyoming (NBC). See https://en.wikipedia.org/wiki/Gray_Television.

licenses with the four major networks to continue providing distant broadcast channels to

RVers and commercial trucks.

Ultimately, however, AT&T/DIRECTV stated:

[A]s of June 1, 2020, DIRECTV had to remove distant network signals from tens of

thousands of customers ranging from certain grandfathered customers, unserved

households in the twelve markets, discussed above, and unserved households in five

short markets.

On the policy side, AT&T/DIRECTV disagreed with Congress’s premise in

commissioning this study that section 119 pre-STCPPA may have provided “a below-market

incentive for a mature satellite industry to restrict local news transmission.”

The revisions to

section 119 “harmed DIRECTV’s customers,” it stated.

Not only, in AT&T/DIRECTV’s

opinion, do certain unserved households miss out on local broadcast service via satellite due to

the failure of local broadcasters, but the new section 119 rules mean that these customers lose

the AT&T/DIRECTV option for distant network signals as well.

AT&T/DIRECTV’s viewpoint was echoed by the responses of Roberta Vandehey, a

DIRECTV subscriber, who submitted two comments. Vandehey stated that in her location

(Wheeler County in central Oregon), satellite television is the only reliable mode of receiving

information.

She also identified herself as among the “grandfathered-in” category of unserved

households that the STCPPA removed from section 119, and as such, she has been left without

access to distant or local broadcast channels—with one temporary exception—since the

STCPPA went into full effect on June 1, 2020.

Vandehey urged Congress and the President to

reinstate the pre-STCPPA distant broadcast signal license, arguing that “a lapse in the distant

DIRECTV Comments at 4.

Id. at 6–7. With the exception of the five short markets, under the STCPPA the section 119 license would not be

available for most of these customers even if DIRECTV complied with the requirements of the license.

Id. at 5, quoting Staff of H.R. Comm. on Appropriations, 116th Cong., Further Consolidated Appropriations Act,

2020, Legislative Text and Explanatory Statement (Comm. Print 2020).

DIRECTV Comments at 6.

Id. at 5.

See Roberta Vandehey, Second Comments Submitted in Response to U.S. Copyright Office’s Jan. 6, 2021, Notice of

Inquiry (Mar. 8, 2021) (“Vandehey Second Comments”).

See Vandehey Second Comments. Specifically, Vandehey indicates that immediately after June 1, 2020, DIRECTV

continued to provide her with the FOX network feed from Portland, Oregon, but that in January, 2021, that channel

was removed. See id. AT&T/DIRECTV, however, advertises that local channels from Portland, Oregon, are available

in all three zip codes covering Wheeler County—97750, 97830, and 97874. See Local Channels Lookup, DIRECTV,

https://www.directv.com/DTVAPP/packProg/localChannels.jsp?assetId=cms_local_channels&_ga=2.19585208.161713

7532.1591539052-1057042063.1591278848.

signal license would turn a significant American population into have-nots for vital television

programming.”

Finally, a similar consumer-focused comment was received from Bruce Grimm, an

individual who did not identify whether he is a satellite television subscriber. Mr. Grimm

asked that, as technological options for receiving broadcast channels evolve, Congress and the

otherwise unserved or underserved subscribers and viewers that cannot obtain distant

signals.”

The Copyright Office recognizes that the paucity of comments in response to its NOI,

and the inability to distribute the related questionnaire to subscribers, creates a lacuna in the

record that is difficult to overcome. Ultimately, we do not believe that enough information is

available to draw more than limited conclusions as to the impact of the STCPPA on the satellite

television market.

IV. Analysis of the Impact of the STCPPA

A. Direct Effects of the Changes Made by the STCPPA

It has been just eighteen months since the passage of the STCPPA, and just slightly over

a year since its provisions became fully effective. Thus, any conclusions about the effect of the

legislation are necessarily limited in scope.

According to AT&T/DIRECTV, it is still providing service to RVs and commercial

truckers (by licensing directly from the networks).

However, there is some anecdotal evidence

to the contrary.

In any case, it does appear that AT&T/DIRECTV has decided to forego the

section 119 license in favor of entering into licensing contracts directly with the networks for

RVs and commercial truckers,

while forgoing any network transmissions for five short

Roberta Vandehey, First Comments Submitted in Response to U.S. Copyright Office’s Jan. 6, 2021, Notice of Inquiry

(Mar. 8, 2021) (“Vandehey First Comments”).

Bruce Grimm, Comments Submitted in Response to U.S. Copyright Office’s Jan. 6, 2021, Notice of Inquiry

(Mar. 8, 2021) (“Grimm Comments”).

See DIRECTV Comments at 4; John Eggerton, AT&T Strikes Distant-Signal Deals, NEXTTV (June 3, 2020),

https://www.nexttv.com/news/atandt-strikes-distant-signal-deals.

See Long Distance Networks Going Away, SATELLITEGUYS: FORUMS, https://www.satelliteguys.us/xen/threads/long-

distance-networks-going-away.388543/ (Apr. 28, 2020) (indicating that AT&T had terminated service to a person with

an RV). See also Long Distance Networks Going Away, SATELLITEGUYS: FORUMS,

https://www.satelliteguys.us/xen/threads/long-distance-networks-going-away.388543/page-5 (beginning Jun. 5, 2020)

(discussion among former AT&T subscribers).

It appears that AT&T/DIRECTV only uses distant signals from New York and Los Angeles, and that subscribers

will receive one or the other, depending on where they are located. See Chioma Azeh, The 2021 Guide to Watching

DIRECTV in Your RV (Sept. 10, 2020), https://cordcutting.com/services/directv/rv/.

markets. AT&T/DIRECTV is not providing local-into-local service in all DMAs.

DISH

Network is still able to use the section 119 license because it provides local-into-local service in

all DMAs.

Given reports of DISH Network’s dwindling satellite subscriber base,

it is likely that

local network service for satellite customers in areas formerly serviced by AT&T/DIRECTV has

decreased, but the extent to which such service has been successfully replaced by DISH

Network’s SlingTV or other OTT services is unknown.

(Data about subscribers switching

from AT&T/DIRECTV to DISH Network is not publicly available.) According to

AT&T/DIRECTV, they were not able to negotiate contracts to provide distant signal network

service into the 12 DMAs in which they did not provide local service prior to the STCPPA.

a consequence, AT&T/DIRECTV ended service to those subscribers as of June 1, 2020.

Assuming that AT&T/DIRECTV’s contracts with the networks are used only to service

RVs and commercial truckers, that may mean that satellite subscribers in those 12 DMAs, as

well as some households previously designated as unserved that were removed from the

section 119 license, have less access to network programming than before—and likely no greater

service than before the STCPPA. For these households, the only choice for network service via

satellite would be DISH Network. On the other hand, AT&T/DIRECTV’s ability to negotiate

licenses to continue servicing RVers and commercial truckers after the expiration of the

transition period indicate that it may be feasible for satellite carriers to provide distant network

service to unserved households even in the absence of the section 119 license. However, this is

something about which different segments of the industry disagree.

DIRECTV’s Comments indicate that it has not been able to enter into agreements allowing it to provide distant

network service in the twelve DMAs where it did not provide local-into-local service. DIRECTV Comments at 4.

See Mike Farrell, Dish Gets Back to its Rural Roots (Nov. 9, 2020), https://www.nexttv.com/blogs/dish-gets-back-to-its-

rural-roots.

Rural markets have been one of the few markets to retain significant numbers of satellite TV subscribers, as cable

service and the broadband internet service required to support OTT services have historically been unavailable to

these communities. Broadband penetration to those communities has been on a steady increase in recent years,

however, with 72% of rural U.S. adults saying that they have a broadband connection at home in February 2021,

compared to only 50% in July 2015. See Internet/Broadband Fact Sheet, PEW RESEARCH CENTER,

https://www.pewresearch.org/internet/fact-sheet/internet-broadband/?menuItem=89fe9877-d6d0-42c5-bca0-

8e6034e300aa.

DIRECTV Comments at 4.

Id.

Compare NAB Comments at 4 (“NAB believes that the distant signal license, as narrowed by STCPPA, has already

encouraged a more active market for collaboration with section 119 licensees”), with DIRECTV Comments at 3 (“If a

broadcaster owns two, three or even all four of the top four stations, it has the ability to demand even more egregious

terms and unreasonable rates than those with a single top four station as that broadcaster can coordinate blackouts

on multiple local stations, denying viewers access to several network stations instead of just one.”).

Comments from subscribers and former subscribers (both in response to the NOI and

seen on internet forums) indicate that they feel left behind by the termination of their distant

network service. For example, when AT&T/DIRECTV terminated service to Roberta Vandehey,

she believed that she was left without alternatives.

Interestingly, some subscribers appear to

have preferred receiving distant signal programming to receiving programming from a local

station.

One consequence of the changes wrought by the STCPPA is a dramatic decrease in

satellite royalty receipts. The annual royalty receipts from the section 119 license have been

declining since their peak in 2010 (over $96 million). After passage of STELAR, receipts

dropped from about $82 million in 2014 to just over $60 million in 2015. By 2019, just before

passage of STCPPA, receipts were down to about $8.662 million. In 2020, the year after passage

of STCPPA, receipts dropped by over 50% from 2019, to about $4.268 million. Notably, in the

second half of 2020, after the expiration of the STCPPA transition period, royalty receipts

dropped to about $684,000.

Thus, it is clear that the usage of the section 119 license has

decreased significantly with each iteration of the license since 2010.

2018/1

2019/2

2020/1

2020/2

DIRECTV

$3,524,799

$2,074,241 41.2%

$1,524,987 26.5%

$72,372 95.3%

DISH

Network

$2,337,095

$2,105,375 10%

$2,057,509 2.3%

$610.679 70.3%

DISH

Puerto Rico

$1,484

$1,394 6.1%

$1,355.90 2.76%

$1,314 3.1%

See Vandehey Second Comments. See also Grimm Comments (“Changes in the Section 119 license made by the

Satellite Television Community Protection and Promotion Act seem to benefit and strengthen the structure of satellite

operators, broadcast television stations, broadcast networks and owners of television programming content without

giving much thought to the changing technological advancements which may or may not be beneficial to

consumers.”).

See Long Distance Networks Going Away, SATELLITEGUYS: FORUMS, https://www.satelliteguys.us/xen/threads/long-

distance-networks-going-away.388543/page-5 (beginning Jun. 5, 2020).

https://www.copyright.gov/licensing/receipts.pdf.

Cable royalties have fluctuated during this period, but not to the same extent as satellite royalties. According to the

records of the Licensing Division, cable royalties peaked in 2014, at $239.48 million. Receipts declined 9.65% in 2015,

another 5.22% in 2016, and 0.41 % (essentially flat) in 2017. They then increased by 9.85% in 2018, and by 4.52% in

2019, before declining by 3.69% in 2020. See LICENSING DIVISION, U.S. COPYRIGHT OFFICE, REPORT OF RECEIPTS 4/30/2021

1, https://www.copyright.gov/licensing/receipts.pdf.

B. Other Factors Influencing the Use of Satellite Service

The changes made by the STCPPA are not the only factors influencing the ability of

satellite television subscribers to access broadcast networks. Even in the absence of the

STCPPA, analysts have seen a less-than-rosy future for satellite TV services. As noted above,

the linear TV market has changed significantly since 2010, with year-over-year declines in the

number of satellite TV subscribers for both DISH Network and DIRECTV.

This reflects not

just the broader cord-cutting trend seen throughout the United States, but also an increase in

broadband penetration, and, with it, access to competing OTT services.

As is the case with all

television services, there are now other options for potential video subscribers. Many viewers

receive their television channels via the internet, through OTT services such as Hulu, Vudu,

Sling TV, YouTube, and others.

Both AT&T and DISH Network have begun to adjust their corporate focus to reflect

these changing realities. Comments by AT&T president John Stankey last year indicated that

AT&T viewed satellite service as a non-growth, “legacy” business and intended to place greater

focus on OTT streaming services.

The re-focus away from satellite service seems to have been

confirmed by the recent AT&T announcement that it is spinning off DIRECTV (and some other

parts of its business) into a separate company.

It is too early to tell what effect this will have

on DIRECTV’s subscribers. For the short-term, DISH Network appears to be refocusing its

efforts into rural areas.

If so, this may ultimately have a favorable impact on rural customers.

See George Szalai & Etan Vlessing, Dish Lost 133,000 Pay TV Subscribers in Fourth Quarter, HOLLYWOOD REPORTER

(Feb. 22, 2021), https://www.hollywoodreporter.com/business/business-news/dish-loses-pay-tv-subscribers-fourth-

quarter-4135356/ (detailing declining DISH subscriptions); Lee Rainie, Cable and Satellite TV Use has Dropped

Dramatically in the U.S. Since 2015, PEW RESEARCH CENTER, https://www.pewresearch.org/fact-tank/2021/03/17/cable-

and-satellite-tv-use-has-dropped-dramatically-in-the-u-s-since-2015/ (discussing decline in satellite and cable

viewing since 2015); Mike Farrell, Satellite TV: Five Years, That’s All You’ve Got, NEXTTV,

https://www.nexttv.com/news/satellite-tv-five-years-thats-all-youve-got; Jon Brodkin, AT&T Loses Another 600,000 TV

Customers as it Seeks Buyer for DIRECTV, ARSTECHNICA (Oct. 22, 2020), https://arstechnica.com/information-

technology/2020/10/att-loses-another-600000-tv-customers-as-it-seeks-buyer-for-directv/.

See Internet/Broadband Fact Sheet, PEW RESEARCH CENTER, https://www.pewresearch.org/internet/fact-sheet/internet-

broadband/?menuItem=89fe9877-d6d0-42c5-bca0-8e6034e300aa (charting increase in broadband access).

See Daniel Frankel, DIRECTV’s Nearly 3 Million Lost Customers in 2020 Accounted for Nearly Half of all Cord-Cutting,

NEXTTV (Mar. 5, 2021), https://www.nexttv.com/news/directvs-over-3-million-lost-customers-in-2020-accounted-for-

nearly-half-of-all-cord-cutting.

See Joe Supan, AT&T Hints That It Might Stop Selling DIRECTV Outside of Rural Areas, ALL CONNECT (Apr. 12, 2020),

https://www.allconnect.com/blog/directv-availability-future-in-doubt.

Jessica Bursztynsky &Alex Sherman, AT&T to spin off DIRECTV, AT&T TV Now and U-Verse into new company valued

at $16.25 billion, CNBC (Feb. 25, 2021), https://www.cnbc.com/2021/02/25/att-to-spin-off-directv-att-tv-now-and-u-

verse-into-new-company.html.

See Mike Farrell, Dish Gets Back to its Rural Roots, NEXTTV (Nov. 9, 2020), https://www.nexttv.com/blogs/dish-gets-

back-to-its-rural-roots.

The long-term prospects for rural satellite service appear more questionable, however. DISH

Network President Charlie Ergen has indicated that long-term health for the satellite TV

business is likely to be dependent upon a merger between DISH Network and DIRECTV.

For

now, DISH Network’s recent corporate growth has been through increased adoption of its OTT

service Sling TV,

and the company is in the process of pivoting to 5G.

If AT&T/DIRECTV ultimately decides to exit the satellite market entirely or exit certain

markets, this would leave only a single satellite provider in certain areas of the country. That

could raise concerns of monopoly power being exercised by DISH Network and a lack of

consumer choice in those areas that may not have access to alternatives, such as cable or

broadband. But it is not clear that the pre-SCTPPA status quo would have been a long-term

answer to the problem of network availability in underserved markets, given the pre-existing

market trends.

These trends are likely to continue, and could be further hastened by

proposals to build out broadband in many areas, which would increase the possibility of

replacing conventional satellite television with television service via broadband.

See DISH Network Corp. (DISH) Q1 2021 Earnings Call Transcript, THE MOTLEY FOOL (Apr. 29, 2021),

https://www.fool.com/earnings/call-transcripts/2021/04/29/dish-network-corp-dish-q1-2021-earnings-call-trans/ (“So

DIRECTV, I'd just say the same thing, I think it's inevitable those 2 companies to go together. There’s, it’s harder and

harder for it would be harder and harder for regulators and people to, to make a case when gosh it is going to be 10

to 20 competitors now 50 million, 100 million subscribers. I think DISH and DIRECTV or price not even the top 10

video companies today and you run the risk that prematurely rural America and other people don't have a choice.”);

Ben Munson, Deeper Dive – AT&T Sold DIRECTV but Could Still Score on Dish Tie-Up, FIERCE VIDEO (Feb. 26, 2021),

https://www.fiercevideo.com/video/deeper-dive-at-t-sold-directv-but-could-still-score-dish-tie-up.

See Mike Farrell, Dish Gets Back to its Rural Roots, NEXTTV (Nov. 9, 2020), https://www.nexttv.com/blogs/dish-gets-

back-to-its-rural-roots.

See id. In the year since the STCPPA, satellite subscriptions have declined significantly. AT&T/DIRECTV went

from 16 million subscribers in the fourth quarter of 2019 to 13 million in the fourth quarter of 2020, a decline of about

19% (They had 19.63 million in the second quarter of 2014.). See Number of DIRECTV Video Subscribers in the United

States from 1st Quarter 2014 to 4th Quarter 2020, STATISTA, https://www.statista.com/statistics/497288/directv-number-

video-subscribers-usa/. DISH Network went from 9.39 million in the fourth quarter of 2019 to 8.83 million in the

fourth quarter of 2020, a decline of about 6%. See Number of Dish Network Video Subscribers in the United States from 1st

Quarter 2014 to 4th Quarter 2020, STATISTA, https://www.statista.com/statistics/497299/dish-network-number-

subscribers-usa/. As described above, section 119 royalty receipts declined far more dramatically, presumably

reflecting the smaller subscriber base permitted to receive distant signals under the current section 119 license.

See Long Distance Networks Going Away, SATELLITEGUYS: FORUMS, https://www.satelliteguys.us/xen/threads/long-

distance-networks-going-away.388543/page-4 (posting from June 5, 2020, indicating that DIRECTV had only a small

subscriber base in the rural markets prior to STCPPA).

See Theodore F. Claypoole, Can U.S. Government Help Improve Broadband?, NAT’L L. J. (Mar. 24, 2021),

https://www.natlawreview.com/article/can-us-government-help-improve-broadband; Liam Niemeyer, The Long Wait:

Rural Communities Wonder When Reliable Internet Will Reach Them, WKYU (Mar. 8, 2021),

https://www.wkyufm.org/post/long-wait-rural-communities-wonder-when-reliable-internet-will-reach-

them#stream/0.

Another non-STCPPA factor impeding customer access to broadcast network

programming that has been cited by many commenters is increased concentration of ownership

of local broadcast stations. It has been suggested that such concentration has led to increased

difficulty in negotiating retransmission licenses

and consequent temporary service outages

affecting the availability of local stations.

This increased concentration has been cited as

contributing to higher costs for all television subscribers, including consumers who get their

service through cable or OTT services.

Overall, the video service industry is undergoing significant changes. As broadband

internet service becomes increasingly available in more places, more and more customers are

obtaining their video services over the internet. Moreover, within the internet television

ecosystem there are many new streaming options available to viewers, allowing them to choose

from a variety of service providers. However, one thing is clear: use of the section 119 license

has diminished dramatically over time.

The goal of the STCPPA was to reduce the use of the section 119 license to a smaller

group of unserved households (in exchange for providing local service in all DMAs), while

opening a space for voluntary licensing of broadcast signals by satellite companies. One year

after full implementation, use of the section 119 license continues to diminish dramatically, with

only one satellite carrier currently eligible to use it. However, stakeholders dispute the degree

to which a broadcast signal licensing market has opened up thus far, and there appear to be

several factors outside of section 119 impacting the viability of such a market. Thus, the impact

of the STCPPA on the satellite television marketplace cannot yet be determined.

See DIRECTV Comments at 2–3.

See, e.g., David Shepardson, FCC Orders Station Groups to Negotiate with AT&T in DIRECTV Dispute, REUTERS

(Nov. 8, 2019), https://www.reuters.com/article/us-fcc-att-broadcasting/fcc-orders-station-groups-to-negotiate-with-

att-in-directv-dispute-idUSKBN1XI1YY; Updated: Dish Now Missing 236 Channels Due to Fee Fights, TV ANSWER MAN

(Dec. 5, 2020), https://tvanswerman.com/2020/12/05/dish-now-missing-236-channels-due-to-fee-fights/.

Tim Grant, Cable, Internet Costs Are Heading Higher—Even Cord-cutters Will Take a Hit at a Time When More Folks Are

Homebound, PITTSBURGH POST-GAZETTE (Jan. 25, 2021), https://www.post-

gazette.com/business/money/2021/01/25/Cable-TV-internet-prices-pandemic-home-streaming-competition-

regulation/stories/202101150160.