PRESS RELEASE

ICTA REACTION TO COPYRIGHT SMATV RULES PROMULGATION

The U.S. Copyright Office has issued a final regulation addressing compulsory licensing for private - SMATV cable operators. (see attached summary) ICTA's initial reaction to the regulation is that the Copyright Office is endeavoring to inappropriately impose a standard historically applied to franchise cable operators onto private cable operators. As a result, private cable operators in many instances will see large increases in copyright fees. This will further result in an increased cost to consumers and will burden small companies attempting to provide competitive alternatives to the imbedded franchise monopolies. It is conceivable that under the new regulation, private cable operators, who have previously filed copyright fees on the short form, will now be forced to use the long form in its place. This could result in increases in copyright payments of several hundred percent.

The Copyright Office's ruling is illogical in defining contiguous communities as those with adjacent political boundaries and applying that standard to both franchise and private operators. Franchise systems may serve communities with adjacent political boundaries in light of the manner in which franchises were historically granted, but private cable has emerged through a completely different course of business and regulation. Unlike franchise cable systems, which are granted a franchise to serve an entire community or political jurisdiction, private cable operators serve discreet, independent buildings or groups of buildings -- generally apartments or condominiums (MDUs). For instance, a private cable operator may have one cable system serving an MDU in the southern portion of a county and another system serving an MDU in the northern part of a neighboring county, the two systems may be many miles apart. To suggest that these systems are adjacent is a misapplication of the intent of the copyright compromise.

We believe the Copyright office has incorrectly applied the antiquated franchise standard to a new world in which there are now multiple video providers. The Copyright Office needs to recognize the practical differences for alternative video providers including private cable, direct broadcast satellite, MMDS and soon LMDS systems as such differences have been recognized throughout the telecommunications regulatory field. Each of these technologies is different and the regulations governing each should be applied in light of these differences.

Recognition of the fact that private cable operators are entitled to compulsory licenses is a long-expected, and positive element of the rulemaking. Further, the Copyright Office did change its originally proposed rulemaking that required the property owner to submit copyright filings. As forcefully argued by private cable operators in the original filing several years ago, the proper party to provide the required reporting is the service provider -- not the landlord (except in cases where the landlord is operating the cable system and is also the service provider).

The ICTA Board is currently examining alternatives for appeal of the Copyright Office SMATV regulation.

Copyright Rule Summary

Reported in the April 17 Federal Register, the Copyright Office of the Library of Congress issues the Final Rule, which will be effective July 1, 1997.

Summary: The Copyright Office of the Library of Congress is adopting final regulations recognizing that satellite maser antenna television (SMATV) systems are eligible as cable systems under section 111 of the Copyright Act to obtain a compulsory license to retransmit broadcast signals to their subscribers. The regulations provide guidance as to who should file and how to report distant signals.