Electronic Delivery of MVPD Communications; Modernization of Media Regulation Initiative

AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule.

SUMMARY:

In this document, the Federal Communications Commission (FCC or Commission) seeks comment on whether we should permit Subpart T and privacy notices to be delivered electronically to subscribers via means other than verified email.

DATES:

Submit comments on or before April 8, 2019; reply comments on or before April 22, 2019.

ADDRESSES:

You may submit comments, identified by MB Docket Nos. 17-105 and 17-317, by any of the following methods:

• Federal Communications Commission's website: http://apps.fcc.gov/ecfs//. Follow the instructions for submitting comments.
• People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-0530 or TTY: 888-835-5322.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:

For additional information, contact Lyle Elder, Lyle.Elder@fcc.gov, of the Media Bureau, Policy Division (202) 418-2120. Direct press inquiries to Janice Wise at (202) 418-8165. For additional information concerning the information collection requirements contained in this document, send an email to PRA@fcc.gov or contact Cathy Williams, (202) 418-2918.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Further Notice of Proposed Rulemaking (FNPRM), FCC 18-166, adopted on November 15, 2018 and released on November 16, 2018, and the Erratum to that FNPRM, adopted on November 30, 2018 and released on December 4, 2018. The full text of these documents is available electronically via the FCC's Electronic Document Management System (EDOCS) website at http://fjallfoss.fcc.gov/edocs_public/ or via the FCC's Electronic Comment Filing System (ECFS) website at http://fjallfoss.fcc.gov/ecfs2/. (Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat.) This document is also available for public inspection and copying during regular business hours in the FCC Reference Information Center, which is located in Room CY-A257 at FCC Headquarters, 445 12th Street SW, Washington, DC 20554. The Reference Information Center is open to the public Monday through Thursday from 8 a.m. to 4:30 p.m. and Friday from 8 a.m. to 11:30 a.m. The complete text may be purchased from the Commission's copy contractor, 445 12th Street SW, Room CY-B402, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to fcc504@fcc.gov or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

Synopsis

I. Introduction

1. In this Further Notice of Proposed Rulemaking we seek comment on whether we should permit Subpart T and privacy notices to be delivered electronically to subscribers via means other than verified email. Through this proceeding, the Commission continues its efforts to modernize its regulations and reduce unnecessary requirements that can impede competition and innovation in the media marketplace.

2. We seek comment on whether we should permit the Subpart T and privacy notices discussed above to be delivered to subscribers via other electronic means. In the attached Report and Order, we conclude that these notices may be delivered by verified email, so long as certain consumer protections are satisfied. Some commenters maintain that we should adopt a wider range of permissible electronic delivery formats. For example, Charter advocates “using texting to communicate with customers, utilizing the same standard for a verified telephone number as was put in place for email.” NCTA similarly suggests that SMS texting to a “verified phone number” and “other forms of messaging,” such as the use of smartphone apps, should be permissible ways to deliver Subpart T notices. In addition, Verizon asserts that subscriber notices could be made available through an “electronic message center” that is accessible via a subscriber's television screen. Although each of these specific alternatives is referenced and supported by at least one commenter, the record in this proceeding provides little evidence regarding how each would work in practice or discussion of what the costs and benefits of these methodologies would be to consumers or cable operators. Accordingly, we seek further input on these alternatives.

3. Would allowing the delivery of Subpart T notices through the use of other electronic means, such as SMS texting, be helpful to subscribers? How would subscribers be made aware that they would be receiving notices in this manner? Should the subscriber have to affirmatively agree to access these notices through the relevant electronic means? Would allowing additional electronic means increase operator efficiency or decrease the environmental waste associated with paper delivery in a meaningful way? We seek comment generally on the costs and benefits of permitting cable operators more flexibility in how these notices are delivered to their subscribers.

4. With regard to texting, to what extent do cable operators text information to their customers today? Operators should specify what information they text and how they determine which customers receive texts. Should consumers reasonably expect that a cable operator will text them notices simply because they have provided a “verified phone number” to the cable operator? Do cable operators have methods to verify whether a particular phone number is associated with a cell phone whose user accepts text messages? We assume this option would only be viable for subscribers using smartphones. For example, we note that only subscribers with smartphones can click on weblinks that would contain the notices. Is this assumption accurate? If so, how can operators verify that a given number is tied to a smartphone? If a subscriber does not have a smartphone, how would cable operators ensure delivery of required notices? Some notices required under Subpart T, such as the annual notices under § 76.1602(b), are lengthy. Is it reasonable to send such notices in their entirety to cell phones via text? Could any subscriber incur charges for receiving and accessing this information? How is the Telephone Consumer Protection Act implicated by the use of texting as a means of delivering subscriber notices?

5. With regard to other means of electronic delivery, such as the use of smartphone apps or the “electronic message center” suggested by Verizon, to what extent do cable operators use these methods to deliver information to their subscribers today? With respect to notices sent through smartphone apps, how would subscribers be made aware that notices were available to be viewed? If the apps send notices the user's screen even if the app is closed (“push notifications”), could these be deactivated by the smartphone user? How would subscribers opt out of notices sent to smartphone apps (or know that they might want to do so) if they do not have the smartphone app installed? We seek similar input with respect to the “electronic message center” proposal. That is, what affirmative steps, if any, would subscribers need to take in order to access the Subpart T information, and would it be reasonably accessible? Finally, if we permitted additional means of electronic delivery, are there any consumer protections that would be necessary or beneficial? If so, what protections should we adopt?

6. Initial Regulatory Flexibility Analysis.—As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) concerning the possible significant economic impact on small entities by the policies and rules proposed in the Further Notice of Proposed Rulemaking (FNPRM). Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments provided on the first page of the NPRM. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register.

7. Need for, and Objectives of, the Proposed Rules.

8. The Report and Order associated with this item adopts rules that permit cable operators and other MVPDs to send specific consumers notices electronically to a verified email address rather than on paper to a physical address. This FNPRM seeks comment on whether we should adopt additional alternative forms of electronic delivery.

9. Legal Basis.

10. The proposed action is authorized pursuant to sections 1, 4(i), 4(j), 325, 338, 624A, 631, 632, and 653 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 325, 338, 544a, 551, 552, and 573.

11. Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply.

12. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. Below, we provide a description of such small entities, as well as an estimate of the number of such small entities, where feasible.

13. Cable Companies and Systems (Rate Regulation Standard). The Commission has also developed its own small business size standards, for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers, nationwide. Industry data indicate that, of 1,076 cable operators nationwide, all but 11 are small under this size standard. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Industry data indicate that, of 6,635 systems nationwide, 5,802 systems have under 10,000 subscribers, and an additional 302 systems have 10,000-19,999 subscribers. Thus, under this second size standard, the Commission believes that most cable systems are small.

14. Cable System Operators. The Act also contains a size standard for small cable system operators, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate. Industry data indicate that, of 1,076 cable operators nationwide, all but 10 are small under this size standard. We note that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million, and therefore we are unable to estimate more accurately the number of cable system operators that would qualify as small under this size standard.

15. Open Video Services. Open Video Service (OVS) systems provide subscription services. The open video system framework was established in 1996, and is one of four statutorily recognized options for the provision of video programming services by local exchange carriers. The OVS framework provides opportunities for the distribution of video programming other than through cable systems. Because OVS operators provide subscription services, OVS falls within the SBA small business size standard covering cable services, which is “Wired Telecommunications Carriers.” The SBA has developed a small business size standard for this category, which is: All such firms having 1,500 or fewer employees. To gauge small business prevalence for the OVS service, the Commission relies on data currently available from the U.S. Census for the year 2012. According to that source, there were 3,117 firms that in 2012 were Wired Telecommunications Carriers. Of these, 3,059 operated with less than 1,000 employees. Based on this data, the majority of these firms can be considered small. In addition, we note that the Commission has certified some OVS operators, with some now providing service. Broadband service providers (“BSPs”) are currently the only significant holders of OVS certifications or local OVS franchises. The Commission does not have financial or employment information regarding the entities authorized to provide OVS, some of which may not yet be operational. Thus, at least some of the OVS operators may qualify as small entities. The Commission further notes that it has certified approximately 45 OVS operators to serve 116 areas, and some of these are currently providing service. Affiliates of Residential Communications Network, Inc. (RCN) received approval to operate OVS systems in New York City, Boston, Washington, DC, and other areas. RCN has sufficient revenues to assure that they do not qualify as a small business entity. Little financial information is available for the other entities that are authorized to provide OVS and are not yet operational. Given that some entities authorized to provide OVS service have not yet begun to generate revenues, the Commission concludes that up to 44 OVS operators (those remaining) might qualify as small businesses that may be affected by the rules and policies adopted herein.

16. Satellite Master Antenna Television (SMATV) Systems, also known as Private Cable Operators (PCOs). SMATV systems or PCOs are video distribution facilities that use closed transmission paths without using any public right-of-way. They acquire video programming and distribute it via terrestrial wiring in urban and suburban multiple dwelling units such as apartments and condominiums, and commercial multiple tenant units such as hotels and office buildings. SMATV systems or PCOs are now included in the SBA's broad economic census category, “Wired Telecommunications Carriers,” which was developed for small wireline firms. Under this category, the SBA deems a wireline business to be small if it has 1,500 or fewer employees. Census data for 2012 indicate that in that year there were 3,117 firms operating businesses as wired telecommunications carriers. Of that 3,117, 3,059 operated with 999 or fewer employees. Based on this data, we estimate that a majority of operators of SMATV/PCO companies were small under the applicable SBA size standard.

17. Direct Broadcast Satellite (DBS) Service. DBS Service is a nationally distributed subscription service that delivers video and audio programming via satellite to a small parabolic dish antenna at the subscriber's location. DBS is now included in SBA's economic census category “Wired Telecommunications Carriers.” The Wired Telecommunications Carriers industry comprises establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired telecommunications networks. Transmission facilities may be based on a single technology or combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution; and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry. The SBA determines that a wireline business is small if it has fewer than 1,500 employees. Census data for 2012 indicate that 3,117 wireline companies were operational during that year. Of that number, 3,083 operated with fewer than 1,000 employees. Based on that data, we conclude that the majority of wireline firms are small under the applicable standard. However, currently only two entities provide DBS service, which requires a great deal of capital for operation: DIRECTV (owned by AT&T) and DISH Network. DIRECTV and DISH Network each report annual revenues that are in excess of the threshold for a small business. Accordingly, we must conclude that internally developed FCC data are persuasive that in general DBS service is provided only by large firms.

18. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements.

19. The Commission seeks comment on whether alternative electronic delivery of certain notices to subscribers will reduce the costs and burdens on MVPDs of providing such notices. We anticipate that adoption of any additional options will result in no increase to the reporting, recordkeeping, or other compliance requirements of MVPDs, including small entities.

20. Steps Taken to Minimize Significant Economic Impact on Small Entities and Significant Alternatives Considered.

21. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) the use of performance, rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.”

22. The Commission expects to more fully consider the economic impact on small entities following its review of comments filed in response to the FNPRM and this IRFA. The Commission has found that electronic delivery of notices greatly eases the burden of complying with notification requirements for MVPDs, including small MVPDs, and there is no evidence that adoption of alternative electronic means of communication would result in any increase of that lowered burden. The Commission's evaluation of the comments filed on this topic will shape the final conclusions it reaches, the final significant alternatives it considers, and the actions it ultimately takes in this proceeding to minimize any significant economic impact that may occur on small entities.

23. Federal Rules that May Duplicate, Overlap, or Conflict With the Proposed Rule

24. None.

25. Initial Paperwork Reduction Act Analysis—This document contains proposed information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

26. Ex Parte Rules—Permit-But-Disclose. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda, or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

27. Filing Comments and Replies—Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415 and 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th Street SW, TW-A325, Washington, DC 20554. The filing hours are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW, Washington, DC 20554.

28. Availability of Documents—Comments, reply comments, and ex parte submissions will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW, CY-A257, Washington, DC 20554. These documents will also be available via ECFS. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat.

29. People with Disabilities—To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

30. It is ordered that, pursuant to the authority found in sections 1, 4(i), 4(j), 325, 338, 624A, 631, 632, and 653 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 325, 338, 544a, 551, 552, and 573 this Notice of Proposed Rulemaking is adopted.

31. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration.