Guam Cable TV System currently has approximately 12,000 subscribing families and we estimate that nearly 50,000 Guamanians view CATV programming on the system every day (the present population of Guam is approximately 100,000 persons). Guam is 9,090 miles from Washington, D.C. Distance is the fact that has given rise to our special CATV problem. Ordinarily, CATV picks broadcast television signals out of the air and delivers them to subscribing customers. Sometimes this process is aided by use of microwave, which allows the transportation of broadcast signals for thousands of miles. However, the distance factor for Guam makes microwave unavailable as a practical matter and requires programs to be taped in the continental United States and then physically transported to Guam. It does not appear that satellite can ever be a solution to our special problem because of the time zone factor; that is, such transmissions would not be viewable at an appropriate time in Guam. For example, a satellite transmission of the Johnny Carson Show would take place in the late afternoon on Guam. Similarly, satellite transmission of Captain Kangaroo would take place in the wee hours of the morning. The citizens of Guam should be able to receive the same television programming as is available to citizens located in counterpart markets in the contiguous states. Thus, Guam which is considered a smaller market under the Rules and Regulations of the FCC is entitled to the full programming of each of the three national networks, the programming of one independent station and the programming of at least one educational station. This programming is now provided to CATV subscribers in Guam through the mechanism of videotaping. When the companion bill of HR 2223 was pending in the Senate in 1974 When the companion bill of HR 2223 was pending in the Senate in 1974 (S. 1361), it provided for the payment by CATV of specified copyright fees under a compulsory license. A compulsory license woudl be the equivalent of copyright consent without the necessity for obtaining that consent in each case. In other words, copyright holders by virtue of having authorized television stations to broadcast their material, would be deemed to have consented to CATV carriage. Prior to the addition of language which has come to be known as the "Stevens Amendment", the offshore systems that taped programing, i.e., in Guam and Alaska, would not have received compulsory licenses. Thus those systems were placed in an inferior position to cable systems located in the contiguous states. We have always viewed the "Stevens Amendment" as equity legislation designed to place the citizens of distant areas on the same footing as those in the forty eight contiguous states. That is, if the Congress decided to pass copyright legislation involving CATV, the provisions of such legislation should apply to the noncontiguous areas such as Guam. Under the "Stevens Amendment", which imposes compulsory licenses on offshore systems, the Senate did away with the administrative and costly nightmare program by program and system by system negotiations entailed. Essentially, this is what the compulsory license of § 111 for mainland systems is all about in the first place. As you know, S. 1361 did not get enacted into law and the bill was reintroduced as S. 22 in the Senate and is now pending before you as HR 2223. After passage of S. 1361 in the Senate, Guam Cable TV System continued to operate under threats of lawsuits; and in face of opposition to the "Stevens Amendment" by the Motion Picture Association, the National Association of Broadcasters and one or more networks. While we were happy that the Senate agreed with our position, and we believed that the House would also, we had no certain understanding of the length of time required for deliberation of the omnibus copyright bill in the House, and its enactment into law, and whether § 111 (CATV copyright liability) would be included. With great uncertainty as to our continuing ability to serve the residents of Guam and other areas of the Trust Territory of the Pacific, Mr. Won Pat, our Representative, introduced HR 4965, a bill that we hoped would expeditiously settle this very narrow copyright question by putting us in the same exact footing as mainland CATV systems. Fortunately, Mr. Won Pat's bill contained many provisions that met the concerns of the copyright holders. With this in mind, our counsel arranged a meeting between Mr. Valenti and me in which we discussed the CATV system in Guam and set to work on amendments largely derived from Mr. Won Pat's bill, which we proposed to this committee. These amendments would perfect the "Stevens Amendment" and satisfy those seeking (1) payment for use of their product and (2) protection of the integrity of that product; and would also satisfy those seeking a compulsory license under the proposed copyright law for use of that product. Thus, the proposed legislation would, among other things, accomplish the following: 1. Apply the criminal provisions and other remedies of the copyright act to violations of the taping authority for the offshore systems affected; 2. Provide for only one time transmissions of the videotapes on the CATVs; 3. Prohibit deletion or editing of programs including the commercials that are contained within the story line of the programs. This would not affect the existing practice of deleting or otherwise altering or substituting commercial content at the beginning and end of programs; 4. Those systems engaged in taping must prevent the duplication of the tapes while in the system's possession and while in the possession of the taping facility and must take adequate precautions to prevent duplication while being transported. The system is also required to erase or destroy the tape or cause such erasure or destruction and to attest to the fact by an affidavit of an owner or officer of the CATV involved. Such affidavits must be kept open to public inspection in a public file at its office; 5. CATV transmissions must be those that would be permitted under the pertinent FCC Rules and Regulations if made by a system that were not taping. Importantly, because of (1) the complexity of FCC Rules and Regulations, (2) the likelihood that such regulations may from time to time be changed, and (3) the problems involving notification, proposed section (e) (1) (F) is explicitly inapplicable to inadvertent or accidental transmissions. This is designed specifically to insure against the institution of nuisance suits under the copyright law. Paragraph (e) (2) applies similar restrictions to the process of sharing tapes among CATV systems to insure that such tapes do not find their way out of the CATV chain of distribution. It would also allow for cost sharing of the full costs attendant in making tapes available, i.e., costs of tape, production costs and delivery costs. Finally, Paragraph (e) (3) indicates that the legislation is not meant to supersede any existing agreements concerning exclusivity protection provided to broadcast stations. It is our opinion that the adoption of the proposed amendments in HR 2223 would fully resolve our CATV/copyright problem and would avoid the necessity for any consideration at this time of HR 4965 legislation, Mr. Won Pat's bill. We believe this agreement among the parties constitutes a good faith effort to arrive at a reasonable solution to a complex problem. Our experience in the last several weeks indicates that a forthright and hardworking approach to settle this matter has been entered into and achieved and we urge this Committee's adoption of the proposed amendments. As you know, the residents of the northern Marianas have voted to join the United States as a Commonwealth. The bill that would confer such status has passed the House and is now pending in the Senate. When it passes, they will join the people of Guam as our westernmost American citizens-6,000 miles off the California coast. As Americans in the world today, their freedom of speech includes access to television, our most widely distributed medium. We have all played a part in the proposed legislation and we believe enactment of these vital amendments will meet the daily need of these Americans. Thank you for this opportunity to testify and I would be delighted to answer any of your questions. Mr. HOLMES. Mr. Chairman and members of the subcommittee, it is indeed a pleasure to appear before you this morning. Mr. name is Lee Holmes; I am president of Guam Cable TV System; seated on my right is my wife, Joan Holmes, a director and secretary of the corporation; and to my left is Richard L. Brown, our Washington counsel. Guam Cable TV System operates a CATV system on Guam. It carries the off-the-air signals of two local stations; one is an educational station, and one is a commercial station, KUAM-TV. Our company has approximately 150 shareholders, approximately 80 percent of which are Guamanians. Our company was developed with the financial 57-786-76-pt. 3—22 assistance of the Guam Economic Development Authority. Therefore, not only are we a local service organization, but we are deeply rooted in our community. Guam Cable TV system currently has approximately 12,027 subscribing families and we estimate that nearly 50,000 Guamanians view CATV programing on the system every day-the present population of Guam is approximately 100,000 persons. Guam is 9,000 miles from Washington, D.C. Distance is the fact that has given rise to our special CATV problem. Ordinarily, CATV picks broadcast television signals out of the air and delivers them to subscribing customers. Sometimes this process is aided by the use of microwave relay which allows the transportation of broadcast signals for thousands of miles. However, the distance factor for Guam makes microwave unavailable as a practical matter and requires programs to be taped in the continental United States and then physically flown to Guam. It does not appear that satellite can ever be a solution to our special problem because of the time zone factor; that is, such transmissions would not be viewable at an appropriate time in Guam. For example, a satellite transmission of the Johnny Carson show would take place in the late afternoon on Guam. Similarly, satellite transmission of Captain Kangaroo would take place in the wee hours of the morning. The citizens of Guam should be able to receive the same television programing as is available to citizens located in counterpart markets in the contiguous States. Thus, Guam which is considered a smaller market under the rules and regulations of the FCC is entitled to the full programing of each of the three national networks, the programing of one independent station, and the programing of at least one educational station. This programing is now provided to CATV subscribers in Guam through the mechanism of videotaping. When the companion bill of H.R. 2223 was pending in the Senate in 1974, S. 1361, it provided for the payment by CATV of specified copyright fees under a compulsory license. A compulsory license would be the equivalent of copyright consent without the necessity for obtaining that consent in each case. In other words, copyright holders by virtue of having authorized television stations to broadcast their material, would be deemed to have consented to CATV carriage. Prior to the addition of language which has come to be known as the Stevens amendment, the offshore systems that taped programing, that is, in Guam and Alaska, would not have received compulsory licenses. Thus those systems were placed in an inferior position to cable systems located in the continguous States. We have always view the Stevens amendment as equity legislation designed to place the citizens of distant areas on the same footing as those in the 48 contiguous States. That is, if the Congress decided to pass copyright legislation involving CATV, the provisions of such legislation should apply to the noncontiguous areas such as Guam. Under the Stevens amendment, which imposes compulsory licenses on offshore systems, the Senate did away with the administrative and costly nightmare program by program and system by system negotiations entailed. Essentially, this is what the compulsory license of section 111 for mainland systems is all about in the first place. As you know, S. 1361 did not get enacted into law and the bill was reintroduced as S. 22 in the Senate and is now pending before you as H.R. 2223. After passage of S. 1361 in the Senate, Guam Cable TV system continued to operate under threats of lawsuits; and in face of opposition to the Stevens amendment by the Motion Picture Association, the National Association of Broadcasters and one or more networks. While we were happy that the Senate agreed with our position, and we believed that the House would also, we had no certain understanding of the length of time required for deliberation of the omnibus copyright bill in the House, and its enactment into law, and whether section 111, which is CATV copyright liability, would be included. With great uncertainty as to our continuing ability to serve the residents of Guam and other areas of the Trust Territory of the Pacific Islands, Mr. Won Pat, our Representative, introduced H.R. 4965, a bill that we hoped would expeditiously settle his very narrow copyright question by putting us in the same exact footing as mainland CATV systems. Fortunately. Mr. Won Pat's bill contained many provisions that met the concerns of the copyright holders. With this in mind, our counsel arranged a meeting between Mr. Valenti and me in which we discussed the CATV system in Guam and set to work on amendments largely derived from Mr. Won Pat's bill, which we proposed to this committee. These amendments would perfect the Stevens amendment and satisfy those seeking (1) payment for use of their product and (2) protection of the integrity of that product; and would also satisfy those seeking a compulsory license under the proposed copyright law for use of that product. Thus, the proposed legislation would, among other things, accomplish the following: 1. Apply the criminal provisions and other remedies of the copyright act to violations of the taping authority for the offshore systems affected. 2. Provide for only one time transmissions of videotapes on the CATV's. 3. Prohibit deletion or editing of programs including the commercials that are now contained within the story line of the programs. This would not affect the existing practice of deleting or otherwise altering or substituting commercial content at the beginning and end of the programs. 4. Those systems engaged in taping must prevent the duplication of the tapes while in the system's possession and while in the possession of the taping facility and must take adequate precautions to prevent duplication while being transported. The system is also required to erase or destroy the tape or cause such erasure or destruction and to attest to the fact by an affidavit of an owner or officer by the CATV involved. Such affidavits must be kept open to public inspection in a public file in its office. 5. CATV transmissions must be those that would be permitted under the pertinent FCC rules and regulations if made by a system that were not taping. Importantly, because of (1) the complexity of FCC rules and regulations, (2) the likelihood that such regulations may from time to time be changed, and (3) the problems involving notification, proposed section 111 (e) (1) (F) is explicitly inapplicable to inadvertent or accidental transmissions. This is designed specifically to insure against the institution of nuisance suits under the copyright law. Paragraph (e) (2) applies similar restrictions to the process of sharing tapes among CÁTV systems to insure that such tapes do not find their way out of the CATV chain of distribution. It would also allow for cost sharing of the full costs attendant to making tapes available, that is, costs of tape, production costs, and delivery costs. Finally, paragraph (e) (3) indicates that the legislation is not meant to supersede any existing agreements concerning exclusivity protection provided to broadcast stations. It is our opinion that the adoption of the proposed amendments into H.R. 2223 would fully resolve our CATV/copyright problem and would avoid the necessity for any consideration at this time of H.R. 4965 legislation, Mr. Won Pat's bill. We believe this agreement among the parties constitutes a good faith effort to arrive at a reasonable solution to a complex problem. Our experience in the last several weeks indicates that a forthright and hard-working approach to settle this matter has been entered into and achieved, and we urge this committee's adoption of the proposed amendments. As you know, the residents of the northern Marianas have voted to join the United States as a Commonwealth. The bill that would confer such status has passed the House and is now pending in the Senate. When it passes, they will join the people of Guam as our westernmost American citizens-6,000 miles off the California coast. As Americans in the world today, their freedom of speech includes access to television, our most widely distributed medium. We have all played a part in the proposed legislation, and we believe that enactment of these vital amendments will meet the daily needs of these Americans. Thank you for this opportunity to testify and I would be delighted to answer any of your questions. Mr. KASTENMEIER. Thank you, Mr. Holmes. The Chair knows that there has been an exchange of correspondence on this issue and there are, for example, a letter from Mr. Valenti to Mr. Holmes dated September 10; a letter from Mr. Valenti to the Chair dated September 11; a letter from Mr. Brown to Mr. Valenti, dated September 12; a letter from Mr. Brown to the Chair, dated September 15; a letter from Mr. Brown to Mr. Won Pat dated September 15. Without objection, these communications will be placed in the record, and the thrust of these communications is to affirm what Mr. Holmes has suggested; namely, that the parties have resolved their dispute and have agreed to amendments varying somewhat from H.R. 4965. [The above-referred to documents and a letter from Mr. Valenti to the Chair, dated September 30, 1975, follow:] MOTION PICTURE ASSOCIATION OF AMERICA, INC., Mr. LEE M. HOLMES, DEAR LEE: In our endeavor to be helpful in meeting the special geographical problem of Guam, as you are aware we have worked out with your Washington counsel, Richard Brown, Esq.. who has consulted with you, an amendment to the provision dealing with nonsimultaneous secondary transmissions presently contained in Section 111 of H.R. 2223. |