-6 county" households rather than "popularity" in CATV households only. The use of TPT's measure of "popularity" could tend to understate "popularity" among cable viewers and, thus, to understate the system's copyright liability. Although TPT's contention that these data are now being collected by the national rating services is technically The ultimate effect of TPT's proposal is very clear. By definition, the proposal seeks to narrow substantially the base of TPT systems (and revenues) which are subject to copyright liability by exempting certain systems entirely and the bulk of revenues of many other systems. This approach is in sharp contrast to the fee schedule currently incorporated in H. R. 2223, which applies copyright liability n/e/r/a -7 to the full base of the cable industry's basic service revenues, and which is structured incrementally to impact more heavily on the larger systems. Before turning to an examination of the TPT proposal in application to its systems, it is appropriate to review the effect of the H.R. 2223 fee schedule on TPT cable systems. VI. COPYRIGHT FEE IMPACT OF H.R. 2223 ON TELEPROMPTER SYSTEMS Tables II through II-E present observations on 142 TPT cable television systems for which data on subscribers and monthly subscriber fees are published. The tables array the cable systems by annual revenue classification as determined by the fee schedule in H.R. 2223. The cable systems in each of the five resulting revenue classifications are presented in Tables II-A through II-E. Table II presents a summary of the five classifications. Examination of Column (6) shows that copyright liability for TPT's systems under the cents and 11.2 cents per subscriber per month, respectively 2 Including those in which TPT has an interest of at least 50 percent. n/e/r/a -8 copyright liability of 1.48 percent of annual revenues, or 8.6 cents per subscriber per month (less than the postage cost of billing each subscriber for service each month). It should also be noted that the purposefully incremental construction of the H. R. 2223 fee schedule results in a greater than proportional share of copyright liability being borne by the largest TPT systems--those with annual revenues in excess of $640,000, and with the highest average monthly charge to subscribers--$5.98 (Column (4)]. Columns (3) and (5) indicate that these systems, representing 60.6 percent of TPT's revenues, account for 76.9 percent of the total copyright liability. A less than proportional share applies to all other classes of TPT's sytems. This result is consistent with the intention of the H.R. 2223 statute as drafted. It is also significant to note that the overall copyright fee impact of 1.48 percent on TPT systems per H.R. 2223 contrasts sharply with the illustrative figure of 2.24 percent in the text of TPT's proposal. Despite the higher illustrative fee given in the text of the TPT proposal (2.24 percent versus 1.48 percent in H.R. 2223), one is led to conclude that there are elements in the TPT proposal, which if placed in actual operation would result in substantially lower copyright liability for TPT. Since the formula would apply only to systems which retransmit "copyright qualifying" stations and/or signals, the definition serves to exempt outright a number of cable systems from all copyright liability. n/e/r/a -9 It should also be noted that, beyond outright exemption, the concepts of "copyright qualification" and "popularity" embodied in the TPT proposal necessarily result in an uneven geographic distribution of copyright liability. This would tend to place a greater copyright burden on cable systems located in more remote areas which rely heavily on "distant signal" importation rather than on systems located in or near major TV markets which, because of the availability of many local signals, use fewer "distant signals" in providing service to their subscribers. The greater copyright burden, therefore, would fall more on those systems for which the lack of sufficient "local" signals means greater reliance on "distant signals." To illustrate this point, Table VI presents an analysis of the geographic distribution of those systems which retransmit the signals of "copyright qualifying" TV stations, as defined by the TPT proposal. The data contained therein show that of the 25 systems within 35 miles of a top 100 TV market, only 2 systems, or 8 percent, relied on distant signals with "popularity" factors of 4 percent or more. Conversely, of the 79 systems outside the 35 mile zones of top 100 TV markets, 51 systems, or 65 percent, relied on "copyright qualifying distant signals" with relatively high "popularity" ratings. This pattern of signal carriage by cable systems underscores the greater copyright burden of systems outside major markets. n/c/r/a -10 The consistency of this pattern is further underscored by the observation that of the 26 "copyright qualifying" cable systems with minimal viewing to distant signals, 16 systems, or 62 percent, are within the 35 mile zone of a top 100 TV market. This indicates that closer proximity to a major TV market results in less reliance on "copyright liable" distant signals. Moreover, in addition to the 104 TPT "copyright qualifying" systems in the foregoing analysis, the same pattern of signal carriage is evident among the 38 TPT systems, which are exempt outright from copyright liability. Of these 38 systems, 30 systems, or 79 percent, are within 35 miles of a top 100 TV market. Again, a pattern wholly consistent with their nonreliance on "copyright qualifying" distant signals. VII. EXEMPTION EFFECT OF TELEPROMPTER PROPOSAL In order to evaluate the exemption aspects of the TPT proposal, we have established a definition of the term "copyright qualifying broadcast signal" and, by extension, "qualifying" cable systems. For purposes of this analysis, we have defined such systems as those which retransmit signals of stations whose Grade B contours do not cover the location of the cable system. Therefore, "non-copyright qualifying" cable systems are those which retransmit only the signals of stations within whose Grade B coverage the system is located, n/e/r/a |