The FCC’s recent Order with respect to rules for broadcasters choosing to implement the Next Gen TV standard (also known as ATSC 3.0) will become effective on March 26, 2021. Next Gen TV is based on Internet Protocol (“IP”), and, like online video services, will offer television stations the chance to offer Internet content and services. The FCC refers to these as “Broadcast Internet” services. The Order provides tailored rule changes to clarify and promote progress in making the best use of the more “robust” broadcast spectrum capacity that ATSC 3.0 offers. The rule changes were proposed in a Notice of Proposed Rulemaking the FCC issued in June 2020, which we addressed in a July 2020 Client Alert.
The key areas addressed in the FCC’s Order are:
Fees for Ancillary and Supplemental (“A&S”) Broadcast Internet Services
In general, the FCC declined to change the requirement that broadcasters annually pay the FCC 5% of the gross revenues they receive from third parties to whom they provide A&S services, including ATSC 3.0 Internet Broadcast services. But the FCC revised this requirement for noncommercial educational broadcasters that provide Broadcast Internet for “primary” noncommercial services—i.e. those that are non-profit, noncommercial or educational in nature. Such stations will only pay a fee of 2.5 percent of the gross revenues generated annually. Noncommercial stations will be permitted to provide commercial Broadcast Internet services, but they will pay the standard 5% fee on those services. The FCC also declined to specify the amount of spectral capacity noncommercial stations must use for primary A&S services or the scope of primary uses.
The rule revisions specify that the gross revenue used to calculate A&S fees are not affected by the revenues of third parties, such as when a broadcaster leases some of its spectrum to a third-party that then generates its own revenues using that spectrum. Instead, the fees are calculated based only on gross revenues directly received by the broadcaster.
Requirement Regarding Non-Derogation of Broadcast Service
Next Gen TV rules require stations that convert to ATSC 3.0 to broadcast at least one free over-the-air video programming stream, and require that any ancillary and supplemental services a station offers cannot derogate the quality of that programming stream. The Order clarified that the resolution of the one standard definition over-the-air free programming stream be at least 480i.
The FCC had encouraged a wide-ranging discussion, but ultimately was measured in its response. For example, the FCC declined to grant fee exemptions for classes of Broadcast Internet Services providing social benefits, such as telehealth, distance learning and public safety related services.
Please contact us if you have questions about the FCC’s recent Order or ATSC 3.0 developments in general.