Staff Comments on Open Video Systems

The staff of the Federal Trade Commission has told the Copyright Office that consumers could benefit through lower costs and more robust competition if open video systems (OVS) were covered by the same compulsory licensing arrangement that applies to cable television systems.

Open video systems were established under the Telecommunications Act of 1996. They will combine features of common carriers and cable systems in providing video programming. Under current copyright law, cable systems can retransmit programming carried on broadcast signals upon payment of a fee for the "compulsory license" that the program owner is compelled to grant. If OVS's had to negotiate separate copyright licenses for each broadcast channel, their costs, including transaction costs, could exceed the "compulsory license" costs incurred by cable systems. "In such a circumstance, consumers would face higher prices than if programming were available to all technologies under a compulsory license," the staff report says. In addition, the staff recommends that copyright fees be paid by OVS programmers, not OVS operators.

The FTC staff recommendation was submitted in response to a request by the Copyright Office of the Library of Congress seeking comments on whether, and to what extent, OVS should qualify to use the cable compulsory license.

Copies of the staff comment are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov