Echostar Satellite L.L.C. v. F.C.C.

• Decision Date: 25 July 2006
• Docket Number: No. 04-1304.,04-1304.
• Citation: 457 F.3d 31
• Parties: ECHOSTAR SATELLITE L.L.C., Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents National Association of Broadcasters, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

457 F.3d 31

ECHOSTAR SATELLITE L.L.C., Petitioner v. FEDERAL COMMUNICATIONS COMMISSION and United States of America, Respondents National Association of Broadcasters, et al., Intervenors.

No. 04-1304.

United States Court of Appeals, District of Columbia Circuit.

Argued December 12, 2005.

Decided July 25, 2006.

On Petition for Review of Orders of the Federal Communications Commission.

Pantelis Michalopoulos argued the cause for petitioner. With him on the briefs were Rhonda M. Bolton and John D. Clopper.

Joel Marcus, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the brief were Thomas O. Barnett, Acting Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson and Robert J. Wiggers, Attorneys, Samuel L. Feder, General Counsel, Federal Communications Commission, and Daniel M. Armstrong, Associate General Counsel. John A. Rogovin, Attorney, entered an appearance.

Thomas P. Olson argued the cause and filed the brief for intervenors National Association of Broadcasters, et al.

Before: GINSBURG, Chief Judge, and SENTELLE, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

GINSBURG, Chief Judge.

EchoStar Satellite L.L.C., a provider of direct-to-the-home satellite television service, petitions for review of two orders in which the Federal Communications Commission adopted an improved version of its Individual Location Longley-Rice (ILLR) model for predicting the strength of broadcast television signals. In response to congressional directives in § 1008 of the Satellite Home Viewer Improvement Act of 1999 both to adopt a "reliabl[e]" model and to "ensure" that the model "takes into account" loss of signal strength due to "terrain, building structures, and other land cover variations," 47 U.S.C. § 339(c)(3), the Commission altered its ILLR model for UHF stations but, as a practical matter, did not do so for VHF stations. EchoStar argues, among other things, the decision with respect to VHF stations violated § 339(c)(3). Six associations of broadcasters and the Fox Broadcasting Company have intervened in support of the Commission. For the reasons stated below, we deny EchoStar's petitions in all respects.

I. Background

A network television broadcaster generally has "exclusive rights," pursuant to the Copyright Act, 17 U.S.C. § 106(5), to authorize the public display of its copyrighted content, including the retransmission of its broadcast signal. In the Satellite Home Viewer Act of 1998 (SHVA), the Congress, in order to make network programming available to households outside the broadcast range of a local network affiliate, gave satellite carriers a "statutory license," that is, a compulsory license subject to payment of a prescribed royalty, to retransmit to "unserved households" the signals of no more than two distant network television stations. 17 U.S.C. §§ 119(a)(2)(A)-(B). An unserved household is, with respect to a particular television network, one that is unable to receive by way of a conventional rooftop antenna a Grade B signal, as defined by the Commission, from one of that network's affiliates. Id. § 119(d)(10)(A).

In the wake of the SHVA, the Commission adopted the ILLR computer model "to predict whether a household is likely to be able to receive a signal of the required strength" and thereby "minimiz[e] the need for on-site testing." See Satellite Delivery of Network Signals to Unserved Households for Purposes of the Satellite Home Viewer Act, Report & Order, 14 F.C.C. Rcd. 2654, ¶ 7 (1999) (SHVA Order). When it was adopted, EchoStar and others criticized the ILLR model because it did not account for loss of signal strength due to variations in land cover— for example, buildings and vegetation— also known as "clutter loss." See id. ¶ 82. The Commission acknowledged that land cover affects signal intensity, but declined to include a clutter loss factor in the model because it was "not aware of a standard means of including such information in the ILLR that has been accepted by the technical and scientific community." Id. ¶ 83.

In response, the Congress enacted the Satellite Home Viewer Improvement Act of 1999 (SHVIA), directing the Commission to "take all actions necessary ... to develop and prescribe by rule a point-to-point predictive model for reliably and presumptively determining the ability of individual locations to receive signals [of Grade B intensity]." 47 U.S.C. § 339(c)(3). Specifically, the Commission was to "rely on the [ILLR] model set forth [in its SHVA Order ] and ensure that such model takes into account terrain, building structures, and other land cover variations." Id. The Congress further directed the Commission to establish "procedures for the continued refinement in the application of the model by the use of additional data as it [sic] becomes available." Id. Finally, the SHVIA amended the Copyright Act to incorporate a statutory presumption in favor of the Commission's ILLR model. See 17 U.S.C. § 119(a)(2)(B)(ii)(I) (in copyright dispute between broadcaster and satellite carrier, court must rely upon ILLR model, as revised by the Commission over time, to establish presumptively whether satellite subscriber is "unserved").

Pursuant to the SHVIA, the Commission conducted the rulemaking here under review, proposing to adjust the ILLR model to incorporate "the effects of both vegetation and buildings." See Establishment of an Improved Model for Predicting the Broad. Television Field Strength Received at Individual Locations, Notice of Proposed Rulemaking, 15 F.C.C. Rcd. 1843, ¶ 9 (2000) (ILLR Notice ). In particular, the Commission proposed to subtract from each predicted signal strength a "clutter loss value" based upon one of ten different categories of land cover, using data from the Land Use and Land Cover (LULC) database published by the United States Geological Survey. Id. ¶¶ 9-11. Loss of signal strength would be calculated using the figures in "Clutter Losses and Environmental Noise Characteristics Associated with Various LULC Categories," IEEE Transactions on Broadcasting, Vol. 44, No. 3 (Sept.1988), by Professor Thomas N. Rubinstein. Id. ¶ 11. Recognizing certain limitations inherent in Professor Rubinstein's figures, see id. ¶¶ 11-12, the Commission solicited "comment on whether other data are available that would allow [it] to expand the application of clutter loss considerations, and whether there are other approaches that are scientifically supported and could be integrated into the ILLR model to take into account losses due to vegetation and man-made structures." Id. ¶ 11.

Various broadcasters, satellite carriers, and engineers commented upon the proposed rule. Many criticized the methodology underlying the Rubinstein data and one engineer, Richard L. Biby, submitted an alternative set of clutter loss figures. Most significant, an empirical study jointly submitted by the National Association of Broadcasters and the Association for Maximum Service Television, Inc. compared "approximately 1,000 intensity measurements," taken during field testing in five geographic regions, with the signal strength predicted by the existing ILLR model and the model as adjusted for clutter loss based upon the Rubinstein and the Biby data. The NAB/AMST study reported for each measurement whether the various models correctly predicted the presence of a Grade B signal, predicted service at an unserved location (over-predicted), or predicted no service at a served location (under-predicted). The study concluded the proposed models were "less accurate" than the ILLR model already in use because they produced a lower percentage of correct predictions. Finally, the Associations argued that the SHVIA required the Commission to leave its "highly accurate" model in place "[a]bsent an empirically-validated method of improving the accuracy of the ILLR." The NAB/AMST study was the only empirical study submitted by any commenter, and no commenter, including EchoStar, criticized the study prior to the Commission's initial decision.

Relying upon the NAB/AMST study, the Commission concluded that for both VHF and UHF channels "the ILLR model without clutter corrections prove[d] superior to [the alternatives] by making the correct prediction more often." Establishment of an Improved Model for Predicting the Broad. Television Field Strength Received at Individual Locations, First Report and Order, 15 F.C.C. Rcd. 12,118, ¶ 14 (2000) (ILLR Report and Order ). With respect to VHF channels, the Commission concluded that reducing predicted signal strength to take account of clutter loss would "make the ILLR model less accurate because it already produces more under-predictions than over-predictions." Id. Accordingly, the Commission set the "clutter loss values for VHF channels to zero," id. ¶ 15, thereby leaving the results generated by the model unchanged for those channels. With respect to UHF channels, however, the Commission concluded an adjustment for clutter loss was appropriate because, by setting clutter loss figures at one third the levels proposed in the ILLR Notice, it could "produce a better balance between under-predictions and over-predictions without adversely affecting the overall percentage of correct predictions." Id.

EchoStar petitioned for reconsideration, arguing the Commission had "abdicated its responsibility" under the SHVIA to take into account clutter loss values in its predictive model for VHF channels. EchoStar also objected that the Commission had relied upon the NAB/AMST study without having made the supporting data available for comment. (The two Associations later filed those data with the Commission, approximately one month before EchoStar's reply was due.) Finally, EchoStar argued the Commission had unlawfully refused to permit it to conduct on-site signal strength tests at the premises of customers who claim to have been erroneously identified as served, rather than requiring those customers to...