To access video programming via the Internet, consumers must also have Internet access, which requires (1) an agreement with an Internet Service Provider ("ISP"), such as America Online or Mindspring; and (2) a means to access the ISP, such as by a phone line, cable, satellite, or terrestrial wireless technology. Thus, the availability of Internet webcasting in rural and small communities is dependent upon the availability of ISPs and a means to access those ISPs.

What Does a Webcaster Need to Deliver Television Signals via Internet Webcasting?

A webcaster must use a number of basic components to provide consumers with television signals via Internet webcasting. Below, IWA discusses three basic elements of an Internet webcast: (1) the programming source, (2) an encoder, and (3) a media server.

a. Programming Source

In order to webcast a local television signal, the Internet webcaster must obtain access to the television signal. If the television station is also the webcaster, then accessing the television signal is simple. Some webcasters, however, may seek to aggregate multiple television signals at their web site. If the webcaster is located within the serving area of a local television station, then it can access the signal with an antenna just like most households do. If a webcaster wants to webcast multiple television signals including signals from distant markets, then it will need to access the television signal through some other means, such as by satellite or wired means. Of course, the legal authority of a webcaster , whether or not the webcaster is an independent party or the television station itself, to make a local television signal available on the Internet is currently under much scrutiny by lawmakers, broadcasters, and webcasters. In Part III below, IWA discusses the current copyright law issues surrounding Internet webcasting and the steps that can be taken to resolve these issues.

b. Encoder

Once a webcaster accesses a television signal, it users an encoder to capture, compress, and convert the signal into a format that can be transmitted over the Internet. This encoder can be a dedicated hardware device or, more typically, a computer running encoding software.

c. Media Server

After the signal is encoded, it is sent to the media server which is connected to the Internet. The media server enables the webcaster to distribute the encoded television signal to Internet users, even if many users want to access the same television signal at the same time.

The Internet users' "player" must be compatible with the webcasters' encoding and server software. Thus, if a webcaster uses RealNetworks' encoding and server software, only those Internet users with RealNetworks' RealPlayer "player" software can view the television signal of that webcaster. Because the "player" software is usually free and readily available for downloading, Internet users do not face incompatibility difficulties between the "player" and encoder/server software. It is quite common for users to have multiple streaming media players resident on their computers simultaneously.

II. Benefits of Webcasting Relative to Other Means of Delivering Local Television Signals Into Rural and Small Markets

Viewing local television signals via the Internet in rural and small markets presents a number of benefits relative to other means of viewing television, such as by cable and satellite. Below, IWA discusses each of these benefitso

A. The Internet and Webcasting Are Almost Universally Available in Rural and Small Markets, Thereby Eliminating the Need for Deployment of Costly Infrastructure

The major benefit of Internet webcasting is that it is available today to anyone with an appropriate computer and Internet access.

1. Computers Are Readily Available in Small and Rural Markets

There are virtually no limits on the availability of computers in small and rural market While not all residents of small and rural markets can drive to the local consumer electronics superstore and purchase a computer, they can order the most up-to-date computers by calling the computer manufacturer or distributor directly. On average, a computer costs between $500 and $1500 bundled with appropriate software.

Despite the availability of computers in rural and small markets, however, a recent study prepared by the NTIA demonstrates that Americans in rural areas are slightly less likely to own a computer than residents of urban markets. ² Specifically, the NTIA found that, as of 1998, 39.9% of U.S. households in rural areas owned a computer compared to 42.1% of all U.S. households and 42.9% of urban households. ³

2. Most Americans in Rural and Small Markets Can Access the Internet with a Phone Line

Americans can access the Internet using many different technologies, such as with a basic telephone line or "copper local loop," cable, satellite, or terrestrial wireless technology. While h0t1*0 access via cat4e modems, satellite, or fixed wfteless technology provide users with greater bandwidth and thus greater video quality, many Americans in rural and small markets do not yet have access to these emerging technologies. Cte means of access, the copper local loop, is almost ubiquitously deployed. As of 1998, 94% of U.S. households in rural areas had telephone service. ⁴ In fact, the NTIA has concluded that "rural areas are generally as connected as urban areas." ⁵ Although Internet access via a telephone line, commonly referred to as "dial-up access," provides the least bandwidth compared to other means of Internet access, it is by far the most readil ailable in rural markets.

Satellite technology also provides a means for Internet access in rural markets. A geostationary satellite has a nationwide footprint, thereby making it just as cost effective to serve a consumer in a rural area as it is to serve a consumer in an urban area. The Federal Communications Commission ("FCC") recently estimated that DirectPC, a provider of Internet access via satellite, offers a downstream access speed of 400 kbps and has approximately 40,000 6 subscribers ⁶ . DirectPC currently uses a telephone line return path. Technology is also available that also enables two-wa Internet access via satellite.

3. Internet Access Is Available in Rural and Small Markets

Given the near ubiquitous deployment of telephone lines in rural markets and the emerging technologies of satellite, cable, and wireless, Internet access should be abundantly available in rural markets. The following chart published by the NTIA which provides figures on the percentage of U.S households using the Internet, however, does not entirely support this conclusion.

   Percentage of U.S. Households Using the Internet7


             U.S.    Rural   Urban   Central City

Northeast    26.7    29.7    25.9    18.7

Midwest      25.4    21.5    26.9    24.0

South        23.5    19.0    25.6    22.6

West         31.3    26.2    32.0    31.8

These figures demonstrate that Americans in rural areas are less likely to use the Internet than Americans in urban markets. The FCC, however, has concluded that Internet access is available in rural America and that "At this stage in the deployment of advanced services to rural communities, our data is anecdotal and we can in no way conclude that all Americans have, or are about to have, access to these services. At the same time, however, it appears to us that companies are building or providing these services in many rural areas and that the rural character of these areas will not present an intractable barrier to deployment." ⁸ One study cited by the FCC concluded that over 90% of the U.S. population have access by a local phone call to several ISPs and an additional 5% have access by a local call to one ISP. ⁹ Thus, based on this study, the FCC concluded that only 5% of Americans now lack access to any ISP by a local call. ¹⁰

B. Costs of Receiving and Broadcasting Signals via Webcasting Are Minimal

While the NTIA's figures demonstrate that Americans residing in rural areas are less likely to own a computer and to access the Internet, the costs of both viewing and providing local television signals via Internet webcasting are insubstantial relative to other technologies and should not be an impediment the continued development of Internet webcasting as an alternative to traditional cable and satellite television.

1. The Costs of Receiving Local Television Signals via Internet Webeasting Are Minimal

The cost to the Internet user of receiving local television signals via the Internet is relatively small. The most significant cost is the cost of the computer or web-enabled TV itself. This represents a one-time cost and will be of no cost to those Americans in rural areas that already own such a device. As indicated, the software needed to play streaming media is available free of charge. If a consumer accesses the Internet via his or her phone line, then the cost of the phone line does not present an additional cost to access local television signals because the consumer already pays for the phone line for regfflar phone service. Of course, if ft consumer wishes to install a second phone line or to access the Internet through some other means, such as cable, satellite, or wireless, then these types of Internet access will result in an additional monthly recurnng charge. Finally, the consumer must pay the ISP for Internet access. These charges are usually flat-rate, recurring monthly charges.

2. The Costs of Webcasting Local Television Signals Are Minimal Relative to Other Technologies

For the webcaster, the costs of Internet webcasting are also relatively small compared to other technologies. Unlike cable, satellite, and terrestrial wireless providers, webcasters do not need to deploy costly infrastructure to rovide their service. For exa le, a cable company must deploy cable throughout a market to provide local television signals or must upgrade its existing cable plant to enable two-way communications in order to allow Internet access over cable. A satellite provider must construct, launch, and operate a satellite and obtain access to scarce spectrum resources. A fixed wireless provider must construct towers and install antennas on end users' rooftops as well as obtain access to scarce spectrum.

A webcaster, however, merely uses existing infrastructure, such as telephone lines and the Internet backbone, to enable consumers to access local television signals. The webcasters' costs include the programming, encoding hardware and software, media server and software (as well as a server license if the webcaster uses a RealNetworks platform, whereas Microsoft provides its server software free of charge), a production system to capture the video, an Internet connection charge, and labor and administration expenses. One organization estimates that, depending upon the system configuration used, an Internet webcaster could incur monthly recurring expenses of between $2500 and $36,000 and total capital expenditures of between $11,700 and $126,500. ¹¹ These costs may not be insubstantial for some broadcasters in rural markets. The IWA urges the NTIA and other lawmakers to consider subsidies or loan guarante" for Internet webcasters of television signals in rural markets to purchase streaming media servers and other necessary hardware. Relative to other technologies, Internet webcasting presents the most cost effective solution to rapidly providing local broadcast signals into rural and small markets.

Unlike broadcast, cable, or wireless service providers, a webcaster does not need to be in the same market as or even be located close to to the end user to vide local television signals. While a cable service provider must deploy cable to the home and a broadcast or fixed wireless provider must be within a certain distance of the end user, an Internet webcaster can be thousands of miles away from an end user and still provide local television signals. Thus, the lack of need for geographic proximity between an end user and a webcaster provides Internet webcasters with a key advantage over cable and wireless providers.

III. Impediments to the Development of Internet Webcasting

The impediments to providing local television signals via Internet webcasting can be broken down into two categories: (1) copyright laws and (2) the lack of bandwidth in the "last mile" to the home. Both of these impediments are discussed below.

A. Copyright Laws

Current copyright laws provide cable and satellite providers with a compulsory copyright license which enables them to retransmit local television broadcast signals without the need to negotiate with each individual copyright holder of the material retransmitted. The cable and satellite providers pay fees into a copyright pool, the proceeds of which are then distributed to the copyright holders. Internet webcasters, however, are not covered by this compulsory licensing scheme, thereby requiring a prospective Internet webcasteT to negotiate with each individual copyright holder before retransmitting a broadcast signal over the Internet. Even if the local broadcaster itself wanted to provide its signal over the Internet in the way many broadcast radio stations currently do, it is limited in its ability to do so by the fact that it may not own the copyrights of many of the programs it broadcasts. These rights are often held by networks or syndicators who provide such programs to the broadcaster for its over-the-air use.

Retransmission of local television signals into local markets via the Internet also raises concerns regarding the network nonduplication, syndicated exclusivity, and sports blackout rules. While these rules presently pertain only to cable operators, the FCC is currently conducting a rulemaking proceeding pursuant to the Satellite Home Viewer Improvement Act of 1999 ("SHVIA") which will result in the application of some form of these rules to satellite operators as well. ¹²

The network nonduplication rules allow a television broadcast station that has purchased exclusive rights to network programming within a specified area to protect its exclusivity on local cable systems. ¹³ Under the syndicated exclusivity rule, a cable system may not import duplicating syndicated programming which has been purchased by a local station on an exclusive basis. ¹⁴ The sports blackout rule allows the holder of the exclusive distribution rights to a sporting event to control, through contractual agreements, the display of that event on local cable systems. ¹⁵ The ability to access distant broadcast signals over the Internet jeopardizes many of the exclusive programming rights held by local broadcast stations.

B. Lack of Bandwidth

Presently, the quality of video received over the Internet with simple dial-up Internet access using a telephone line and a 28.8 kbps modem does not approach the quality of video provided by broadcast, cable, or satellite providers. The limiting factor is the bandwidth, or information carrying capacity, of the local copper loop. While Internet webcasting can be used today to provide local television signals and, most importantly, the critical news and emergency information local television stations provide to their viewers, Internet webcasting over telephone lines cannot at this time equal the quality provided by broadcast television's approximately 30 frames-per-second transmission. In fact, Internet webcasting over telephone lines currently allows for only 10 to 12 frames per second. Such a limitation is particularly troublesome for sporting events and other programming that involves significant action and movement. Thus, the ability of Internet webcasting to serve as a viable, long-term, commerical alternative to broadcast, cable, and satellite television for purposes of delivering high quality, full-motion video programming depends upon increasing the bandwidth of the "last mile" to the home.

IV. Steps for the Future

Below, the IWA discusses the steps lawmakers can take to ensure that Internet webcasting continues to develop as a viable and cost effective alternative to cable and satellite television as means of providing local television signals in rural and small markets.

A. Copyright Laws Must Be Revised to Enable Webcasting to Deliver Local Television Signals into Local Markets

1. Lawmakers Must Create a Compulsory Licensing Scheme for Internet Webcasting

Rather than requiring each Internet webcaster to negotiate with each copyright holder of local television programming to be transmitted over the Internet, lawmakers must create a compulsory licensing scheme for Internet webcasting. As with cable and satellite providers, a compulsory licensing scheme will eliminate the transaction costs entailed in negotiating with each individual copyright holder. Further, a webcasting compulsory copyright scheme will level the playing field between webcasters and cable and satellite television providers, thereby allowing webcasting to become a legally viable alternative to cable and satellite.

2. Encryption and Password Protection of Broadcast Signals Presents a Solution to Concerns Regarding Network Nonduplication, Syndicated Exclusivity, and Sports Blackout Rules

Local broadcasters are rightfully concerned that the ability to access distant market television signals over the Internet will violate their exclusive rights to certain programming within their local market. Encryption technology and password protection of programming, however, can eliminate these concerns. By encrypting the television signals webcast over the Internet, webcasters can ensure that television signals are viewed only in the markets in which they are intended and authorized to be viewed, thereby protecting the exclusive rights of local broadcasters. Of course, such encryption software will increase the expense of webcasting a television signal and provides even more support for loan guarantees or subsidies for Internet webcasting of local television signals.

B. Lawmakers Must Encourage the Further Development of Broadband Internet Access via Telephone, Cable, Satellite, Terrestrial Wireless, and Any Other Emerging Technology in Rural and Small Markets

To ensure that Internet webcasting develops as a viable alternative to cable and satellite television, lawmakers must continue to work to increase the bandwidth of the last mile to the home in rural and small markets. While most Internet users access the Internet with dial-up service over their telephone line, such a means of access does not i vide sufficient bandwidth to allow Internet webcasting to provide video quality equal to that of cable and satellite television. Nevertheless, webcasting does provide local television signals now in rural and small markets and, most importantly, access to critical news and emergency information from these local stations. However, to realize the full potential of webcasting, the NTIA should promote the distribution of broadband access to all areas of the country.

Below, IWA briefl discusses some of the emerging technologies that cangvide broadband Internet access to rural and small markets. TWA does not have a vested interest in any of these technologies. Rather, IWA encourages the NTIA and lawmakers to promote the deployment of these technologies in rural and small markets to enable Internet webcasting to equal the quality of video provided by broadcast, cable, and satellite television.

1. Digital Subscriber Line Technology

Digital Subscriber Line ("DSL") technologies vastly increase the bandwidth of the local loop without the need for substantial new infrastructure deployment. The FCC has indicated that DSL can increase the bandwidth of the average analog local loop connection of about 40 Kbps to 1.5 Mbps and higher, depending upon the type of DSL technology deployed. ¹⁶ In rural areas, one limitation on DSL technology is that the end user must located within approximately 18,000 feet of the local telephone company's central office. Because end users in rural areas are widely dispersed and relatively far from the central office compared to urban residents, DSL may be of limited effectiveness in rural areas.

2. Cable

High-speed Internet access is also available over cable lines usinjicable modem technology. The FCC has estimated that cable modem technology can provide Internet access at speeds one hundred times taster than dial-up service. ¹⁷ Because some rural and small markets do not have cable infrastructure, such a means of Internet access may not be ubiquitously available.

3. Satellites

Satellites present a particularly effective solution to bandwidth limitations in markets. Although the construction and launch of a satellite is a costly endeavor, one satellite is operational, the cost of providing Internet access via satellite is not depend the location of the end user. Thus, the cost to provide service to a customer in a rural be the same as the cost to provide service to a customer in an urban area.

4. Terrestrial Wireless

Terrestrial wireless technology presents another option for Internet access in rural and small markets. Using multichannel multipoint distribution service ("MMPS" or "wireless cable"), local multipoint distribution service ("LMDS"), or some other spectrum resource, wireless providers can offer Internet access without the need to deploy a physical line or cable to every home in a market. ¹⁸ While this same technology could also simply retransmit local broadcast signals, providing Internet access with this spectrum provides consumers with more video programming and data options and is more spectrum-efficient. The MMDS and LMDS spectrum were both originally envisioned by the FCC as providing wireless cable television service. However, in both services, even in urban areas, this economic model failed. Both services are now envisioned as means of broadband access to the home for Internet applications. MMDS is currently being deployed in such a fashion and it is expected that LMDS will be so deployed in the near term. ¹⁹

5. Power Lines

Some companies have proposed to use power lines to provide high-speed Internet access. While this technology is still in development, it presents a particularly appealing solution to the bandwidth glut in rural and small markets due to the substantial penetration of power lines in these market..

V. Conclusion

Internet webcasting can provide residents of rural and small markets with access to local television signals now. Due to copyright and bandwidth concerns, however, the true potential of Internet webcasting has not yet been realized. The IWA encourages the NTIA and other lawmakers to encourage the further development of Internet webcasting by revising the current copyright laws and encouraging the deployment of broadband infrastructure in rural and small markets.

Respectfully submitted,

INTERNATIONAL WEBCASTING
ASSOCIATION

By:

Its Attorneys

April 14, 2000