The American Cable Association is asking the U.S. Copyright Office to create a streamlined waiver process that will relieve small, financially troubled cable operators from paying new filing fees on submitted semi-annual Statements of Account (SOAs) for at least one year to create needed space for these firms to improve their financial condition.

"Permitting cable operators to seek waivers will greatly reduce financial burdens for some providers without materially compromising Congress's goals of permitting the Copyright Office to recover up to 50% of its administrative costs," ACA President and CEO Matthew M. Polka said.

ACA's comments were filed May 14 with the Copyright Office in response to the Licensing Division's Notice of Proposed Rulemaking (NPRM) that included plans to establish filing fees for cable SOAs. The Copyright Office proposed a tiered filing fee approach, offering lower fees to cable operators filing short forms. Yet, ACA contended that the NPRM's proposed fees may result in a significant burden for some cable operators facing financial hardship, justifying the creation of a streamlined waiver for troubled small cable operators, for whom the Copyright Office failed to provide an avenue of relief.

"A reasonable filing fee structure must include a waiver process for cable operators that face financial hardship, particularly for smaller cable operators. For a small cable operator that operates multiple systems, the total filing fee due can become significant," Polka said.

ACA said the creation of the streamlined waiver would be consistent with the history of forbearance shown small cable operators by Congress and previous Copyright Office rulings and reports. For example, smaller systems pay a reduced fee under the Compulsory License in addition to being granted a waiver by the Copyright Office from mandates to make fee payments electronically.

ACA proposed that the Copyright Office adopt a streamlined waiver process for smaller cable operators - those with 400,000 subscribers or fewer and facing financial hardship, and it proposed a standard waiver process for larger operators in similar circumstances.

ACA said it proposed a streamlined waiver process for smaller cable operators because the act of filing a waiver can itself be burdensome for smaller entities.  ACA recommended a simpler process in which the smaller operator would provide a statement, signed by a company representative, that the small provider qualifies for the waiver with an explanation why payment of the filing fee would impose a financial hardship.

"A smaller cable operator filing for a waiver should not be required to demonstrate negative cash flow in order to qualify for relief. Rather, the Copyright Office should only expect that a cable operator's assertion of financial hardship be reasonable under the circumstances," Polka said.

For cable operators relying on the standard waiver, ACA said the Copyright Office should require submission of a signed certification that includes the following:

Evidence of its financial condition, such as financial statements;

• A cost estimate for the filing fees that would be expected to be paid;
• A detailed statement explaining why its financial condition justifies waiving the filing fee; and
• An estimate of when the operator believes the filing fees would no longer be a financial hardship, along with supporting information.

However, ACA said a larger cable operator should similarly not be required to demonstrate negative cash flow. Instead, the cable operator's assertion of financial hardship should only need to be deemed reasonable under the circumstances by the Copyright Office.

ACA said a filing fee waiver process will not compromise the Copyright Office's recovery of administrative costs as permitted by Congress. The Licensing Division estimates that it will collect $1.2 million in filing fees, representing about 48% of SOA program costs.

Because the Licensing Division receives thousands of SOAs every six months, ACA predicts the number of SOA filers requiring a filing fee waiver should represent only a tiny amount of these SOAs and will not undercut the Copyright Office's recovery of up to half of its administrative costs.