There’s a kind of hush on the way as lawmakers and regulators in Washington, DC have quickly escalated their war on loud commercials in video programming.  On May 27, 2011, the Federal Communications Commission proposed new rules to implement the Commercial Advertisement Loudness Mitigation Act (the “CALM Act”), enacted by Congress on December 15, 2010.  These rule changes would incorporate new technical standards aimed at requiring broadcast stations, cable operators and other multichannel video programming distributors (“MVPDs”)  to turn down the volume of commercials in video programming. The FCC is required to prescribe regulations by December 15, 2011, and the new regulations would have to take effect within one year after the date they are adopted.  The comment cycle has been announced in the Federal Register. Comments are due on or before July 5, 2011 and reply comments are due on or before July 18, 2011. 

What has prompted legislation and new regulations designed to give viewers serenity from loud commercials?  According to the FCC, complaints about loud commercials are not new, but the rise of digital television has expanded the dynamic range of audio, both in program material and in commercials. The FCC stated that it has received more than 800 complaints about “loud commercials” since January 2008.  The CALM Act is not only specific in how Congress expects the FCC to tackle the issue, it also sharply limits the FCC’s authority on the matter.

As the CALM Act requires, the new rules would incorporate a technical standard published by the Advanced Television Systems Committee (“ATSC”) called ATSC A/85. A consumer’s home receiver would be capable of automatically adjusting volume based on metadata (called a “dialnorm”) encoded in the programming.  These volume adjustments would occur as programming transitions between program material and commercials or when the viewer changes channels.  Under the proposed rules, the ATSC A/85 standard and “successor” standards would be incorporated by reference into the rules and that public notice and an opportunity for comment would not be necessary.

For broadcasters and MVPDs, the new regulations likely will produce disquiet about increased regulatory risk and legal liability. Some considerations: 

• The rules would apply to all commercials transmitted by a broadcaster or an MVPD. There be no exceptions for commercials that are inserted by third-party content providers; thus raising questions about who bears the ultimate responsibility for compliance.  The rules would not be enforced directly against third-party content providers, and there will be situations where responsibility remains to be allocated – for example, if an MVPD carries a broadcast station’s programming that contains loud commercials.
• The FCC has raised some interpretive questions regarding what counts as a “commercial advertisement” for purposes of the rules. For example, the FCC wants to know whether the rules would include political ads by a legally qualified candidate or promotions of specific video programs. In addition, the FCC has asked about the impact on noncommercial broadcast stations, which are legally prohibited from broadcasting advertisements.
• Broadcasters and MVPDs would have new burdens to demonstrate compliance with the rules in response to a consumer complaint alleging loud commercials.  Compliance could occur with respect to a “safe harbor” under the statute or in other ways.  To qualify for the safe harbor, the entity would have to install, utilize and maintain in a “commercially reasonable manner” the equipment and necessary software to comply with the ATSC A/85 standard.  The FCC has sought comment on what practices are “commercially reasonable” for this purpose.  The FCC also wants to know other ways compliance can be demonstrated. For example, stations and MVPDs may choose to enter into agreements with content providers whereby the provider would agree to deliver content that complies with ATSC A/85 RP. The station or MVPD would remain responsible but could choose to negotiate for indemnification clauses in these contracts.
• Broadcast stations and MVPDs would be able to apply for a limited, one-year waiver from the CALM Act requirements based on financial hardship.  The FCC cites a Senate Committee report that estimates the cost of equipment as ranging from a few thousand to about $20,000 per device.  Under the FCC’s proposal, financial hardship would be demonstrated based on evidence of the station’s financial condition, cost estimates for new equipment, a detailed explanation of the justification for the postponement and an estimate of the time to comply.  Waiver proponents would not be required to demonstrate financial hardship.  The FCC has sought further comment regarding whether blanket waivers may be necessary in smaller markets.
• The FCC has identified “practical challenges” in compliance for some MVPDs who use a different type of audio system than the AC-3 system for which the technical standard was designed but who nevertheless would be subject to the rule.  The FCC has sought comment about these challenges.
• Some providers receive program material from third-party programmers.  The FCC wants input on the technical ability to pre-screen that content for loud commercials.
• The FCC has proposed a consumer-driven complaint process whereby consumers would be permitted to prepare and submit an online form that relates specifically to complaints about loud commercials.  There would be no filing fee, but the complainant would be required to submit contact information and specific information about the programming that is the subject of the complaint.  The broadcaster or MVPD receiving the complaint would be expected to retain records and documentation to demonstrate compliance. 

Despite the prevalence of digital video recorders (or more importantly, their fast-forward functionality) and the volume button on remote controls, through the CALM Act, Congress has charged the FCC to act quickly to combat loud commercials.  As the NPRM makes clear, however, questions remain, and we have yet to hear the answers.