STATEMENT OF CONGRESSMAN RICK BOUCHER 

                                                       June 13, 2002

           Thank you Mr. Chairman for a timely hearing on the CARP process.

           The CARP process is badly broken. It should be replaced with a more efficient,

more affordable and fairer system. In my view the functions of the CARP should be

transferred to a U.S. District Court.

           The problems which beset the CARP are many.

           While the CARP process was designed to produce a streamlined procedure, the lack

of appropriate discovery mechanisms has prolonged the proceedings, achieving the

opposite of the intended outcome.

           The process is too expensive. It is beyond the ability of many interested parties to

afford. Having private parties pay the fees of the arbitrators is manifestly unjust to the

financially less fortunate.

           No body of expertise is developed by the arbitrators which could be applied in

subsequent proceedings. Starting with a new arbitrator panel each time will lead to

inconsistent judgements and a constant process of reinventing the wheel.

           And the standards which are applied are demonstrably inadequate. In the recent

webcasting decision, the concept of fairness of the payment was totally absent from the

deliberation. 

           Fairness is the standard under Section 801 (b) (1) proceedings for royalty

payments for digital music services other than webcasting.

           Fairness is the standard under Section 119 (c) (3) (B) for royalties paid by cable

and satellite companies to terrestrial broadcasters for terrestrial broadcast retransmissions.

           But fairness is not an element of the standard under Section 114 applicable to

webcasters. However we address the procedural problems, and I believe vesting this rate

setting function in a U.S. District Court is the best approach. We also need to invest

fairness of the payment as the governing standard under all CARP proceedings.

           We must avoid a repeat of rulings like the most recent one, through which a one-size

fits all approach was adopted, and small webcasters that measure annual revenues in the tens

of thousands of dollars were saddled with royalty fees in the hundreds of thousands. A

fairness standard would have prevented a ruling which threatened to put the young and small

companies out of business.

           Changes must be made, and I welcome this first hearing as we explore the problem

and consider a new course.