The new main studio rule, which took effect at the end of October, has generated a number of inquiries at our office. Under the new rule, each broadcast station must locate its main studio within: a) the boundaries of the community of license, or b) the principal community contour of any AM, FM, or TV station licensed to the same community, or c) 25 miles of the community reference coordinates for the community of license. (Yes, the rule does give the distance in miles rather than kilometers!) A footnote indicates that for purposes of guideline "b)" listed above, AM stations with transmitters in both the expanded band and the conventional AM band must use the contour of the conventional band station until the license for the original facility is surrendered. If you want to read the exact wording of the new rule, you can find it in Chapter 47 of the Code of Federal Regulations (CFR), Section 73.1125. It is quite possible, that for some smaller stations—especially those licensed to communities with much larger stations—the main studio can now be legally placed at a location where the station cannot be heard! With these greatly liberalized guidelines, look for the Commission to be more hesitant to grant waivers of the main studio rule. However, the new rule says such requests can be made and will be considered on a case-by-case basis.
Commission Matters
The Commission has issued a Further Notice of Proposed Rulemaking asking for public comments on ways to resolve mutually exclusive non-commercial, educational (NCE) radio and television applications. The traditional method of using comparative hearings to resolve these cases was tentatively concluded to be too lengthy, too costly, and too cumbersome. One suggestion put forth by the Commission was a lottery. This would allow decisions to be made quickly and inexpensively. The Commission also requested comments on the use of a point system as a possible alternative to lotteries. Under this system, 2 points would be awarded for local diversity, 1-2 points for a second or first NCE service in a given community, and 1 point for having a 10% or greater service range than competing applications. Comments are being sought on other factors which could potentially add points or factors that could be used to break "ties" between competing applications. Since Congress mandated the use of auctions for commercial channels but prohibited their use for non-commercial applicants, the Commission continues to struggle with how to resolve cases involving commercial channels with both commercial and non-commercial applicants. One of the more interesting solutions (for which comments are also being sought) would use an initial lottery for such channels. If none of the NCE applicants won this preliminary lottery, the allocation would then be auctioned to the highest bidding commercial applicant.
A group known as the USA Digital Radio Partners, L.P. (USADR) has filed a petition for rulemaking asking the Commission to permit the introduction of digital audio broadcasting (DAB). The petition, which includes a substantial amount of technical data, asks the FCC to adopt an in-band on-channel (IBOC) technology. USADR argues that this would allow the smoothest transition to an all digital radio service because it would allow stations to simultaneously broadcast analog and digital programs on the same frequency. In its petition, USADR urges the Commission to adopt a single system and establish transmission standards to insure compatibility among equipment manufacturers. (Our wacky editor, Thumbs Feebleman, wonders if the USADR folks just might remember the great "marketplace" experiment that was conducted with AM stereo. He’s waiting to see if we really do learn anything from history!) Comments supporting or opposing the petition are due December 23, 1998, with reply comments due by January 25, 1999. The full text of the document can be downloaded from <http://www.fcc.gov/Bureaus/Mass_Media/filings/rm9395.pdf>. Acrobat Reader, which is a widely available, free program, is required to read "pdf" files.
The Commission has set a fee for DTV stations who use their ancillary or supplementary spectrum for subscription services. Free over-the-air programs, which are supported by commercial advertising, will be exempt from the fee, but the fee will apply to all subscription services—even if those programs include commercials. The fee has been set at 5% of the gross revenues received from the services. The Commission felt this approach would satisfy the Congressional mandate to recover a portion of the value of the spectrum for the public and avoid unjust enrichment on the part of broadcasters. At the same time, the Commission believes this approach will also allow broadcasters to be innovative and creative because the fees will not be required until after the revenue is actually received. The present plan calls for broadcasters to file a report and pay their fees annually on December 1. The fees will cover the revenues received during the previous twelve month period ending on September 30. The program and the fee level will be reviewed after broadcasters and the Commission have a chance to develop some experience with the market for such services.
A Report and Order has been issued by the Commission in conjunction with the 1998 biennial regulatory review. The new rules will streamline a number of FCC procedures. Fifteen key application and reporting forms are being revised to facilitate electronic filing. The first of the new forms is expected to be available sometime after March of 1999. Electronic filing of the streamlined forms will become mandatory approximately six months after each individual electronic form is introduced. To aid in the electronic filings, a number of narrative exhibits will be replaced with certifications. To aid in keeping the certifications honest, random audits of pre-grant and post-grant forms will be conducted. The forms will also be available for viewing by competitors, and the Commission expects to rely in part on Petitions to Deny to preserve the integrity of the electronically filed forms. In other revisions, the FCC is changing the ownership form to require identification of the gender and race or ethnicity of individuals or entities with attributable ownership. The period between ownership reports will be extended to two years except for cases of changes in ownership. The Commission also removed the prohibition against for-profit sales of unbuilt stations. The FCC believes the rule is no longer needed because the new auction rules and procedures will minimize spectrum speculation. The Report and Order also extends the duration of all construction permits, television and radio, to 3 years. This allows permittees more time to construct the authorized facilities and should eliminate the need for many of the extensions that are now requested.
Commissioner Matters
As might be expected, the "Streamlining" Report and Order has provoked some comments from individual commissioners. In a joint statement, Commissioners Susan Ness and Gloria Tristani addressed their concerns regarding the use of certifications based on worksheets that will not be available for public inspection. Here are some excerpts. "We support the decision to make this fundamental change because we believe in the overall honesty and integrity of our licensees and applicants. We would prefer, however, that the worksheets used in completing these abbreviated forms be made publicly available." "Among other things, these worksheets will help applicants determine whether ownership interests are attributable, whether a transaction is within the multiple ownership limits, and whether a transfer of control has occurred, as well as to evaluate certain aspects of sales contracts. Yet we do not require that these worksheets be made available for public inspection, either in the station’s public files or at the Commission." "The Commission’s review and approval of applications for new facilities, modifications, assignments and transfers are all premised on public participation, especially where the Commission is no longer providing close scrutiny. It is important that the public have access to the information used by applicants in support of their answers. Even the most carefully prepared application may contain errors, especially in the early stages of this new process. Those who would be interested in examining pending applications may have legitimate questions about how a particular ‘yes’ or ‘no’ answer may have been determined." "We fear that our decision to require that applicants only make available such supporting information if and when they become subject to an audit is insufficient to ensure the integrity of our process. Streamlining should not impair the rights of the public to know that our rules are being fairly and consistently applied. We hope that in our desire to reduce paperwork that we have not inadvertently thrown the baby out with the bathwater. We express our willingness to reconsider this issue if others share our concerns or as experience warrants."
It was a different issue that prompted a rather lengthy statement by Commissioner Harold W. Furchtgott-Roth. He disagrees with the collection of racial and gender information. His statement is characteristically filled with involved, legal arguments. However, here are a few of the less technical highlights: "I thank the Mass Media Bureau and my colleagues for their fine efforts on this good item. I am pleased that we are simplifying our rules regarding, among other things, the filing of mass media applications and reports and that we are moving to a certification system." "I respectfully dissent, however, from the decision to require broadcast station owners to identify their race, ethnicity and gender on Annual Ownership Report Form 323." "I believe the central premise of this reporting requirement is fundamentally flawed. There is an inherent futility in seeking to classify broadcast licensees, which are often corporations or partnerships, in terms of race and gender. For instance, what is the race of the ABC radio group? The ethnicity of CBS/Westinghouse? Or the gender of a family-held business, shared equally by husband and wife?" "If one attempts to bypass this problem by instead assessing the race or gender of the shareholders, one then runs into the fact that almost any corporation in America has significant institutional investors." "Moreover, trying to characterize the racial or gender composition of stockholders is like trying to hit a moving target; even if the majority of shareholders at a certain point in time are of a particular race or gender, tomorrow they may not be. Of course, it is precisely the permanent nature of corporations—as opposed to the ever-shifting identity of the shareholders—that fundamentally distinguishes those institutions from other business arrangements." "Even if classifying corporate licensees in terms of race and gender by looking to the race and gender of its individual shareholders made sense, it strikes me as highly inappropriate for government to inquire into the racial and gender identities of those stockholders. As it should be, these factors have absolutely no bearing on a person’s ability to buy, sell, or hold stock. Accordingly, we surely would find it chilling if the government wanted to know and record a person’s race or gender prior to their purchase of stock interests. It is no less chilling, I submit, for the government to want to know such information subsequent to purchase." "We have no specific statutory authority to collect this information." After providing a lengthy, detailed legal argument in support of this statement, the Commissioner concludes, "The task of racially and sexually ‘categorizing’ shareholders, …which the Commission today requires broadcast licensees to do, is messy, potentially legally hazardous, and certainly indelicate."
A statement regarding the Commission’s 1999 budget has been issued by Chairman William Kennard. "I am delighted with the $192 million that the Commission received for its FY 1999 budget. I am particularly grateful to Senators Stevens, Gregg and Hollings and Representatives Livingston, Rogers and Mollohan, and their staffs, for their support and hard work. This funding is critical to enable the FCC to fulfill its statutory mandate and respond to the important and dynamic issues before us at this time. Also, I am pleased that Congress passed the Y2K supplemental funding and I look forward to working with OMB on meeting the FCC’s needs in this area. With respect to the FCC’s planned relocation to the Portals building, we will continue to work with GSA on the unresolved issue of increased rent and associated costs."
Miscellaneous Matters
The Commission has started the process of moving from its old location at 1919 M Street, NW to The Portals building at 445 Twelfth Street SW. Although the Office of the Secretary moved to The Portals on November 2, paper filings are still being accepted at the 1919 M Street address—but only between 4:00 PM and 5:30 PM, Monday through Friday (except holidays). The Commission expects the whole moving process to take about six months.
The issue of who is eligible to receive network television feeds via home satellite dishes is the subject of a Notice of Proposed Rulemaking (NPRM) (FCC 98-302). The NPRM is seeking comments on a number of related issues including the extent of the Commission’s authority to amend its Grade B definition only for purposes of the 1988 Satellite Home Viewer Act. Because a court injunction may cause a large number of subscribers to lose their network programming feeds on February 28, 1999, the NPRM is being conducted on an expedited basis. Comments in the proceeding will be due on December 11, 1998, and reply comments will be due on December 21.
The Commission has officially replaced the Record Imaging Processing System (RIPS) with the Electronic Comment Filing System (ECFS). All ECFS documents can be viewed on the Internet at <http://www.fcc.gov/e-file/ecfs.html>. The system can also be used to file comments electronically in unrestricted rulemaking and docketed procedures. The system is designed to work with Version 3 or higher of either the Netscape or Internet Explorer browser programs.
Upcoming Matters
You can find the continually update list of future FM allocations on our web site at <www.munn-reese.com>. We still have no official word on when the freeze on major changes and new commercial applications may be lifted.
This issue of the newsletter is going to press during Thanksgiving week. We realize it will be after Thanksgiving by the time you receive this, but please know that you are high on our list of people and things for which we are thankful this year. Although life often seems incredibly hectic, let us not fail to take time to express our thanks to God, and to one another, for the many blessings we all enjoy. We wish each of you a belated, but sincere, Happy Thanksgiving!