Report No. MM 97-8 MASS MEDIA ACTION April 3, 1997 COMMISSION ADOPTS RULES FOR DIGITAL TELEVISION SERVICE (MM DOCKET NO. 87-268) The FCC today concluded its proceedings on digital television. The Fifth Report and Order, adopted today, lays the groundwork for introducing digital television (DTV) to the American people. DTV allows delivery to consumers of brilliant, high definition pictures, multiple digital-quality program streams, as well as CD-quality audio programming and advanced digital services, such as data transfer or subscription video. In the Telecommunications Act of 1996, Congress directed the Commission to issue licenses for digital television to incumbent television broadcasters. These licenses permit temporary use of the additional channel and are conditioned upon the return of one channel at the end of the transition period. The overarching goal in this proceeding is to provide for the success of free, local digital broadcast television. To bolster DTV's chance for success, the Commission's decisions today allow broadcasters to use their channels according to their best business judgment, as long as they continue to offer free programming on which the public has come to rely. Specifically, broadcasters must provide a free digital video programming service that is at least comparable in resolution to today's service and aired during the same time periods as today's analog service. The Commission will not require broadcasters to air "high definition" programming or initially to simulcast their analog programming on the digital channel. Broadcasters will be able to put together whatever package of digital product they believe will best attract customers and to develop partnerships with others to help make the most productive and efficient use of their channels. These services could include data transfer, subscription video, interactive materials, audio signals, and whatever other innovations broadcasters can promote and profit from. Giving broadcasters the flexibility in their use of their digital channel will allow them to put together the best mix of services and programming to stimulate consumer acceptance of digital technology and the purchase of digital receivers. -2- The Commission requires the affiliates of the top four networks in the top 10 markets to be on the air with a digital signal by May 1, 1999. Affiliates of the top four networks in markets 11 - 30 must be on the air by November 1, 1999. The top ten markets include 30% of television households. The top 30 markets include 53% of television households. Nearly 40% of televisions are sold during the fourth quarter of every year. A number of broadcasters in the top ten markets consisting of 30 percent of American households have committed to begin digital operations within 18 months. In adopting its construction requirements, the Commission relies on these commitments. The Commission stated that it would grant extensions where a licensee has been unable to meet the requirement due to circumstances that are either unforeseeable or beyond the licensee's control, where the licensee has taken all reasonable steps to resolve the problem expeditiously. While digital technology will change the nature of television, broadcasters remain public trustees, whether they use analog or digital technology. In the Telecommunications Act of 1996, Congress clearly provided that broadcasters' public interest obligations extend to the digital environment. The Commission stated that, at an appropriate time, it will issue a Notice to collect and consider all views on how broadcasters' public interest obligations. It placed broadcasters on notice that existing public interest requirements continue to apply to all licensees, that the Commission may adopt new public interest rules, and that nothing is foreclosed from the Commission's consideration. An important goal in this proceeding is the return of the analog spectrum at the end of the DTV transition period. The Commission has set a target of 2006 as a reasonable end-date for NTSC service. The Commission will review that date in its periodic reviews, which will be conducted every two years to allow evaluation of the progress of DTV and changes in Commission rules, if necessary. Action by the Commission April 3, 1997, by Fifth Report and Order (FCC 97-116). Chairman Hundt, Commissioners Quello and Ness, with Commissioner Chong concurring in part and issuing a separate statement, and Chairman Hundt and Commissioners Quello, Ness and Chong issuing separate statements. -FCC- News Media contacts: Patricia A. Chew and David Fiske at (202) 418-0500.Mass Media Bureau contacts: Saul Shapiro at (202) 418-2600, Gretchen Rubin (202) 418-0425, Mania K. Baghdadi (202) 418-2130, Dan Bring (202) 418-2170, and Gordon Godfrey (202) 418-2190. SEPARATE STATEMENT OF CHAIRMAN REED E. HUNDT RE: Adoption of Digital Television Allotment and Service Rules Reports and Orders, April 3, 1997. Today's decision marks the culmination of a long and worthy effort in Congress and at the Commission to ensure that 21st century America has a free, universally available digital medium that not only entertains but that educates and informs children and adults. It also marks a radical departure from earlier Commission decisions that were presented to this Commission with its current membership as of 1994. In every material respect in which the Commission had discretion, the plan adopted today is a significant change from earlier policies, or expressed in the Commission's 1992 decision. The new policies represent, first, a movement away from a command and control policy toward a market orientation for the business of digital television. And second, today's policies focus on the public interest benefits the public will receive from digital television. In terms of a market orientation, the Commission has moved from having government determine the television format of the future to having industries compete to provide the best format; from having government tell broadcasters the quality of picture resolution to giving broadcasters the freedom to respond to market forces; from having government restrict the use of the digital channel through simulcasting and other policies to giving broadcasters the flexibility to use the spectrum to respond to market opportunities. In terms of the public interest, the benefits of our changes in direction can be measured in many ways. The original plan had the public recovering 72 MHz in 15 years. The new plan has the public recovering a full 138 MHz -- 60 MHz immediately and 78 MHz in ten years. The return of a lot more spectrum a lot faster is a benefit worth billions of dollars; but far more important, the early return will generate new services and economic growth for the economy. The early return can also be measured in lives saved, as 24 MHz can now, and should be, reallocated to the critical needs identified in the report of the Public Safety Advisory Committee. Another public interest benefit is the accelerated provision of digital television services to the public. The prior plan was a slow motion launch requiring three years of licensing and six years to build. Instead, this Commission adopted today adopts a plan for instant licensing and a rapid build out. Further, our approach of focusing build-out in major markets by Christmas 1998 and Christmas 1999 scuttles the laissez-faire approach of the 1992 decision. Now we rely on the lead dogs to move the transition, which gives the country the biggest bang for the smallest buck. Specifically, we have the commitments of NAB to build at least 3 stations in markets serving 1/7th of the country by November 1998, almost 1/3 of the country by April 1999, and 1/2 by November 1999. Further, the earlier view of this proceeding was that it represents a burden to broadcasters. We are of the view that digital television represents a tremendous boon to broadcasters and that, therefore, now is the appropriate time to reexamine through a Notice appropriate public interest rules for the digital age. The Commission vote to move forward with this Notice is another breakthrough result. This Commission can justly be proud of these many improvements in its policies for the digital television service. We even changed the name from the misleading "high definition" to the apt "digital." These evolution of DTV policy is discussed in greater detail below. MOVING TO A MARKET ORIENTATION The Standard The Commission wisely adopted a digital TV standard that did not artificially limit broadcasters' choice of picture formats, allowing the directives of the marketplace, not government, to carry the day. Until June 1995, the Commission's Advisory Committee was considering a standard with a single goal -- high definition formats each of which used virtually all of the digital capacity of a 6 MHz channel. This would have been a serious and unfortunate constraint on broadcasters' ability to offer a package of digital programming and services that would help create a new digital medium and enhance consumers willingness to purchase digital receivers. After a number of discussions, the Advisory Committee -- to its credit -- decided to include other digital formats that used less bandwidth. The recommendation of the Advisory Committee aided by the addition of Microsoft, ultimately included both high definition and standard definition digital formats. Unfortunately, as Microsoft explained at the time, some of the recommended formats were not well suited for use with computers. The Commission increased the likelihood of TV- PC convergence by modifying the recommended standard to remove the specification of formats altogether. The recommendation to do so was jointly made by the computer, broadcast and consumer electronics industries, after negotiations we encouraged. As a result of the revised standard, computer manufacturers have already announced plans to build massive numbers of DTV-compatible computers so that by the time television manufacturers will have made one million DTV television sets, computer manufacturers will have sold 20 to 50 million DTV-compatible computers. And Silicon Valley companies including Microsoft, Intel and Compaq are developing dazzling new PC-TV products. We have, in short, moved from a marketplace where the only new product would be a prettier picture to a marketplace in which business can compete in offering a plethora of new products riding on a river of bits sent over the air to every TV household. While we cannot be certain of the outcome of the digital battle for eyeballs, we can take pride in knowing that by modifying the standard we gave the marketplace an opportunity to pick the winner. Spectrum Flexibility With respect to rules governing use of the digital spectrum, the Commission takes the right approach in departing from the previous notion that, after digital broadcasters were on the air, Commission rules were needed to micro-manage their businesses. High Definition Previously, many contemplated requiring broadcasters to use a single format -- the high definition format -- even though most Americans can't afford sets that can display the difference between the high definition format and lower- resolution digital formats, and even though most Americans don't have living rooms large enough to allow viewers actually to see the difference. A high definition requirement would have prevented broadcasters from airing multiple channels at once, even if that's what some viewers might prefer at least some of the time, even if that could lead to the invention of new kinds of television, and even though that's what might lead to a service that can compete head-to-head with cable TV, satellite services or other multiple video channel providers. The Commission today rightly rejects a high-definition requirement. Simulcast The Commission also rightly rejects the argument that broadcasters should be required immediately to broadcast simultaneously on their new digital channel the programming they air on their analog channel. This too would have needlessly hamstrung broadcasters, who would have been deterred by rule from offering viewers the full benefit of digital television technology. Wisely, the Commission adopts a reverse simulcast for the last few years of the transition, (what's shown digitally must be shown on the rump share of analog TVs left in the market.) This rule is narrowly tailored to the goal of recovery spectrum. Preservation of Free-Over-The-Air Programming The Commission today adopts just one requirement for use of the digital spectrum: broadcasters must provide one free TV programming service. This will ensure that adoption of digital television gives consumers at least what they reasonably expect from every current licensee: one free, universally- available, national programming channel. Meanwhile, it gives broadcasters the freedom to put together packages of digital programming and services that will be most attractive to consumers. This will speed consumer take-up of digital TV. It is an open invitation to innovation and entrepreneurship, an invitation America needs broadcasters to accept. Business Relationships Under the rules we adopt today, broadcasters are free to accept this invitation by partnering with others. The Commission rightly gives broadcasters flexibility in structuring arrangements that will bring expertise and capital into the digital TV business. By working together or with others, broadcasters could share facilities costs and equipment, and the development and provision of programming and digital services. Broadcasters can partner with each other, as by sharing a digital studio. Or they can partner with others such as computer hardware and software companies, who are itching to help make digital television as desirable as possible for the American people. IMPROVING THE PUBLIC INTEREST BENEFITS Recovery of Spectrum The digital channel allotment plan that the Commission adopts today similarly represents a dramatic improvement over what was previously contemplated. The prior plan would have recovered 72 MHz after a transition of 15 years. The new plan recovers 138 MHz -- 60 MHz immediately and 78 MHz in ten years. Early recovery is made possible by an allotment plan that minimizes the number of digital channels above channel 59. The allotment table we issue today has only 15 allotments in channels 60-69, down from 30 allotments in the table we released when we issued our Notice of Proposed Rulemaking and substantially less than the 156 allotments in channels 60-69 that some in the broadcast industry sought. The 60 MHz at channels 60-69 that we will recover quickly and the additional 78 MHz that will be recovered later is found gold that will generate enormous benefits for the public. Some of that spectrum -- 24 MHz -- can be quickly reallocated to help address the serious spectrum needs of our public safety agencies. The benefits of this can be measured, literally, in lives saved. The remaining spectrum (36 MHz from channels 60-69 plus 78 MHz at the end of the transition) can be assigned by auction for any use that the public desires. By way of comparison, the Commission's auction of 60 MHz of spectrum as part of the A and B block PCS licenses generated $7.7 billion in winning bids, twice that much in new investments, literally thousands of new jobs, and the many other benefits associated with new competition. There are yet more potential benefits. Bob Johnson, Chairman and CEO of Black Entertainment Television, has said that if spectrum at channels 60-69 were auctioned he and others would bid to acquire licenses "to create a new minority- owned digital broadcast multimedia network." An auction with that desirable possibility should be encouraged. It is worth noting that there are still other significant changes in the allotment plan we adopt today. We went from a policy of equalization, that would have by government fiat destroyed the market values earned by different broadcast licensees, to a policy of replication, that respected existing market valuations. We went from a policy of first come/first serve in terms of spectrum assignment to a policy of having the Commission set the assignments. While this task presented enormous technical complexities, at the urging of broadcasters we undertook this challenge and the result will be much greater certainty as to the build-out. We went from a inefficient policy to a policy that used the most efficient spectrum for television. We went from a policy that created greater interference for existing television sets to a policy that reduced that interference. We also went from doing essentially nothing for low power television and translators to adopting a number of creative measures to minimize the impact of digital television on those services. Now that the DTV allotment table is done, it is time for the Commission to explore ways to find a permanent home for the low power service. The many benefits associated with the DTV allotment plan that the Commission adopts today are the direct result of the hard work, rigorous analysis and extraordinary commitment of several of the Commission's brilliant engineers and economists, including Bruce Franca, Alan Stillwell, Robert Eckert, and Robert Bromery who for the last two years have been supervised and fully supported by Office of Engineering and Technology Chief Richard Smith. I am proud to have worked with these dedicated public servants. The Buildout of DTV The Commission previously would have given all broadcasters a full six years to begin digital TV transmissions. Six years would have stretched out the introduction of DTV far too long, making for a fitful, lackluster launch of this new medium instead of the impressive entry our rules provide. The cost could well have been the death of free TV, as broadcasters' pay competitors -- cable, DBS, wireless cable and others -- move earlier to digital and lock in subscribers. Today the Commission adopts rules that guarantee that there will be three or four network-affiliated digital signals in the top ten markets, and three network-affiliated signals in the top 30 markets by November 1, 1999, roughly by April 1, 1999, roughly 24 months from now, 30 months. The focus on multiple TV signals in each market is critical, since -- as our experience with color TV proves -- consumers won't buy TV sets for a single improved signal. And the 30-month milestone is significant because it means that there will be multiple digital television signals in the top 30 markets -- representing 53% of the country -- by November 1, 1999, in time for the holiday shopping season that year. ( More than 40% of television sets are sold in the last quarter of each year.) In addition, a number of television stations in the top ten markets have committed to building their digital facilities in 18 months -- that is, by November 1, 1998 -- in time for the holiday 1998 shopping season. NBC in particular is to be praised for its commitments; it has pledged that 80% of its owned and operated stations in the top ten markets will be up and running with digital TV in 18 months. The other major networks deserve commendation in accordance with their commitments: ABC has pledged to build 60% of its O&Os in the top ten markets in 18 months; CBS has pledged 57%; and Fox has pledged 33%. Other broadcast groups, such as Gannett, have similarly made important commitments. And the NAB and MSTV have said that they will continue to encourage broadcasters to begin digital television in time for the 1998 holiday shopping season. The broadcast community has come a long way since as recently as last month, when they questioned whether a significant buildout by the fourth quarter of 1998 was possible and advocated that the Commission adopt a 6-year build out rule. I very much appreciate the progress and the hard work it will take in many cases to meet the commitments. I would have preferred to adopt an 18-month rule to guarantee that we have three or four network-affiliated stations in the top ten markets by the 1988 holiday shopping season. It is beyond dispute that an 18-month buildout is reasonable. A rule applying to all network-affiliated stations would have been more fair than an approach that, in effect, rewards stations that did not make 18-month commitments. And it would have given manufacturers the certainty they need to build digital TV sets in massive amounts or the holiday 1998 shopping season. The Consumer Electronics Manufacturers Association specifically urged us to require that multiple digital signals be available in the top ten markets in 18 months. I am concerned that failure to adopt an 18-month rule will delay a major launch of digital television by one year, to the 1999 holiday shopping season, and that such a delay needlessly places the success of digital TV -- especially free digital TV -- at risk. I hope to be proven wrong. I am also concerned by the Commission's decision not to adopt a phased-in buildout rule for markets 30-211. The failure to do so means that over 90% of television stations have no requirement to build out before five years. This puts our spectrum recovery goals unnecessarily at risk. I believe there is a good chance that market forces generated by a rapid buildout in the top 30 markets will cause the remaining markets to build out relatively quickly. But I would have preferred not to leave this to chance, no matter how good. I hope the Commission will revisit this decision as early as next year. Nonetheless, the build-out plan adopted today is an extraordinary improvement over the plan proposed earlier. Public Interest Programming Broadcasters who receive this boon of licenses for the public spectrum must also accept the responsibilities that accompany such licenses. The Commission does not yet adopt specific new public interest rules for broadcasters in the digital world. Instead, we will allow the Administration, Congress and the public to advise us on the appropriate nature and scope of specific public interest obligations in the future. The Report and Order that we adopt today makes it crystal clear, however, that in deferring decision on public interest rules, the Commission forecloses nothing from its consideration or adoption. The Commission specifically places broadcasters on notice that it may adopt new public interest obligations. As the decision today states, the Commission will issue a Notice on the public interest to gather all ideas and views. This will give the public a real chance to ensure that the Commission adopts appropriate public interest obligations for broadcasters in the digital age. What might those obligations look like? First, as the Vice President stated in announcing a Presidential Advisory Committee on the public interest, the obligations should be clear. Especially, in a dynamic and flexible digital environment, broadcasters need to know exactly what is expected of them; the public has a right to know the same thing; and so does the Commission if the obligations are to be enforced. Second, as the Vice President also said, the obligations should be commensurate with the opportunities provided by the new digital channel being given existing broadcasters. The obligations should give the public a fair deal for free use of its spectrum, and they should take fair account of the effective increase in capacity that digital technology allows -- the fact that a digital broadcaster can air multiple channels require over the same amount of spectrum that allows an analog broadcaster to air just one. One possibility is for the Commission to enquire that five percent of capacity be devoted to public interest purposes -- that is, desirable programming or services that the market on its own won't adequately generate. There is ample precedent for this. DBS providers must set aside 4-7% of their capacity for educational programming. And cable operators must set aside specific percentages of their channels for must carry, leased access and PEG. Another compatible possibility is to adopt a rule requiring broadcasters to set aside a specific and ample amount of time for candidates to speak directly to voters. This could be combined with legislative action setting limits on campaign spending -- the approach set out in the legislation introduced by Senators McCain and Feingold. Setting aside TV time for candidates would directly fulfill one of the basic tenets of national communications policy -- "promoting the widespread dissemination of information from a multiplicity of sources." Turner Broadcasting System, Inc. v. F.C.C., No. 95-992, 1997 WL 141375, at *6 (S.Ct. March 31, 1997). As Justice Breyer pointed out in making the fifth vote for the Supreme Court's decision upholding must carry, "That policy .... seeks to facilitate the public discussion and informed deliberation, which, as Justice Brandeis pointed out many years ago, democratic government presupposes and the First Amendment seeks to achieve." Id. at *26 (Breyer, J., concurring). At the same time, stump time for candidates would remedy a problem that has steadily worsened over the last two decades: the fundraising that office holders must pursue in order to afford the TV time necessary to reach voters. A better system would let candidates at election time use the public spectrum for free, and surely it is not unreasonable for broadcasters to offer this service in return for all they have been given. Justice Breyer's important opinion observed that must carry "extracts a serious First Amendment price," a price that "amounts to a suppression of speech." Id. at *26 (Breyer, J., concurring) Justice Breyer concludes that it is a price worth paying, however, because of the First Amendment interests that must carry promotes: ensuring the "quality and quantity of programming choice" for non-cable subscribers, thereby facilitating public discussion and informed deliberation. Id. at *26 (Breyer, J., concurring) Just as it furthers First Amendment principles to require cable operators to carry broadcast channels, it would further First Amendment principles to require broadcasters to carry the messages of political candidates without payments. The same is true of rules requiring broadcasters to provide programming that educates children. The purpose of these rules is to help ensure that children in our society grow up into citizens who can not only fully participate in our economy, but who can fully participate in the public discussion and informed deliberation that democratic government presupposes. Digital technology provides many new and creative opportunities for broadcasters to serve the country and the public interest. Access for candidates and children's educational TV are only two possibilities. The Presidential Advisory Committee will grapple with this and, I expect, generate exciting new ideas. And the Commission will return to explore in greater depth the question of how broadcasters should satisfy their public interest obligations in the digital age. The decisions in the second of the two Reports and Orders we adopt today -- the service rules item -- and the substantial improvement over what previously had been contemplated, are a result of the hard work of many dedicated public servants. And for that the public should thank Saul Shapiro, Mania Baghdadi, Gretchen Rubin and Dan Bring, as well as their supervisors Roy Stewart, Renee Licht and Doug Webbink and many others in the Mass Media Bureau. For long days over many months they have devoted all their energy and their impressive talents toward one overarching goal: implementing Congress's decision on the award of digital licenses in a way that will serve the public interest in every respect. They have succeeded. The Future Broadcast television is our only free, universally available communications medium. It uses the public property of the airwaves and so is appropriately required to provide all Americans with programming that serves the public interest. And as the Supreme Court pointed out just this week, "though it is but one of many means for communication, by tradition and use for decades now it has been an essential part of the national discourse on subjects across the whole broad spectrum of speech, thought, and expression." Id. at *9. Those are the reasons that Congress enacted and the Supreme Court upheld the must-carry law. Congress has decided that we should help broadcasters retain this position in the digital age by giving each existing broadcaster a second 6 MHz band of spectrum. Whether this was the best way to launch digital television has been legitimately questioned by many. Nevertheless, the role of the FCC is clear: our threefold task is to implement Congress's decision in a way best designed to promote the success of free, over-the-air digital television in a competitive marketplace, to recover spectrum as quickly as possible, and to ensure that broadcasters serve the public interest. The decisions we have made in no way guarantee the success of digital television. Our job at the Commission is to give DTV a fighting chance. DTV broadcasters face many challenges. Other media such as DBS, cable, wireless cable, and telcos have or soon will offer all the advantages of digital technology. Unless DTV is available soon, and unless it is available in a way that will attract consumers, it may never be able to catch up to the head-start of its competitors. That's why rapid construction requirements are so important. Unless DTV hits the air running, soon, it will be left in the dust of its competitors. At stake is the viability of our free, over-the-air television system. Already DTV faces a challenging landscape in which 65% of households receive broadcast television through cable wires. Will broadcasters seek to wean these households from cable so that they can receive the digital signal off the air? If so, how? Will they offer multichannel packages that will compete directly with cable? Or perhaps broadcasters assume that most Americans will continue to receive broadcast programming through cable wires (or through DBS, if it begins retransmitting local signals). But then why purchase a digital TV set designed for over-the-air delivery? And what about the relationship between networks and affiliates in the digital world? What role will the networks' increasing investment in cable play? Will broadcasters offer programming that attracts viewers to Digital Television? These are only some of the difficult questions broadcasters will have to answer, and quickly. Last October I gave a speech to broadcasters which I concluded by saying, "we are getting very close to working out all the issues and reaching resolution to all the complex DTV questions. But in the end, the success of digital will not be determined by the FCC; it will be determined by alliances that may not now exist -- alliances between, among others, broadcasters, TV manufacturers, the hardware and software arms of the computer industry, the creative community, and newspapers and by content creators that don't now use spectrum for transmission. It will be driven by market forces not regulatory demands. I'm certain in just a few months, the policy debates will be behind us, and the digital future will be here." Thanks to the Commission's actions today, the future is now. And the future for Digital Television, while not guaranteed, is much brighter for the changes we have made. April 3, 1997 Separate Statement of Commissioner Susan Ness Re: Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service, MM Docket No. 87-268. Our decisions today ensure a bright future for free, over-the-air broadcasting, and thereby secure its continuing vitality as the principal source of news, information, and entertainment in homes throughout our nation. The two orders adopted today, along with the standards decision issued last December, conclude a lengthy deliberative process. The momentous result of an extraordinary industry-government partnership, our new rules will facilitate an expeditious and successful launch of digital broadcasting, delivering abundant benefits to the American consumer. The landscape of television will be forever changed. Throughout our deliberations, my primary concern has been to protect the interests of the American consumer. Our decisions today accomplish that goal. Highlights of our actions include an aggressive but achievable deployment schedule that will accelerate the availability of digital broadcast signals in major markets, stimulate demand for new television and computer products, and permit the recovery and auctioning of spectrum currently allocated to the broadcast service. Service rules will enable broadcasters to experiment with high-definition television, multi-channel standard definition programming, and ancillary services such as paging and data delivery. Broadcasters need not delay while their public interest compact is renewed and clarified, but there is clear notice that we will maintain the fundamental precept that broadcasters have a special obligation to operate in the public interest. I am particularly pleased that fully half of all Americans should be able to receive three or more digital broadcast signals within 30 months. I also welcome the opportunity to provide new spectrum for public safety uses -- and later to reclaim other channels that will permit the delivery of new services to the public, and auction revenues to the Treasury. Service rules Deployment schedule: Our decision on the service rules gives broadcasters a green light to move rapidly to convert from analog to digital. Each broadcaster shortly will receive authorization for the transition channel identified for its use. The transition from analog to digital broadcasting presents difficult practical challenges. One difficulty is the "chicken-and- egg" relationship between transmission and reception. Broadcasters are not eager to invest significant sums to broadcast a signal that no one can receive. Manufacturers are reluctant to build -- and consumers will be reluctant to buy -- receivers for which there is no programming. The only solution is for both industries to move forward in tandem, sharing the commitment and the risk. I believe we have addressed this issue in a way that maximizes the opportunities for a rapid and successful launch of digital broadcasting. A substantial number of the largest broadcasters in the top ten markets voluntarily have committed to commencing digital broadcasting within 18 months. This will be in time for the 1998 Christmas holiday shopping season, when digital receivers should be widely available to consumers. A rapid and progressive transition to digital will be further promoted by the mandatory conversion schedule we are adopting. The top four network-owned and operated stations and network affiliates in the largest 10 markets must convert within two years; in the top 30 markets, the conversion must occur within 30 months. All commercial stations will be required to be on air in five years, and public stations in six. Of course, our schedule recognizes the possibility of extenuating circumstances that are outside the broadcasters' control, such as inability to secure tower locations for new antennas. But the commitment to move rapidly must -- and will -- be there. In short, the deployment schedule is rapid, rigorous, and yet reasonable. It is practical and achievable. It enjoys the strong support of the broadcasters and receiver manufacturers upon whom we depend to roll out service to the public. Further, this schedule is consistent with our target of 2006 as the date on which the analog signals will cease. This is essential so the "loan" of the channels can be ended and the analog channels recaptured and readied for auction. Then, the American public will receive the benefits of both the auction revenues and of the new services that the auction winners will offer. Service flexibility: Consistent with the Telecommunications Act of 1996, we have provided broadcasters with the flexibility to experiment with the types of services to be offered under the digital transmission standard adopted last December. Based on my conversations with broadcasters and others, I fully expect to see a wide variety of new services, including data and Internet access, computer software transmission, electronic newspapers and magazines, and a host of other services. Our computer- friendly approach leaves it to the marketplace to determine the kinds of devices American consumers will choose to receive the digital signals that will be broadcast. Yet, even as we allow for new ancillary services, we must not forget the reason for which broadcasters were accorded the spectrum to effectuate a full conversion to digital: to preserve and enhance free-over-the-air broadcast service. Broadcasting plays a unique role in American society, and the American public rightfully expects that broadcasters will use these channels to continue to deliver news, information, sports, and educational programming for children, among other things. Our rules will ensure that this service continues. Simulcasting: During the transition period, broadcasters will have temporary use of an additional six megahertz channel to deliver digital programming and other new services to the public. I emphasize the word "temporary." We will reclaim the temporary channel when consumers have converted to digital receivers. My desire is to expedite market penetration of the new digital sets, yet ensure that we obtain return of the temporary channels. Consequently, we have agreed not to impose a simulcasting requirement during the early years of the transition, when new programming and features need to be maximized to encourage sales. Once substantial market penetration is achieved, continuing separate programming on the analog and digital channels likely would impede the orderly return of the spectrum. Hence, we adopted simulcast requirements in the later years of the transition to ensure that consumers will not be inconvenienced in the period before the analog signal is turned off. HDTV: High-definition television -- with crisp pictures, true color, multi-channel compact-disc-quality sound, and a wide aspect ratio -- has the potential to provide a theatrical viewing experience. We permit, but do not require, the use of digital channels to offer HDTV. The FCC standard is on its way to global acceptance as state of the art. Consumers increasingly desire "home theater" facilities. While the price of wall-sized flat screens is prohibitively high today for most consumers, as technology advances the cost of such equipment is bound to decline. High definition pictures, especially for movies and sporting events, may be a major consumer draw. While we do not require broadcasting in high definition, we carefully avoid any policies that would inhibit its emergence. The consumer marketplace -- not the government -- should determine the success or failure of HDTV. Public Interest: In a future Notice, we will proceed to explore and better define the public interest obligations of broadcasters in the digital world. As we formulate that policy, I personally look forward to insights from the advisory committee that is being established by President Clinton and Vice President Gore, as well as from Congress and the public. Allotment Schedule The allotment schedule we adopt today is a masterpiece of engineering. Many said it couldn't be done, but this plan accommodates all existing broadcast stations during the transition in a manner that avoids loss of free, over-the-air broadcast service to consumers. Signal Disparity: The Table provides existing high-powered stations with digital coverage areas that essentially replicate their analog service area contours. We also set a floor power level for existing UHF stations, and a ceiling of one megawatt for existing VHF stations moving to UHF, to mitigate the power differential between these types of stations within their primary service areas. This is necessary to ensure that the signals from all size stations will sufficiently penetrate buildings within their primary markets. Channels 60-69: We have limited the number of analog and digital stations that will broadcast on channels 60-69. Subject to the existing broadcast operations, this will facilitate expeditious reallocation of this spectrum for other purposes. In particular, I favor a plan to allocate four of the channels -- 24 MHz -- for public safety. The need for additional spectrum, and the suitability of this specific spectrum for public safety uses, was demonstrated in the report of the FCC and NTIA's Public Safety Wireless Advisory Committee. We will address this shortly in a new proceeding. I am concerned that public safety entities such as firefighters, police, and rescue workers not be hampered by having insufficient spectrum. Public safety entities often cannot communicate with each other in an emergency, such as a bombing or plane crash. It is inexcusable that today these life-saving agencies cannot talk to each other without multiple radios operating across scattered spectrum bands. In the middle of a disaster rescue operation, our public safety teams should not have to worry about having the right radio equipment in hand. We have set in motion a process that will free up enough contiguous, versatile spectrum to facilitate those vital communications. I look forward to expeditiously allocating the remaining space between channels 60 and 69 to new uses. I consider these 60 megahertz a "downpayment" on our commitment to the American public for the return, repacking, and auctioning of the remaining spectrum that will be reclaimed. After conversion from analog to digital is completed, the total spectrum reserved for broadcasting will shrink by over one-third, and that which is recovered will be put to other valuable uses. Low Power Television: We have done everything possible at this time to enable the maximum number of low power stations to continue operating and providing desired services to consumers. We also are looking for any additional methods which we could employ to enable even more low power stations to continue broadcasting, both during the transition and afterward. I expect that the adoption and release of our specific allotment table will enable engineers to go to work -- as I know the Community Broadcasters Association has suggested -- and find channels where existing low power stations can be accommodated. Low power offers a valuable service -- providing communities with news and information tailored to their needs. I want to enable as many LPTV stations as possible to prosper in the digital age. Perhaps one method -- where everything else fails -- would be to assemble stations on a multiplexed digital six-megahertz channel. Another "last-ditch" method might be for contractual arrangements with full-powered stations to carry the LPTV signal on one programming stream. Such results clearly would promote the public interest in making more and diverse programming available to consumers. The items adopted today are not the final word on LPTV. We remain committed to doing our best to preserve these additional voices in the broadcast marketplace. Conclusion I am proud of the way in which my colleagues, our staff, and interested parties have worked together on these orders. I truly believe that the net result will serve the interests of American consumers. The conclusion of these phases of the governmental process sets the stage for an intense period of rapid progress in the marketplace. Other issues will require our attention, but with these decisions broadcasters and receiver manufacturers now have a clear path to the digital future. I urge them to proceed with the same vigor and commitment they have so ably demonstrated in recent weeks. April 3, 1997 PRESS STATEMENT OF COMMISSIONER JAMES H. QUELLO Re: Action Concerning the Service Rules for Digital Television Advanced Television Systems and Their Impact upon the Existing Television Broadcast Service (MM Docket No. 87-268, Fifth Report and Order) By adoption of this order the Commission hopes to provide a smooth transition to digital television broadcasting. Although we have attempted to refrain from regulation as much as possible, we have adopted rules where such rules are appropriate. Our overriding goal is to preserve free over-the-air broadcasting that continues to serve the public interest. It is clear from the broadcasters' overwhelming response to our concerns over the build-out schedule for DTV that broadcasters are, in fact, anxious and primed for DTV conversion. No industry has worked harder, and I applaud them for their efforts. Although we do adopt a rule that implements a build-out schedule, I personally do not believe that such a move is necessary to ensure that broadcasters play their part in making DTV a success. To premise rules on a fictional intent on the part of broadcasters to delay the implementation of DTV defies reason. However, I do believe that the build-out rules that we adopt will only coincide with what the marketplace, and broadcasters themselves, would achieve on their own. In addition, we have adopted criteria for extensions of time of these scheduled periods that should accommodate broadcasters who run into either unforeseeable circumstances or valid circumstances beyond their control that would warrant additional time. In our decision, we implement Congress' intent that broadcasters continue to provide free over-the-air service, but retain the flexibility to respond to the demands of their audience by providing supplementary services that do not derogate the free service. In this regard, we decline to mandate that broadcasters provide an HDTV signal comprised of all 6 MHz. It is optional whether to broadcast HDTV signals or standard definition signals. Notably, we do not address what impact, if any, conversion to DTV may have on current public interest obligations. Broadcasters are always obligated to serve the public interest, and, a great majority meet that obligation admirably. I am well aware of the industry initiatives, expense and diligence that went into developing DTV. It is incongruous to "reward" broadcasters by imposing additional, quantifiable public interest obligations for their developing an advanced technology that provides superior video and audio TV services for the public, and I would oppose any such initiatives. We do not, however, reach these issues today. By our order, we initiate a two-year review process that will permit us to monitor closely any problems associated with digital conversion. I believe firmly that the marketplace, not government, must resolve the majority of issues remaining. However, to the extent this Commission can facilitate the process, we may still yet have a role to play. ###