before the West Virginia Association
Charleston, West Virginia
February 4, 2000
I would like to speak today about four topics: the scariest words at the FCC, the transition to digital television, and low-powered FM radio.
The Scariest words at the FCC
Some people have asked me: "What is your scariest experience at the FCC?" There is a simple answer to that question. It is when an FCC staff member asked me the following question: "Commissioner, would you like to review the video tapes before making your decision?"
The issue did not involve obscenity. It did not involve technical standards for digital broadcasting. It involved whether the Commission should approve the transfer of license from one company to another. And in this case, the FCC staff had spent a lot of time reviewing programming for content.
I did not come to the FCC to be a censor. I came to implement the law. And it is very difficult for me to find in federal law where a microscopic review of program content should determine whether a license should be transferred from one party to another.
Tin-horned dictators and repressive regimes have government officials review program content so that political opponents are not heard.
Not in America.
Culturally insecure countries have culture police who review program content.
Not in America.
We value our independence. As a Nation. As individuals. As responsible members of the media. No government can tell us what we can say or not say.
Or can they?
Three recent events have made this question all too real.
The recent revelation that the White House had prescreened certain network programs to assess their "propriety" is only the most dramatic example. Similarly dangerous are recent efforts by the Federal Communications Commission to require free political advertising and to judge which religious programming is sufficiently "educational."
The White House Office of National Drug Control Policy (ONDCP) reviewed network programming and made decisions affecting the financial value of the programming. If the network programming contained a sufficiently anti-drug message, ONDCP offered to reduce the financial and programming obligation of the networks to provide free time for anti-drug public service announcements. Awarding government subsidies for certain kinds of scripts and programming undercuts the very core of broadcasters' independence and blurs the line between programming and propaganda. Perhaps most significantly, it reflects a certain governmental arrogance about what is the best type of programming for American viewers - and an apparent willingness to be less than forthright about that government role.
When government agencies have discretion to affect the profitability of a business based on subjective criteria and a secret process, how can the public have any confidence in the resulting decisions? Such a process has the appearance if not the actuality of impropriety. Yet the Administration's reaction to the unmasking of this hidden process has been brazen pride, stressing the importance of the anti-drug message. No doubt, we are to believe, the ends do justify the means. Constitutional rights to freedom of speech, speech, and other activities can be eroded in the name of an anti-drug campaign or other popular policy.
Recently the FCC announced a decision that reveals a similar willingness to cast government in the role of programmer in an effort to advance "good" messages. In a license transfer proceeding, the FCC - never shy to intervene into a commercial transaction if there is a chance to do "good" - became concerned that the religious broadcaster in the transaction may not provide sufficiently "educational' programming to qualify for a noncommercial educational license. In an alleged effort to provide guidance to all noncommercial television licensees, the FCC ruled that at least 50% of an educational station's programming must be "educational, cultural or instructional" and found that many types of religious programming would not "count."
For example, the FCC found that programming "devoted to religious exhortation, proselytizing, or statements of personally held religious views and beliefs" would not generally qualify as educational. On the other hand, the FCC would regard shows that explore religion from a literary or historical perspective generally as sufficiently educational.
How is any licensee going to have any confidence about the results of such a subjective and vague test? Perhaps educational licensees will be advised to send in their taped shows in advance to assess whether the shows are "overly" focused on personal religious beliefs?
The problem with government advancement of "good" speech is that by necessity it must define "good" and reject "bad" speech. Moreover, licensees under this approach have no choice but to seek government approval for their programming -- an approval process that seems to inevitably lead to government involvement in content of private programming.
Ultimately the specter of this additional guidance led to the demise of the transaction. The Commission itself ultimately abandoned the specific additional guidance but did not entirely abandon the notion that government evaluation of speech is inherently wrong.
Similarly misguided is a recent FCC proceeding to assess whether government should require broadcasters to offer "free" airtime to candidates. According to its advocates, the program is designed to improve political discourse and "better educat[e] the voting public." Besides the dubious constitutionality of such a program, it too creates a dangerous opportunity for government to control and approve certain media messages - and could well lead to replication of the invidious approach of the White House Drug Control Office. For example, would guest appearances by John McCain or Bill Bradley on "Saturday Night Live" be screened by the FCC in order to award NBC credit under such a free time obligation? Would the government end up judging which candidates could participate? Or perhaps which broadcast programs actually "improve" the nation's political discourse?
The broadcast industry, more than most, should be alarmed by the willingness of Washington to hijack the media, particularly the broadcast medium, to put forth the government's view of the world. It is arguably the scariest activity in a city full of horrors.
II. Lobbying of Specialness
Broadcasting is an important industry, an important part of America. Some would even say, a special industry. "Special" can mean different things. Some good. Some not so good. But always, special means different. Different from everyone else.
In the world of regulation, special is not always good. Consider the FCC. Lobbyists for different companies and industries come to the FCC every day.
They come to me and say: "regulate less." They don't say they are special. Indeed they say that they are no different from anyone else, and everyone should be regulated less.
To the extent a lobbyist claims "specialness," it is that a claim that they are less privileged if anything. Someone to be pitied. Someone in need of help. Someone in need of less regulation than everyone else.
These lobbyists don't come in and brag about all of their good deeds. They do not come to tell me about how much community service they have done. They don't have fancy reports telling about all of the community service sponsored by their business or industry. They don't have video cassettes describing their good deeds.
Have these businesses done good deeds? Of course they have. They just don't wear it on their sleeve. They would find it offensive and insulting to be asked about it. They would fear it egotistical and self-aggrandizing if they bragged about it.
Unless, of course, they were broadcasters.
Is there something different about how the broadcast industry lobbies the FCC from other industries?
Some people say that broadcasters are different because you have FCC licenses. It is true that you have FCC licenses.
Practically everyone before FCC receives FCC licenses. We have hundreds of thousands of licensees. We transfer tens of thousands every year.
Count 'em. Hundreds of thousands of licensees. They are subject to the same public interest obligations of broadcasters. Do you think the FCC asks hundreds of thousands of licensees about each of their good deeds? Do you think we review hundreds of thousands of video casettes?
Having an FCC license is not special. Your local Kiwanis Club or othr civic organization may have a license. They have a license not because they do good deeds, but simply because they applied.
Who has an FCC license? Consider the following:
a. local church
b. local school
c. local taxi cab company
d. cable operator
e. DBS operator
f. Telephone company
No one asks these people to list their good deeds.
Broadcasters are treated differently.
You say you are different, and the FCC says you are different.
Broadcasting is different. So too is cablecasting, or running a DBS system, or running a church.
All right, you are different. So what?
The FCC says that you need more regulations. Special regulations just for broadcasters. Not for anyone else.
Federal labor laws, that apply to every business in America and that are enforced vigorously, are not enough. You need special ones, additional ones that apply just to broadcasters.
Federal antitrust laws, that apply to every business in America and that are enforced vigorously, are not enough. Just ask Bill Gates. You need special ones, additional ones that apply just to broadcasters.
Federal EEOC rules, that apply to every business in America and that are enforced vigorously, are not enough. You need special ones.
Look around your community. Talk to other business owners, managers, and employees. Ask them if they have to comply with federal laws and regulations. They will give you an earful. They have plenty of federal laws and regulations to deal with. And they do. And they probably can't even tell you how many FCC licenses they hold.
You know what? You have to comply with every law and rule that other businesses in your community have to comply with, plus you have to comply with special FCC rules that just apply to you, the broadcaster.
Moreover, the FCC says we need to know about your community service as broadcasters.
a. FCC seems to think you are innately bad.
b. But for FCC, you would do bad deeds.
c. The only reason you do anything good is because FCC makes you.
d. American communities would die without FCC intervention.
Oddly, we don't ask the local bank or hardware store about their good deeds. Or the local Rotary Club or the local church, or any of the hundreds of other FCC licensees in your community. We don't even ask cable operators or DBS about their good deeds. Most of these licensees do lots of good deeds. They support local charity drives, sponsor local little league teams, listen to the needs of their community and respond accordingly.
They do all of this not because the FCC, or any else in Washington, pretends to be Santa Claus and keeps a list of who has been naughty and who has been nice. Good citizens, individual or corporate, do good deeds because that what it means to be a good citizen.
I believe FCC treatment of broadcasters is insulting.
You do good deeds because you are good, and good citizens, not because FCC coerces you.
Listing good deeds is demeaning.
Your licenses are fundamentally no different from anyone else's.
You should be treated the same as everyone else - less FCC regulation.
Some people may believe that we have all of these special rules for broadcasters because that is what the law requires.
Wrong. The Commission has simply made up these rules, and broadcasters have played along with these special rules for generations. It is time that the broadcast industry stands up for itself and says "No more." It is time for the FCC to do the job we were hired to do: follow the law as it is written and not reinvent it.
I. Digital Television
There are other problems with being labeled "special." In the case of the broadcast industry, you are perceived not only as special, but also as especially rich. Filthy rich.
In Washington, DC, it is intellectually respectable to say that broadcasters received tens of billions of dollars in windfall benefits when Congress mandated the transition to digital television.
If you don't believe the Washington politicians, just ask the New York Times and the Wall Street Journal. They say the same thing. You can't think of a value that is bigger than the amount some people think you all have been enriched at taxpayer expense.
Yup. You are filthy rich at taxpayer expense. There are only a couple of thousand television licenses in the country, so each of you must have raked in tens of millions of dollars in windfall profits. Maybe more. That is what people in Washington believe.
Yesterday you were mere paupers. Today you are filthy rich. Rich at taxpayer expense. Consequently, it is only appropriate for the FCC to impose any and all conceivable burdens and expenses on you.
You want to convert to digital television? Go ahead and buy the equipment. It will only cost ten or twenty million dollars. Pocket change compared to how much you were enriched.
And while you are at it, buy the new tower, buy the new land, get the environmental clearances, and deal with countless government agencies. What a few year's delay to you? Or what difference does it make how many tens of millions dollars all of this will cost?
And how about some new programming. Digital programming. It is free, isn't it? That's what everyone in Washington tells me.
Oh, and I am sure that all of your good friends at the networks will be generating lots of free programming for you. They'll just give it away.
You may have to pay for it? Oh, well.
You're rich! Aren't you?
In all seriousness, the costs of the transition to digital broadcasting are substantial, while there are limited, if any, opportunities for additional revenue. These substantial costs are roughly the same for large market broadcasters and for small market broadcasters. Large market broadcasters, naturally, can absorb these costs more easily than can small market broadcasters.
Make no mistake: the transition to digital broadcasting is happening. Large market broadcasters are on track. I am concerned, however, about what happens in smaller markets. I also am concerned about what happens to broadcast operations that rely extensively on translator services that are not directly covered in the digital transition plan.
Public interest obligations
Some people think that you are so rich that the FCC is thinking about asking for a little help with some of our social and political programs. We will call it "new public interest obligations for digital television."
It sounds nice, doesn't it? If you thought the old public interest obligations were fun, wait until you see these. They are not actually in the law, but who cares? You are rich!
Of course, these new public interest obligations will apply just to you. Not to cable. Not to satellite. Not the to the Internet. Because you are so special.
We may even ask you to provide some free air time for politicians. You will like that. Air time is free for you, isn't it? So why not share some of it with some politicians?
Sure, you won't be able to sell as many paid advertisements, but you don't really need the money--do you?
And I am sure that your viewing audience will be delighted to listen to free political advertisements. Why, all of those viewers who are watching ESPN and CNN will suddenly switch over to watching your local broadcast signal just for the opportunity to see the free political ads. Of course, ESPN and other cable channels won't be required to have any free political ads.
There is a fundamental principle in economics that if something that used to be costly suddenly becomes free, demand will go up. Such will be the case for political ads.
Today, you can sell an advertisement to Bob's car dealership. "Hi, My name is Bob. I am honest and own a car dealership. Come buy a car from me."
Tomorrow, you can give away the same advertisement to Bob the candidate: "Hi, My name is Bob. I am honest and own a car dealership. Come vote for me in the next election, and perhaps buy a car as well."
The Commission spent a decade studying and preparing for the transition to digital television broadcasting. It was one of the most studied and prepared issues in recent memories.
With all of that studying and preparing, the FCC got the transition to digital television exactly right. Didn't we?
I am not suggesting that the Commission should have spent even more time preparing for the transition. The Telecommunications Act of 1996 required us to move relatively quickly. There is an underlying likelihood that some things will go wrong when major changes are made.
So what about low-power FM radio?
The Commission has spent perhaps 1 year rather than 10 years thinking about it.
Have we solved all of the problems? Sure…
There is a simple description of Low Power FM radio: rush to judgment.
It is a rush to judgment about interference.
It is a rush to judgment about how the program will be administered.
It is a rush to judgment about whether there even needs to be a program.
Who will suffer? The American listening public.
The Commission will march ahead with LPFM next week. There is not much you can do to stop it.
There are many myths about low-power radio.
1. There are countless voices in America that cannot be heard.
During the war in the former Yugoslavia, the Kosovo Liberation Army could not get its message out in the war zone. But it could and did get its message out to millions of people--and every imaginable broadcast outlet--around the world through the Internet. Yet, we are to believe that there are people in America who have less access to disseminating their message than did the Kosovo Liberation Army.
There are rebellious political groups in every corner of the world. Practically every one of them has a Web site. Practically every organized group in the world--legitimate, nutcase, and somewhere in between--has a web site.
And these groups get their message out the old-fashioned way too, through meetings, newsletters, and word of mouth.
1 2. There is an enormous pent-up demand to become legitimate radio broadcasters. Every year, the Commission issues new licenses, and transfers hundreds of existing licenses. There are countless audio sites on the Internet that are neither licensed by the FCC nor costly to establish.
3. Radio broadcasting is costless.
4. Any problems in concentration in Class A licenses can be cured with LPFM. I hear much about concentration of full-power radio licenses. Whether one believes this is an issue, it will not change with the issuance of low-power licenses. They are not the same.
5. Problems of minority ownership can be cured with LPFM.
6 Pirates want to be legitimate.
7. Interference is not an issue. Interference is the primary issue.
a. 3RD Adjacent channel interference?
2nd Adjacent channel interference?
1st Adjacent channel interference?
threatened so that you will feel grateful when it is not taken away.
b. How do radio listeners react to interference?
They tune out; they have many alternatives.
c. How do advertisers react to interference?
They stop advertising; they have many alternatives too.
d. What will be the result of interference in each market?
No one knows.
e. What is the net effect nationwide?
No one knows.
h. Keep in mind, there is interference not just from new licensees to incumbents, but vice versa as well.
Interference is the central issue in this proceeding. If there were no change in interference standards, this proceeding would be about nothing more than reducing the power floor for FM transmission and restricting ownership of low-power to certain entities. Instead, the Commission plans to change interference limitations.
9. 1000 watt stations are low power.
10. LPFM licenses will be available in all markets.
In practice, LPFM licenses will not be available in large markets, regardless of the change in interference standards. Any LPFM licenses will be issued in small and medium-sized markets.
We have had a process that can only be described as a rush to judgment.
a. NPRM issued without engineering study
b. Little time given for comment
c. Request for more time only given a few weeks
d. Quickly prepared engineering studies
The entire process has taken weeks instead of years for digital television.
We got everything right on digital TV, didn't we?
In the process, the FCC has raised expectations about LPFM that simply cannot be met.
1. People expecting to get licenses won't get them.
2. Licenses cannot be kept out of "wrong" hands
3. Interference will go up
4. Pirates won't go away.