before various State Broadcaster Associations
including Kansas, Michigan, Minnesota, North Dakota, Oregon, and
I would like to speak today about three topics: the lobbying of specialness, the transition to digital television, and low-powered FM radio.
I. Lobbying of Specialness
It is a great honor to be invited to the State Broadcast Association meetings. 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.
V. 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 10 months rather than 10 years thinking about it.
Have we solved all of the problems? Sure…
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? b. How do radio listeners react to interference?
threatened so that you will feel grateful when it is not taken away.
They tune out; they have many alternatives.
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?
b. How do radio listeners react to interference?
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.