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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.


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.


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.


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.