SPEECH BY CHAIRMAN REED HUNDT FEDERAL COMMUNICATIONS COMMISSION MUSEUM OF TELEVISION & RADIO New York, New York June 6, 1996 (As Prepared for Delivery) "ASK NOT . . ." Thank you for that kind introduction. I also want to thank Frank Bennack, Jr., Chairman of the Museum, and Robert Batscha, President of the Museum, for putting this event together. Let me also introduce my guests; Mrs. Elizabeth Rohatyn, the Chair of the New York Public Libraries and Chair of Teaching Matters, Inc., Julius Genachowski, Counsel to the Chairman, and Saul Shapiro, who came to the Commission from Sony to lend his expertise on the many issues related to digital television. This is the third time I've been here. As I've been trying to convince my colleagues at the Commission on another matter, three's a charm. The first time I was here I talked about the need to review outdated broadcast rules such as PTAR. The second time I talked about the need to move to a new policy paradigm for the digital era marked by spectrum flexibility and clear public interest obligations. We've made progress on these fronts. But we have lots of work ahead of us. Today I want to talk about some things we're doing right now, and about some critical long-range issues we need to address. The principal task before us is implementing the recently enacted Telecommunications Act. The FCC has already adopted a number of items to implement the broadcast provisions of the Act. We've eliminated national limits on radio ownership; substantially relaxed local radio limits; eliminated the numerical limits on TV station national ownership; raised the national audience reach cap for TV stations to 35%; repealed the dual network rule; eliminated comparative renewal process for renewal applications; implemented the two-step license renewal procedure; and repealed the Cable Broadcast/Network Cross Ownership Ban. We will soon complete rulemakings related to the 8-year license terms and modifying construction permit requirements for minor changes to broadcasters' facilities. We will also take further actions on other broadcast provisions of the Act, including reviewing local ownership and attribution rules. The message of the Telcom Act is that the Commission must ensure that all of its rules continue to make sense as the market evolves. We got the Commission cart in front of the Congressional horse by launching our own review of TV ownership and attribution rules, as well as our rules governing the relationship between broadcast networks and their affiliates. I'd like to see the Commission complete its review of the network/affiliate rules, but the issues have gotten even harder to resolve. Take, for example, the right-to-reject rule, which forbids affiliates from contracting away their right to preempt network programming. The principle underlying this rule is an important one: the principle of localism. Local television stations must be able to air programming that they believe serves their community's public interest needs, such as local public affairs and local sport events, no matter what the networks say. But here's the problem. Several of the networks have contracts with their affiliates that appear to penalize preemptions of network programs for economic reasons while permitting preemptions for public interest reasons. Are these free-market contracts inconsistent with the public interest and with the principle of localism? No affiliate organization or group owner has complained to the Commission about them. But how do they square with the absolute right-to-reject rule now on our books? Should the Commission modify or clarify the rule? Wouldn't that make more sense than declaring the contracts to be unlawful? I look forward to your input. We're also processing the significantly increased sales activity resulting from the 1996 Telecommunications Act. During the 5-month period ending May 31, 1996, the Bureau handled over 1,700 assignment and transfer applications. This represents an increase of 55% over last year. Despite the increased volume, we've maintained our speed of disposal goals. Uncontested sales applications are decided within 30 days after the thirty-day statutory "public comment" period. Contested sales applications or applications involving waiver requests are acted on within 4 months. Appeals, with rare exceptions, are acted on within 6 months. The Mass Media Bureau, led by Roy Stewart, and the relevant divisions, led by Linda Blair and Barbara Kreisman, deserve a great deal of credit for making sure the new work hasn't created new backlogs. But even with the historical importance of all the Telecom Act proceedings and the other ongoing work, the most critical proceedings for the future of television are the Digital Television Proceedings. We just put out an NPRM on the digital TV standard. The Grand Alliance and our advisory committee have created an incredibly supple digital standard that is a dramatic breakthrough in TV technology. As you know, however, I am skeptical whether the government should be in the business of indefinitely mandating standards. Why is it in the public interest to adopt rules freezing the current state of technology? Why should broadcasters be required to submit to costly and time-consuming Commission procedures just to experiment with new technologies that do not interfere with other broadcasters? Just the other day Bill Gates and the other leaders of the Business Software Coalition were in my office expressing concern that a Commission misstep could have a significant negative impact on our country's economic growth. They don't know why a progressive- only, computer-friendly standard shouldn't be preferred, if we are to pick a standard. How do we answer them? I look forward to seeing these hard issues illuminated in the responses to our NPRM. And I look forward to comments on issues surrounding digital television allotments, which we will put on the table next month. But one issue that should not be hard is the question of whether we should set aside some of the new capacity for public interest purposes. The new digital standard dramatically increases the capacity of broadcasters' 6 MHz channels. It allows each to air 4 or 5 standard definition programs, or at least 2 very high resolution programs, at one time. That's a lot of new capacity. We set aside other forms of public property for public interest purposes. Does anyone think Teddy Roosevelt erred in proposing the National Park Service that left us the treasures of Yosemite, Yellowstone and so many others? If 150 years ago this city had unleashed all of Manhattan to commercial development, does anyone believe that today we'd have 843 acres of Central Park? If a half a century ago the FCC had declined to set aside almost one-third of the public airwaves for noncommercial television and radio, does anyone think we'd have PBS or NPR today? Congress understood the compelling necessity to act before it's too late when it required cable operators to set aside capacity for PEG channels, and when it required that 4- 7% of the DBS satellite capacity be set aside for noncommercial educational purposes. Shouldn't the Commission do the same for digital television? There's a growing consensus that we ought to approach the public interest obligations of broadcasters not with vague rhetoric but with specific, clear guidelines. Last week, for example, a majority of the House of Representatives signed a letter asking the FCC to adopt a 3-hour standard for evaluating compliance with the Children's Television Act. I realize public service commitments are tough when your market share is being threatened by competitors and your advertisers are pressuring you to focus only on winning the most lucrative market. But that is exactly the time to secure your place as the only universally available public good on television. And a commitment of capacity ought to be easy when so much more capacity is coming on line. Last week, I suggested a 5% set aside for educational television and free time for candidates on the new digital spectrum. Look at it this way: if unfettered commercial use of 95% of the public's airwaves is not enough, what is? If broadcasters accepted this 5% solution, it would end the issue for a very long time. I care about this issue for at least two reasons. First, I believe clear and specific guidelines are the most First Amendment friendly way of ensuring that broadcasters fulfill their duties as trustees of the public's airwaves. I can see the logic of declaring that broadcasters will no longer be treated as public trustees, but I disagree with it and think it would be a profound mistake not only for broadcasters but for the country. As long as broadcasters are public trustees, we must resist vague and uncertain public interest standards. They inevitably lead either to no public interest benefits at all, or to secret, unchecked back-room deals that offend basic First Amendment principles. Second, I believe in the power of television to make the world a better place. I wouldn't be spending so much energy worrying about the future of broadcasting if I didn't feel that it mattered to children, their families and our democracy. Throughout television's history, but particularly recently, there have been public outcries about television's power to harm; yesterday's front page Washington Post story headlined "TV Networks Under Fire for Racy Ratings-Driven 'Family Hour'" is just the latest expression of the public frustration with television. Let's focus on efforts on creating an opportunity for television to do better. When I see, for example, what the CourtTV network has done to create a terrific show that educates teenagers about our legal system, I say wouldn't it be great if every network used its existing capacity to put together a show that would help our kids become better citizens. And wouldn't it be great if America looked at broadcasters not only as able business leaders but also as a group dedicated to educating our children and reforming our political process? I acknowledge and applaud the progress the broadcast industry has made. Fox and other broadcasters have promised to provide free time to political candidates. The industry has accepted the V-Chip and is working to develop ratings that will give parents the power to choose. CBS has pledged to provide at least three hours per week of educational programming for children, and I'm hopeful that the rest of the industry will soon follow its lead. That would be wonderful not only for the country but for broadcasters too. For isn't it in broadcasters' interest that Americans ask not what broadcasting is doing to America, but what broadcasting is doing for America? Thank you. -FCC-