Chairman William E. Kennard Federal Communications Commission
National Association of Broadcasters
Las Vegas, Nevada
April 11, 2000
Thank you Eddie for that introduction.
It is good to be here with you in Las Vegas for my third address to you as Chairman of the FCC. I feel privileged to have the opportunity to address the first National Association of Broadcasters convention of the new millennium.
Innovators of Broadcasting's Past
Since this is the first convention of a new century, I thought I would start today by talking about broadcasting in the last century. On my flight here I was leafing through a wonderful book by the journalist David Halberstam, The Powers That Be, about the rise of American broadcasting. The book is full of vivid characters - - men and women who dominated your industry in the early years. And reading this book reminded me that the history of broadcasting is, at its best, a story of embracing new ideas, imagining the future, and harnessing new technologies.
It reminded me that no one embodied this spirit of innovation better than Bill Paley, one of the fathers of modern broadcasting.
In 1928, Paley's father used $400,000 of the family fortune and bought CBS radio. He told his son to go run the company. No one thought that radio would amount to very much. NBC was only two years old and that company was struggling. CBS was in an even more precarious position. It had only 16 affiliates. It lost money. It didn't own a single radio station. And Paley was 27 years old in 1928 and a man with no broadcasting experience. He seemed an unlikely figure to take a new technology and a young business and transform them into one of the most influential forces in America.
Paley, of course, proved himself to be a brilliant programmer, who brought talent like Bing Crosby and Jack Benny and George Burns and Edward R. Murrow to CBS. But Paley's true brilliance was in recognizing that to fulfill radio's potential, he had to devise a new business model for radio.
Paley understood that the power of radio as a medium was in its reach. He knew that distribution was everything, so he did away with old business models and gave affiliates free access to network programming. He did everything he could to reach the widest possible audience because he saw advertising as the key to radio's future.
And while I was thinking about Paley's journey from young entrepreneur to broadcast giant, I was struck by some of the similarities between his time and our own. Paley stood at a crossroads of new technologies, major changes in the economy, and new ways of thinking about and doing business. Today, broadcasters live in an age of new opportunities made possible by the rise of digital technologies.
The NAB convention this year is all about convergence. Convergence is not just about technology. It is fundamentally about finding new business models. It means finding a new business model for television in the digital age.
Frankly, I become frustrated sometimes when I hear people say that broadcasters cannot or will not be innovators when it comes to DTV - - that they are stuck with a business model that they just will not change. I also get frustrated when I hear some broadcasters say that they want to delay the DTV transition, that they have not developed a business model, so they need more time to make this transition. Or worse, I become very frustrated when people tell me that the success of digital television lies in government developing the business model by micromanaging the transition.
All of these views are wrong-headed because this digital transition for broadcasting is inevitable. It will happen as sure as day follows night. Why? Because the broadcast industry has absolutely no choice in the matter.
All of broadcasting's competitors are going or have gone digital. Cable, satellite radio, satellite TV, and the whole alphabet soup of promising new broadband technologies: Multipoint Distribution System (MDS), Local Multipoint Distribution System (LMDS), 3rd generation Personal Communication System (PCS), Digital Subscriber Line (DSL). Americans have awakened to the power and functionality of digital; they want more and they are never going back to the analog-only world. Analog is over. Delay is simply not an option. Resistance is futile.
So I think the important questions that remain are how fast it will happen, and who will be the pioneers among the broadcast industry who, like Bill Paley, will invent the new business model for this medium. What will be the killer application or applications that will reinvent television for the age of broadband Internet?
I believe that the same innovative spirit that transformed broadcasting in the beginning of the last century will again transform broadcasting at the beginning of this century.
Look around this convention this year and you see that the spirit of Bill Paley lives on in today's innovators who are building new business models for the digital age. People like Michael Lambert, the CEO of iBlast, who recently formed a partnership with traditional media outlets to bring digital content to television. And Joseph Horowitz of Geocast who has joined forces with Hearst-Argyle and Belo. And Don Cornwell and Stuart Beck of Granite Broadcasting who envision a nationwide broadband network built with the broadcast spectrum.
I also believe that the same inherent value of your medium revealed by Bill Paley 75 years ago is still the key to your success today. It's still all about distribution.
Broadcasting's strength lies in the ability of stations, both individually and collectively, to distribute popular content that large numbers of people want to receive simultaneously, like the Super Bowl, or have available simultaneously for viewing at will, like stock quotes. It's an extremely efficient way to deliver content, and collectively, no industry is more ubiquitous or more effective in doing this.
The architecture of the Internet, by contrast, is very efficient in delivering content targeted to a specific user, such as e-mail and web browsing. But when you look at what is happening in the Internet, it turns out that entrepreneurial companies are using satellite systems and other techniques to move popular content to the edge of the network, near the end user -- for example, to be cached by a local Internet Service Provider (ISP). That accomplishes two things. It eliminates the cost of repeatedly or simultaneously down- loading identical content across the Internet backbone from a distant server, and it greatly improves performance by avoiding congestion and delays in the public Internet.
The Digital Opportunity
No industry is better positioned than broadcasting to transmit content that is frequently accessed to the end user.
That's why I have tried to foster partnerships between companies that will bid in our upcoming auctions for 700 MHz spectrum - - the so-called 60-69 auction - - and broadcasters who operate in that spectrum. This is a marriage just waiting to happen. And when it does, it will accelerate convergence and speed the DTV transition.
Convergence means using the functionality of digital to blend the best of broadcasting - - the ability to reach many with the same information - - with the interactive power of the Internet - - the ability of individual viewers to store and customize information in digital form.
And let's not forget the digital opportunities for radio.
These features that empower consumers of digital products will be imported to the radio world as well.
Today, when I want to listen to a story on National Public Radio that has already been broadcast, I have to go to the NPR web site. Why can't that technology be incorporated into my receiver, so that I can store and retrieve any newscast or talk show or public affairs show I want, when I want it. I could program my radio to tell me every time Rush Limbaugh mentions my name. That would be fun. The technology is there. And digital radio technology will make it real for millions of Americans in the next few years.
I believe, and many of my colleagues in government believe, that digital technology is the biggest opportunity for broadcasters in a generation.
We also believe that government has made a huge investment in making it possible for TV stations to make the transition to digital by giving broadcasters the spectrum to make the transition. And we have invested lots of our time and resources in promoting the transition. At the FCC meeting this coming Thursday, for example, we are scheduled to propose rules on the two outstanding DTV compatibility issues, labeling and copy protection.
So we are understandably concerned when some broadcasters tell us that they are not interested in having a meaningful debate about the public interest obligations of broadcasters in the digital age.
I know that many broadcasters provide many wonderful services to their communities. And you should be proud of what you do. But the disconnect between us seems to be that many in your industry believe that a station's service in the public interest is whatever that broadcaster happens to be doing to serve the public interest. Now, that may make sense for many broadcasters who are responsible. But you and I know that some are, some are not.
And to say that broadcasters contributed $8.1 billion to serving the public interest is interesting, and certainly a valuable contribution - - even if one quibbles with the way the number was calculated.
But that number alone does not begin to answer all of the relevant questions. Such as, are there public needs not being served? How can digital capabilities enhance broadcasters' ability to serve their communities? How do we identify areas not served and find ways for broadcasters to serve them? Let's work together in the coming months to bring 21st century imagination to our dialogue about the public interest.
Low Power FM
And here is another question on my mind. Why, amidst all this opportunity for broadcasters, have you chosen to muster your considerable resources to deny churches and schools and community-based organizations just a little piece of the broadcast pie? I am talking about low power FM radio.
In every one of my speeches to NAB over the last two years, I have asked this same question. Why won't you work with the FCC to find ways for low power FM to co-exist with full power stations?
Why, when your communities have so much to gain from a new noncommercial voice on the airwaves?
Why, when these non-commercial voices do not in any way threaten the existence of full power stations.
Why have you squandered your goodwill to fight churches and schools and community organizations?
You will say interference. But interference is and always has been a solvable problem. I am committed categorically to protecting every incumbent FM service from harmful interference, from the radio reading services to the commercial stations and everything in between.
The FCC has credibility in fighting interference. I have shut down more pirates than any chairman in the history of the agency, yet you think that the Commission would create an interference nightmare that the agency would be responsible for curing.
I again renew my offer to work with you - - in the reconsideration process now underway at the FCC - - to find ways to address your anxiety about the low power FM service.
The future of digital broadcasting is very bright. There is a great excitement here in Las Vegas about all of the possibilities.
Here in our midst are the pioneers who will bring to your industry the same innovative spirit that made your industry great and that will ensure its greatness in the digital age.
I want to work with you to make sure that all Americans reap the benefits.