Noting that the proposed satellite-delivered digital audio service (DARS) would be the first nationally-licensed radio program service, Commissioner Ness stated that the Commission should not stand in the way of delivering new products and services to the public but emphasized that the benefits of digital satellite radio should be maximized while any adverse impact on the local broadcast services should be minimized. She went on to urge broadcasters to file comments in the rulemaking proceeding (GEN Docket No. 90-357) that addresses, among other issues, the probable impact of DARS on existing broadcast services.

Commissioner Ness also expressed strong support for the effort to develop in-band digital systems which would permit migration of existing AM and FM broadcasters to digital transmission methods. "To remain competitive," Ness said, "local broadcasters must be allowed to participate in the digital revolution."

Commissioner Ness stated her preliminary support for raising the national broadcast ownership limits, stating that "permitting significantly greater station ownership would not appear to result in undue concentration or to impair the public's access to a diversity of viewpoints." In local markets, Commissioner Ness said that duopoly appears to have worked well and that in larger markets additional station ownership, coupled with clear and strict attribution rules, might be possible. She also observed, however, that "one of the underpinnings of our democracy is that ownership of our media outlets is widely held," and that "somewhere between the extremes of single station ownership and unfettered local ownership there may be a point at which the benefit to the public may turn from positive to negative."

In closing, Commissioner Ness noted that the Commission has attempted to streamline its procedures and rules, and invited parties to communicate directly with her their thoughts and what is right and what is wrong with its procedures and rules, and any ideas on how the Commission could better serve the public.

Contact: David R. Siddall, Office of Commissioner Ness (202) 418-2100

It's a pleasure to be here with you in New Orleans.

It is hard to believe that this is my second summer as a member of the Commission -- and my second opportunity to address you at the Radio Show.

I just returned from a brief vacation with my family. You will be pleased to learn that, after spending 10 days on vacation and two weeks at summer camp, my eleven year old proclaimed that she really missed just one thing -- not home-cooked food, not her room, not her friends -- but her local radio station!

The Uneventful Summer at the FCC

This was a peaceful summer in Washington, D.C. The type of quiet summer in which, in one week, two of the three original television networks were sold for billions of dollars.

An uneventful summer in which omnibus telecommunications legislation passed the House of Representatives, setting the stage for Conference Committee action this fall. If enacted and signed into law, it would profoundly change the communications marketplace in the United States.

A placid summer in which a divided Supreme Court challenged the underlying precepts of government-mandated affirmative action programs in a landmark decision entitled Adarand.

A lazy summer in which the Commission issued Notices of Proposed Rulemaking for both Digital Audio Radio and Digital Television, eliminated the Prime Time Access Rule, hammered the final nail in the coffin of FinSyn, proposed streamlining or eliminating most network affiliation rules, and settled the Infinity Broadcasting indecency cases for a voluntary contribution to the U.S. Treasury of $1.7 million.

A sleepy summer, in which the FCC's Audio Services Division restructured, streamlined, and significantly improved its handling of your applications.

A somber summer, in which the Commission began considering necessary restructuring and staff reductions in anticipation of a major shortfall in its budget. We just learned that the Senate Appropriations Subcommittee has proposed to slash the FY96 budget by $38 million, or 20 percent below this year's appropriation. If this is the final number, we will be challenged to implement new legislation in the time-frames required while maintaining existing services.

So, after the dog days of August, our seat belts are fastened for frenzied activity this fall.

Turbulent Times

Many of you undoubtedly are feeling like the much overquoted line in Dickens: "It was the best of times; it was the worst of times." Radio revenues have again hit record highs. The announced mergers and expectation of deregulation have raised stock values and created new millionaires -- at least on paper. Brokers are euphoric. Bankers can be seen everywhere. Multiples are up; interest rates are down. Digitization presents exciting opportunities for new revenue streams. What could be better?

But, while some rejoice, others are less sanguine. Some are not happy with the possible elimination of all ownership restrictions on radio broadcasters. They fear the mounting pressure on single station owners to sell to the big groups, and worry about competition and viewpoint diversity.

Others are concerned about the advent of satellite-delivered digital audio radio. They see prospective national licensees disrupting the local marketplace and squeezing out terrestrial broadcasters, particularly in smaller markets.

For our few moments together, I'd like to share my thoughts on these issues, and also answer any questions you may have about the FCC.

Digital Communications

Since its inception in the early 1920's, radio broadcasting essentially has been a local service. History amply demonstrates that radio broadcasters have been responsive to the needs of their communities; providing news and information, weather and traffic reports, school closings, and the like -- in addition to the music formats listeners, like my daughter, want to hear.

The local radio marketplace is fiercely competitive, and radio broadcasters routinely exhibit their entrepreneurial spirit. But, like it or not, we are in an era of both technological and regulatory change.

The traditional analog technology is changing to digital. Many of you already rely on digital workstations in your computerized, automated studios. On the consumer side, chips soon may be inserted in computers to access local radio station audio or data signals.

And the Internet today already carries some radio programming. You can listen to EZ Communications' Seattle station near the NAB Registration Desk. While the sound may not be CD quality, I am sure that, as with most Internet features, it will rapidly improve.

Digital has come to video as well. DBS has been marketed successfully for more than a year.

And as I noted, this summer the Commission issued the first of several new notices proposing rules for digital television broadcasting. We are in the comment period, and plan to hold an en banc hearing later this fall.

As you are aware, the Commission also has moved ahead with satellite Digital Audio Radio Service (DARS). Satellite digital radio will be licensed on a national basis, as opposed to the local licensing that has always been used for terrestrial broadcasting. But DARS will not be the only provider of satellite transmitted, CD quality audio programming. Cable television and Direct Broadcast Satellite also now deliver multiple channels of programming to their subscribers.

If the FCC grants television broadcasters sufficient flexibility in the use of their digital signals, under the Grand Alliance Advanced Television technology, licensees would also be able to broadcast multiple streams of CD-quality audio programming.

As I have stated before, the Commission must not stand in the way of delivering new products and services to the public. But that does not mean that we should undermine the present broadcast services. We must take care to maximize the unique benefits of satellite radio and minimize any adverse impact on this nation's highly competitive and locally- oriented terrestrial broadcast service.

In our rulemaking proceeding, we ask for comment on a wide range of issues: For example, should DARS be a subscription service or should the licensee determine how it will be regulated? Does the nature of a satellite service change if a multitude of repeaters are needed to cover the market? Should we allow additional applications to be filed for DARS licenses?

How much flexibility should be permitted? How much spectrum does each licensee need for a viable service? Should the licenses be auctioned if there are mutually exclusive applications?

I urge those of you who wish to respond to the issues raised in our Notice to do so during the public comment period -- which ends on September 15th, a week from tomorrow. Replies to the comments will be accepted until October 13th.

Especially helpful are comments which include specific information on the probable impact on your market and suggestions for ensuring that DARS is complementary to, and not a replacement for, local broadcasting.

At the same time that we are moving forward with satellite-delivered digital radio, we also are observing tests of terrestrial "in-band" digital systems. The preliminary test results look promising.

I support the effort to develop in-band digital systems. To remain competitive, local broadcasters must be allowed to participate in the digital revolution. Implementation of digital transmission systems will significantly improve AM and FM broadcasting. I look forward to the committees' reports next year, and I will do what I can to expedite Commission consideration.

Multiple Ownership

Deals are breaking out all over in anticipation of Congressional passage of omnibus communications legislation. Both the House and Senate bills would remove all radio ownership caps. The Senate legislation authorizes the FCC to decline to approve any application that would result in undue concentration of control or harm competition. Of course, the Commission will implement whatever legislation is enacted into law.

I do not wish to comment on the pending legislation. There is no proceeding before us and I have not examined an updated record. Still, I do have some preliminary thoughts on ownership issues.

On the national level, permitting significantly greater station ownership would not appear to result in undue concentration or to impair the public's access to a diversity of viewpoints.

In local markets, duopoly appears to have worked well. It has bolstered weak stations and enabled owners to experiment with more narrowly focused formats. In larger markets, it might be possible to have additional common station ownership, coupled with clear and strict attribution rules, without undermining competition or impairing access to a diversity of viewpoints.

But somewhere between the extremes of single station ownership and unfettered local ownership there may be a point at which the benefit to the public may turn from positive to negative.

One of the underpinnings of our democracy is that ownership of our media outlets is widely held. Diversity in our sources of news and information has served the public well. Think about it.

The Role of the FCC

Finally, I briefly want to address the role of the FCC.

Over the past year, we have attempted to streamline this agency. We have reviewed our rules and procedures -- to assess whether the purpose for the rule or procedure still makes sense in today's marketplace, and whether there is a less burdensome way to accomplish that goal. We have come a very long way in this ongoing effort.

As a former banker, I believe it is critical that the FCC expeditiously act on applications and petitions, especially when a sale is at stake.

Recently the Mass Media Bureau has done its own reinventing of government. It has swept away the bulk of its backlog of pending cases, and has committed to deadlines for processing future applications. Routine applications will be processed within 60 days; and non-routine applications -- those that are challenged or raise novel issues of law, for example -- in 120 days if sales are involved and 180 days if no sale is involved.

I congratulate Roy and his staff for their success and their undertaking to ensure consistently good service in the future.

In the pending legislation, both the House and the Senate have included provisions that would simplify the vast majority of renewal proceedings by providing a two-step renewal process. The Commission supports this provision.

I invite you to communicate directly with me your thoughts about what is right and what is wrong with our systems, and any ideas you may have on how the Commission can better serve the public.

In my judgment, the FCC has an important role to play in fostering fair and long-term competition in existing services and in providing the basis for fair and long-term competition in the emerging digital media marketplace.

Thank you. I would be happy to take questions.