In an address to the Association for Maximum Service Television in Las Vegas, Nevada, Commissioner Ness expressed her view that, "while I am persuaded that we should allow licensees greater flexibility in use of the spectrum, I do not believe that the public will benefit from the confusion that will ensue over multiple broadcast standards . . . . There is theory and there is reality. In real life, investment decisions have to be made. Investors need certainty that there will be a critical mass of viewers before they will commit their dollars. Manufacturers need certainty before they can begin producing advanced television receivers . . . . Consumers need certainty, too. They need to know that the television set they buy in Louisville will work when they move to Lincoln, or Little Rock, or Lubbock."

Commissioner Ness urged prompt consideration of the further notice of proposed rulemaking which will seek public comment on channel allotments and methods of assigning those channels. "I hope [this Notice] can be considered before we undertake the rush of Telecommunications Act implementation items due this summer."

Commissioner Ness also discussed children's television, again emphasizing her belief that the "safe harbor" approach is the mechanism best suited to providing broadcasters the certainty and the flexibility they need. She expressed concern that, absent agreement on a standard, broadcasters may be unable to determine what level of commitment to children's television programming will be necessary to win license renewal.

For further information, please contact: David Siddall, 418-2100

It is a pleasure to be with you in Las Vegas today, to celebrate the 40th anniversary of MSTV.

Las Vegas -- the city of chance. A place of hopes and maybes and what ifs.

Me? I like certainty. So, in preparation for this trip, I asked my 7-year-old son to lend me his fortune-telling crystal ball. I thought it could help me answer your questions.

By the way, negotiating with my son to borrow this crystal ball was almost as tough as negotiating with broadcasters about children's television. The ball is here, so maybe we'll see success on kidvid!

Advanced Television -- Chance or Certainty?

Over the past two years, I have spoken frequently about the role in our society of free, over- the-air broadcasting. When broadcast ownership is widely held, quite simply, it is an insurance policy for democracy.

Although other forms of video entertainment and information have eroded broadcasting's dominance, the vast majority of Americans still receive most of their news and information from broadcast channels. And they can be received anytime, anywhere, for free.

As long as station ownership remains widely held, the public benefits from the opportunity to receive programming from diverse sources.

The Uncertain Future

Communications is entering a new era. The digital era. The technology has presented a cornucopia of new consumer products and services that did not exist even three years ago. With it comes a convergence of voice and video, of data and the world-wide-web.

Cable will convert to digital, once the cost of set-top boxes declines. It does not need FCC approval. Wireless cable and direct broadcast satellite may transmit digitally. Telephone companies may construct open video systems, with analog and digital channels.

Only broadcasters need formal FCC approval to convert to digital. You are constrained by spectrum scarcity, interference restrictions, and FCC rules. You require Commission action to proceed.

Should broadcasters be allowed to convert to digital transmission? Should broadcasters be given the chance to compete? My crystal ball says,

"Concentrate and ask again."

"Yes, definitely!"

FCC Decisions

What needs to happen? There are three major phases remaining in our advanced television rulemaking:

• The first, to address the transmission standard;

• The second, to design an allotment plan, carving up the spectrum into licensed channels; and

• The third, to establish rules for the transition and for governing the service to be offered.

The notice to consider adoption of the Grand Alliance standard is slated for presentation in three weeks at our May 9th meeting.

And I have asked the Chairman to expedite the second notice, which will propose for public comment channel allotments and methods of assigning those channels. I hope it can be considered before we undertake the rush of Telecommunications Act implementation items due this summer.

Last summer we issued a further notice of proposed rulemaking on the third item, the transition mechanisms and service rules. We proposed to provide each incumbent broadcaster -- temporarily -- with an additional six megahertz of spectrum to transition into digital. At the end of the transition period, six megahertz would be returned.

But as a final step before adopting the 1996 Telecom Act, Congressional leaders asked the Commission, and all of the Commissioners agreed, not to issue any construction permits or digital licenses this year so that Congress can consider whether to require the FCC to auction the spectrum.

There will be ample opportunity for the public to comment in each of these phases of the rulemaking before final decisions are reached and orders are entered.

Transmission Standard

A few words about the first item -- the transmission standard:

MSTV started the ball rolling for advanced television. In 1987, you led 58 broadcast organizations to petition for an FCC advanced television proceeding.

In response, the Commission established an Advisory Committee comprised of a broad range of private interests -- broadcasting, cable, computer, motion pictures, and manufacturers -- to work through the issues.

The process was impressively open and impartial. Throughout, anyone could join any of the Advisory Committee working groups to offer expertise. Hundreds did. Testing was conducted by private parties under designs developed by the Committee to ensure that the testing was fair and accurate.

During the proceeding, General Instrument did what others said couldn't be done -- it developed a digital video transmission system, leapfrogging international competitors.

Parties then consolidated efforts to produce a single standard. That action eliminated the need for the FCC to choose from among several standards or to approve all minimally acceptable standards, as the Commission did in its infamous "AM Stereo" proceeding.

All of this was accomplished by the Advisory Committee, the Advanced Television Testing Center, the Advanced Television Systems Committee, and a host of companies, with minimal governmental intervention or cost. I salute Dick Wiley, Chair of our Advisory Committee, for his outstanding contribution. He cajoled everyone to develop, test, and deliver a world class digital standard.

The Grand Alliance standard is a work of art -- the art of compromise. It offers:

• A stunningly clear, high definition picture with an aspect radio ideal for delivery of film and sports entertainment.

• The ability for broadcasters to vary the amount of bandwidth per program stream to maximize spectrum efficiency.

• Flexibility to provide not only video programming, but also data and other services.

• Technological headroom, to implement future improvements and entrepreneurial innovations.

The standard won unanimous approval from the Advisory Committee, and I am unaware of any parties who oppose its adoption.

Unless significant flaws have been uncovered, I believe that we should propose at our May meeting to adopt the Grand Alliance standard. Given the openness of the process and years of consideration, including previous Commission decisions, I approach this issue with the belief that the burden of showing why we should not mandate the standard lies with the proponents of that view.

There may be some that believe that a different technology is better. There may be those who argue that the Commission should not mandate one standard, but rather should authorize the use of multiple standards: the Grand Alliance standard, as well as any other non- interfering standard. They say, "Let the marketplace decide. "

Somehow, adopting a digital broadcasting standard is -- how shall I say this -- "too regulatory."

Undoubtedly, we will debate that issue in our standards rulemaking.

But while I am persuaded that we should allow licensees greater flexibility in use of the spectrum, I do not believe that the public will benefit from the confusion that will ensue over multiple broadcast standards.

There is theory and there is reality. In real life, investment decisions have to be made. Investors need certainty that there will be a critical mass of viewers before they will commit their dollars.

Manufacturers need certainty before they can begin producing advanced television receivers. Absent a mandated standard, investment and manufacturing decisions could be stalled, thwarting the ability to convert rapidly and smoothly to digital broadcasting.

Consumers need certainty, too. They need to know that the television set they buy in Louisville will work when they move to Lincoln, or Little Rock, or Lubbock.

Certainty, not chance. "You may rely on it," not "better not tell you now."

My aversion to multiple broadcast standards is not a desire to freeze technology. The standard submitted provides ample headroom for technological improvements and flexibility for innovative services without additional government approval.

Moreover, we have a limited window of opportunity for global leadership in this highly desirable, high tech sector. Let's not let our lead slip away in search of the perfect solution.

Again, I remain open to be convinced that another way is better. But those arguments should come soon. It is time to get on with it .

Allotment Item

The ultimate design for allotments will depend in large measure upon the decision of Congress whether the Commission must auction the digital spectrum or provide a transition mechanism for existing broadcasters. If there is to be an open auction, there would be no incentive to replicate existing contours.

Transition and Service Rules

There are some who do not believe that HDTV is important or that broadcasting is committed to its future. Some suggest that we should follow England's lead and guarantee broadcasters only 2 megahertz of spectrum to digitally replicate existing analog programming.

I do not know what consumer response is going to be to high definition. Even my crystal ball says: "cannot predict now."

However, I do not support proposals that would prevent high definition from having a chance to succeed in the marketplace.

We should not make success a certainty, but we must provide a fair chance for it to succeed in the marketplace.

Auctions

As you know, the FCC does not have the authority to auction broadcast licenses. Congress must decide whether to auction the digital spectrum or whether to give broadcasters spectrum to convert and then auction the analog channels. There are reasonable arguments on both sides of the issue.

Personally, I believe that the public is better served by providing broadcasters with the ability to convert to digital, repacking the licenses, and then auctioning the spectrum that has been returned.

There are strong demands from other services, particularly mobile services, that could be satisfied from the "reclaimed" spectrum. The amount to be reclaimed -- a clear and contiguous amount that would be available nationwide, estimated at 150 MHz or more -- exceeds the entire amount of spectrum devoted to PCS (120 MHz).

Whatever the result, I hope that the decision is based upon sound communications policy and not driven solely by budget concerns.

No one is certain how to ensure that broadcasters return the analog transitional channels to the Government. If this is the path selected, we will do all in our power to enforce a reasonable transition period of limited duration, and secure the return of the analog spectrum.

Unless there is a firm and irrevocable requirement to return of the spectrum for auctioning, together with a firm commitment from broadcasters to effectuate the transition as quickly as possible, then the case for granting broadcasters a second channel for transition to digital would be --- as my crystal ball says -- "very doubtful."

Children's Television

And frankly, given the disheartening lack of cooperation I have experienced with broadcasters on the children's television docket, I wonder whether broadcasters will cooperate in returning the analog spectrum when the time comes.

Let me make clear, I am not linking the two in subject matter. I am suggesting that in the digital television context broadcasters are going to need credibility and goodwill, both of which have been depleted by the way the industry has responded to the children's programming issues.

For the past two years, I have been calling on broadcasters to join with me in putting flesh on the bones of the Children's Television Act. Regretfully, not much progress was made until the beginning of the renewal cycle loomed large.

The issue is over how the FCC determines, as it must at license renewal time, the extent to which broadcasters have met their obligation to provide educational and informational programming for children. The statute was enacted shortly before the last renewal cycle began. And accordingly, broadcasters were held to a low standard of performance for purposes of that renewal cycle.

Everyone understood that a higher level of responsiveness to the needs of children would be required in the next renewal cycle, which is now about to begin. The Commission has sought to provide guidance on what expectations broadcasters must meet, but unfortunately we have not been able to complete our rulemaking.

There is widespread agreement on certain elements of the needed solution.

We all agree on the need for a revised, tighter definition of what qualifies as educational and informational programming. The Commissioners are all in basic agreement on the fundamental elements of this definition: regularly scheduled, standard-length programs that are specifically designed to serve the educational and informational needs of children. My personal view is that the definition should apply only to shows that air between the hours of 7:00 am and 10:00 p.m.

We also agree on the importance of improving the flow of information to children and to parents, or the availability of such programs.

Educational programs will need to be identified in advance to publishers of program guides, and information about each licensee's children's programming performance will need to be collected in station files and submitted periodically to the Commission.

The harder question is: what guidance do we give to broadcasters about what level of performance will satisfy the statutory obligation to meet the educational and informational needs of kids?

As I see it, there are three ways to go:

1. Set a minimum requirement -- a quota -- of, say, three hours per week (this is the approach most children's programming advocates want, though most would set the requirement at five or seven hours per week).

2. Decide a standard, but on an ad hoc, case by case basis, without advance guidance to broadcasters -- in other words, you ask your crystal ball, "what do I need to do to comply?" and it says "cannot predict now!"

3. Or, provide broadcasters with both certainty and flexibility, with a safe harbor approach. If a station airs, say, three hours of core programming, it would have the certainty of knowing that it has fulfilled its obligations under the Act. But that would not be the only way of meeting that obligation.

If a broadcaster has aired slightly less than the safe harbor minimum, it could show that its commitment to children is comparable. For example, a station that airs only two and one-half hours per week of programming but has developed its own children's show at significant additional expense and has an exemplary record of children-oriented interstitials would be deemed to have fulfilled its responsibility.

It weighs about the same.

Specific examples of "comparable" commitment could be spelled out in advance, but not in a way that limits the ability of broadcasters to exercise their own creativity in finding other ways to make an equally meaningful commitment.

Absent agreement on a standard, I fear that broadcasters will need more than a crystal ball to ascertain what level of performance will ensure license renewal.

I don't think it's fair to leave this to chance.

Conclusion

In the case of digital television -- broadcasters, manufacturers, investors, and consumers need certainty.

In the case of children's television, broadcasters need certainty of knowing that they have complied with the Act. And parents need certainty that there is quality educational programming available for their children to watch.

Will we be able to achieve this kind of certainty? Let me ask my crystal ball:

"It is decidedly so."