September 27, 1996
It is a pleasure to visit again with Washington area broadcasters. I say again, because many years ago -- in a different capacity -- I spoke at your summer meeting on the eastern shore. I was a banker then, with money to lend to broadcast companies. Some would say a far more important role!
Speaking of roles, broadcasters have always played a prominent role in our society. You provide citizens with a wealth of news and information to help us navigate our way through the day. You work with your community to raise money for children's hospitals, homeless shelters and other charitable activities. Your programming and services greatly influence our lives.
This is the year of the Telecommunications Act. It may seem as though the Commission has been preoccupied with telecom issues, as we grapple with the task of introducing local competition in telephony and reforming our support system for universal service.
But we actually have a very full plate of major mass media proceedings. Some were mandated by the Act. Some arise from the unprecedented number of mergers and acquisitions -- a by-product of the Act. And some predate passage of the Act.
I'd like to talk briefly about five of these issues: digital television, digital audio radio, children's television programming, broadcast ownership and equal employment opportunity.
Digital Television
One of the most significant issues before me is the transition from analog to digital television broadcasting. Every American consumer will be affected by the outcome. Their televisions may become obsolete because the digitally transmitted signals cannot be displayed on existing sets without a decoder.
In 1987, the broadcasters requested the opportunity to upgrade their systems to "high definition," so that they could offer the American public programs with substantially superior video and audio quality. The Commission responded by opening a proceeding and empaneling a multi-industry advisory committee.
The Commission set two fundamental requirements: any system must preserve universal availability, and it must not use additional spectrum.
Eighteen proposals were submitted in 1988. The parties coalesced around a single, digital standard -- the ATSC Standard, also known as the Grand Alliance Standard" -- and last year, the advisory committee unanimously recommended its adoption.
It is a remarkable standard that has "headroom" for technological improvements. It also is compatible with computers. In May, the Commission unanimously proposed to adopt this standard.
At that time, I stated that anyone offering an alternative solution would have a heavy burden to demonstrate why consumers would be better served by a different approach. Public comments on this standard have now been received. Some parties believe either that no standard should be adopted, or that the standard proposed should be altered.
I strongly disagree with those who argue that no standard should be adopted. Americans expect to be able to purchase a television set in Muncie and use it to access free over-the-air television broadcasts in Miami, in Minneapolis, and Memphis. The economics of free, over- the-air broadcasting depend upon attracting the largest number of viewers possible.
Failure to adopt a single standard for broadcast transmission will lead to confusion in the marketplace -- as it did for AM Stereo -- resulting in significant delay and disruption in the transition from analog to digital.
Those that oppose adoption of the standard argue that television sets could facilitate widespread access to the information superhighway if only they had greater computer compatibility. Some have suggested an alternative: a stripped down, inexpensive model with optional add-on features, to achieve rapid deployment of digital receivers.
So that the public will benefit from the latest digital technology, and so that the United States will not lose the global leadership it now enjoys, we must press ahead on the digital standard.
I have asked the parties to sit down together, to give serious consideration to each others' arguments, and to see if a joint recommendation can be made to the Commission that will benefit all. I believe that there is significant common ground.
Restoring inter-industry consensus to this process will best ensure rapid adoption and deployment of digital broadcasting, with its attendant benefits to the public.
Digital Radio
We've been talking about digital radio for a very long time. Digital audio transmission is well on its way for satellite and terrestrial services. Canada has just given the green light to using the L-band for digital satellite and terrestrial broadcasting.
The Commission is nearing completion of its rulemaking authorizing satellite delivered digital radio -- also known as DARS. I believe we should promote new technology. Because it has national reach, DARS has the potential to aggregate audiences for narrowly targeted programming, such as ethnic programming, and can reach underserved areas with its ubiquitous signal. I have tried to craft our rules to further its unique benefits and reduce the adverse impact on terrestrial broadcasters.
As you may know, the FCC was getting ready to issue a decision on DARS last spring when members of Congress expressed concerns about our method for evaluating Pioneer's Preference applicants. Over the summer, an intergovernmental panel of experts was asked to evaluate the three Pioneer's Preference candidates. Its recommendation is due shortly. We need to resolve that issue before we can issue our final order on satellite radio.
I am also very interested in the development of in-band or other digital services for terrestrial broadcasters. I hope that satellite and terrestrial digital radio can advance in tandem. Industry has had some technical issues to resolve. Once the technology is ready, I will do what I can on the regulatory front to enable broadcasters to provide digital radio.
Children's Educational Television
After two very long years, on August 8th the Commission issued its order on children's educational television. The rules do four things:
What the rules do not do is tell broadcasters what to teach, or which shows to air, or what the message is.
To succeed, you will want to air shows that entertain as well as educate, enthrall as well as enlighten. I am delighted that celebrated producers, directors, and actors are rising to the challenge. I hope that advertisers will set aside a portion of their advertising budgets to fund family friendly fare.
I encourage publishers of weekly program guides to highlight in a separate box those programs you designate as educational and informational. By letting the public know when your shows will be aired, audiences will grow and advertising dollars will flow.
Let children's television be an opportunity for you. An opportunity to shine. To compete in this new arena.
Broadcast Ownership
I know many of you are interested in what the FCC is doing on ownership rules. We've had several big mergers for approval at the FCC and we will continue to see lots of activity. Some general thoughts:
First, I prefer to make changes to FCC policies and standards through rulemaking not through ad hoc determinations. We're authorized by law to change policies or set guidelines by ruling on individual cases. That's why everyone waits with baited breath for our decisions on the "big" cases.
But in an actual rulemaking, we have the benefit of hearing from all who are interested, as well as experts who have studied the topic, and other governmental agencies. Often these commenters point out important consequences from a rule change.
It's also clear when we complete a rulemaking what the rules of the game will be -- for everyone. Otherwise, communications lawyers and their clients have to guess at whether our ruling in a specific case means that the FCC would or would not approve of another case where the facts may be more or less different.
It's this sense that our rules should be clear that makes me interested in modifying our attribution rules. For example, right now, radio LMAs are counted towards a broadcaster's ownership limit but in TV, LMAs are not attributable. This makes no sense. I'm in favor of counting LMAs towards ownership in both radio and TV.
While the Justice Department and the FTC have responsibilities to review certain transactions, it is clear that the FCC should make its own findings for each license transfer -- whether it serves the public interest, convenience, and necessity.
We give great deference to a competitive analysis of the advertising market from another governmental agency, but our mission is broader: for decades, we have looked at the likely effect of the transfer on (a) competition and (b) diversity in the market. Does approval of this transfer serve the public interest?
Competitive analysis is important to determine whether market power is being exercised anticompetitively. Can smaller stations survive in a market dominated by players that control, say 80% of the advertising dollars?
Diversity analysis requires us to ask whether there will be too great a consolidation of voices in the market. At what point should we worry about the potential to silence the great diversity of voices we enjoy in this free country?
One of the ways we need to improve our diversity analysis is when we review applications for one-to-a-market waivers. These waivers allow someone to own a TV station with some number of radio stations in the same market and in many circumstances the applicant has to show us why such a combination is in the public interest.
When applicants assess diversity, they count "other voices" in the market. But they often include any station that is licensed to any community in the entire DMA! It's unrealistic to think that WYVN, in Martinsburg, WVA should be counted towards the number of "voices" serving metropolitan Washington, DC, even though the station serves a community within the DMA.
Similarly, all voices are typically counted as equals. Dominant VHF TV stations affiliated with the "big 4" networks are counted exactly the same as a suburban UHF station that carries infomercials.
Congress has only spoken clearly on two ownership rules: (a) to change the national limits for radio and TV and (b) to increase the local limits for pure radio. We have faithfully implemented these changes.
But as we look toward further rule changes permitted under the Act, I would appreciate hearing from you on the impact of additional consolidation on diversity and the ability of new entrepreneurs to enter a given market.
Today we will ask for comments on whether we should make any changes to the newspaper- radio crossownership ban. We will also be issuing a further notice of proposed rulemaking on the TV duopoly rules, and one-to-a-market rules, as well as the attribution rules.
Equal Employment Opportunity
My last topic is equal employment. I'm told that the DC area broadcasters have excelled in employing women and minorities in the upper four job categories. Obviously, the labor pool in the DC area provides an extraordinary opportunity for top talent. And I am pleased to learn that you have also begun internship programs, including a job fair held at Howard University.
Food for thought: Where we have large group owners, we have companies that are in a position to excel in their equal employment efforts. They typically have professional human resource staff and have more resources available to support EEO efforts. They are in the best position to have "farm teams" where less experienced women and minorities are trained and are given the opportunity to grow into management positions.
The Mass Media Bureau informs me that virtually all of the stations in the Washington Area have made acceptable EEO filings during this round of license renewals and that no forfeitures are contemplated. I hope that your stations will continue to recruit women and minorities and will increase your efforts to train and promote those who are qualified for upper management. In that way you'll continue to lead the nation in EEO awareness.
Conclusion
I've covered a lot of ground in our brief visit today. As you can see, the Commission has been rather busy this year.
But with your hard work:
Thank you.