roundtable: From MAP: Digital TV Memo
roundtable: From MAP: Digital TV Memo
From MAP: Digital TV Memo
Center for Media Education (cme@access.digex.net)
Wed, 12 Jul 1995 16:40:56 -0400
Message-Id: <v02120d01ac29e0de0a0e@[205.197.91.5]>
Date: Wed, 12 Jul 1995 16:40:56 -0400
To: roundtable@cni.org
From: cme@access.digex.net (Center for Media Education)
Subject: From MAP: Digital TV Memo
Posted by:
Center for Media Education
<cme@access.digex.net>
THE GREAT SPECTRUM GIVEAWAY OF 1995:
ISSUES AND OPTIONS
Prepared by Gigi B. Sohn and Andrew Jay Schwartzman
Media Access Project
May 17, 1995
Congress and the Federal Communications Commission are engaged in a policy
debate that will change the face of broadcast television as we have known
it. Television station owners are asking the FCC and the Congress to give
them vast quantities of additional space on the valuable public airwaves
without having to make any significant corresponding financial or public
interest contributions in exchange. This "spectrum grab" would limit
diversity in the marketplace of ideas and permit broadcasters to use
publicly-owned spectrum for their own exclusive political and pecuniary
gain.
SUMMARY
The broadcasting industry is asking Congress for a huge gift - enormous
amounts of additional, valuable, publicly-owned spectrum. However, unlike
spectrum allocated to broadcasters under the Communications Act of 1934,
the public is to receive nothing in return. This "spectrum giveaway" must
be stopped, and broadcasters made to compensate the public for use of its
airwaves. In the early 1990's, the FCC reserved an extra chunk of public
spectrum for the exclusive use of each existing television station owner
to convert from "analog" to "digital" television technology. The express
purpose of this action was to enable broadcasters to provide High
Definition Television (HDTV), which doubles the clarity of today's
television picture. The understanding was that once this conversion
was made, the broadcasters would return their original channel to the FCC.
As technology changed, however, so did broadcasters' business plans. They
determined that it would be far more lucrative to provide non-HDTV pay-TV,
paging and data services over the new spectrum. Thus, they are demanding
what they euphemistically call "spectrum flexibility," a scheme which
permit TV stations to provide one "advanced" television channel to the
public, while leaving broadcasters latitude to use the remainder of their
transmissions for other program and non-program services as they wish.
This version of "spectrum flexibility" contemplates that no significant
financial or public interest contribution would be expected in exchange.
Pending legislation would essentially require the FCC to award the spectrum
to existing television licensees, and would deny it the discretion to allow
any other applicants to compete or bid for these rights. The Senate
version, S.652, would permit the licensees to keep both the old and the new
spectrum, and would impose public interest obligations (e.g., equal time,
lowest unit rate, children's educational and informational programming) on
only one channel. The House bill, H.R. 1555, requires that broadcasters
give back the old spectrum at an undefined point in the future, and
requires that any fees paid by broadcasters for the right to deliver
non-program services be designated for the U.S. Treasury, and not for
any public interest purpose.
With or without legislation, the FCC will take up the issue this summer.
FCC Chairman Hundt has wavered a bit in formulating his position. He has
alternated between advocating enhanced public interest obligations (e.g.,
free time for candidates, increased children's programming) as a quid pro
quo for the new spectrum and being receptive to broadcasters' wishes to
avoid incurring such new responsibilities.
The public interest community intends to participate in the FCC
proceedings. There are several options for action that could be proposed to
the Commission, and they depend largely on whether legislation is passed
and the degree of discretion left to the FCC. However, consideration of
these options should begin without further delay. The options are:
o Permit broadcasters to program one or two channels on the new
spectrum, and require them to lease the remaining channels to
unaffiliated programmers and services.
o Allocate the spectrum to broadcasters in exchange for increased
public interest obligations, including, but not limited to, free
time for candidates, children's programming or community interest
programming. A one or two channel reservation for public,
educational and governmental could be included in this option.
o Require that any fees paid by broadcasters to provide non-program
services be put in a trust fund for public broadcasting and/or the
production of children's informational and educational programming.
o Adopt the FCC's prior decisions in this area, and allocate the
spectrum to broadcasters only to provide HDTV. This option gives
little back to the public.
o Allocate the new spectrum in the same manner that the FCC has
allocated all available broadcast spectrum in the past, by
comparative hearing. This option is perhaps the most unlikely to
be adopted.
INTRODUCTION
Between 1987 and 1992, the FCC held a series of proceedings to determine
whether and how broadcasters might convert from "analog" to "digital"
television technology. The original expectation was that broadcasters
would use new digital systems to provide High Definition Television (HDTV).
HDTV provides a television picture that is twice as clear as ordinary
analog systems. HDTV picture quality approaches that of 35mm film and its
audio quality is equal to that of compact disks.
To implement the proposed conversion, the FCC set aside a huge chunk of
extra broadcast spectrum (six megahertz or 6 MHz) for each licensee, enough
to carry literally thousands of voice conversations. [Endnote 1] The
spectrum was set aside with the understanding that it would be used for
the sole purpose of converting to HDTV. The FCC also concluded that
broadcasters would have to return their existing channels 15 years after
the FCC adopted a standard for HDTV. This time period was chosen to ensure
that broadcasters had fully completed their conversion to digital and that
members of the public were not left without televisions that could receive
the new HDTV service.
Since then, video technologies have progressed far more quickly, and
beyond the expectations of the FCC and most experts. Digital compression
technology now makes it possible to transmit many more voice, video and
data messages using much less spectrum. [Endnote 2] Where at one time it
was thought that broadcasters could only provide HDTV over the extra
spectrum, it is now possible to do much more. Indeed, broadcasters could
split up the bit stream into six or seven different "channels," which
could be used to provide, among other things, multiple TV channels, as
well as non-program services like paging and data transmission.
As the technology changed, so did the broadcasters' business plans. Their
zeal for HDTV lessened as it became increasingly obvious that consumer
interest in HDTV would not reach expected levels, and as the cost of
providing HDTV programming became more clearly understood.
Thus, in early 1994, the National Association of Broadcasters (NAB) began
to demand what it euphemistically calls "spectrum flexibility." "Spectrum
flexibility" would not limit broadcasters to using the extra spectrum
solely for HDTV. Under this scheme, broadcasters would provide one
"advanced" television service [Endnote 3] to the public, while using the
rest of the transmission space for other program and non-program services
as they saw fit. Just as the Commission had originally contemplated, the
broadcasters, at first, promised to return their existing channel once the
conversion was completed.
THE SENATE LEGISLATION
S. 652, the "Telecommunications Competition and Deregulation Act of 1995,"
was reported out of the Senate Committee on Commerce, Science and
Transportation on March 30, 1995. It is expected that the bill will go to
the floor of the Senate sometime in May. Section 207 is the spectrum
flexibility provision of the bill.
Section 207 (a)(1) gives the Federal Communications Commission discretion
as to whether it should give the new spectrum to existing broadcast
licensees. If it does so, however, it is required to adopt regulations
that allow licensees to make use of the extra spectrum for the
transmission of "ancillary and supplementary services" (i.e., non-program
services), if the licensee provides at least one free advanced television
program service. Importantly, Section 207 commands the Commission that it
"shall apply similar rules to use of existing television spectrum."This
is a clear indication that the broadcasters would not have to give up
their existing channel, as was originally contemplated by the FCC. In
other words, this Section permits a broadcaster to keep both its original
and its new spectrum, permits it to provide digital service on both the
old and the new spectrum, and requires only that it provide one free
program service on each.
Section 207(a)(2) states that if a broadcaster charges a subscription fee
for any of its services over existing or extra spectrum, the Commission may
collect a fee from the broadcaster. The section instructs the Commission,
in setting these fees, to take into account the portion of the spectrum
which is used for such services and the amount of time such services are
provided.
In any event, the fee amount cannot exceed the amount paid by bidders in
the recent auctions for cellular telephone- like personal communications
services (PCS) licenses. [Endnote 4]
Finally, Section 207(a)(3) requires that new and existing spectrum be
operated in the "public interest, convenience and necessity." However, the
section imposes the public interest standard only upon the one advanced
television program service (on the existing and/or new spectrum) that is
provided for free to the general public. This means that any other program
service, whether or not it is a subscription service, would be exempt from
public interest obligations. These obligations include, but are not limited
to, equal time, lowest unit rate, children's television and community
programming obligations. [Endnote 5]. The section states further that the
Commission may consider, at license renewal time, any violation of the
Commission rules "applicable to ancillary or supplementary services."
This could be read to mean that any violation of the Commission's
broadcasting rules, or any violation of a law of the United States,
would be irrelevant to obtaining or keeping a license. [Endnote 6]
Ironically, the NAB is not satisfied with Section 207. They are unhappy
that it gives the FCC discretion whether or not to grant them the extra
spectrum. They want to be assured that they will automatically get the
spectrum. Senate Majority Whip Trent Lott (R-MS) is expected to introduce
an amendment on the Senate floor on behalf of the broadcasters to change
this language. This amendment must be defeated on the floor if there is
to be any possibility of obtaining public benefits from the allocation
of this new spectrum.
THE HOUSE LEGISLATION
H.R. 1555, the "Communications Act of 1995," was introduced on May 2, 1995.
The Subcommittee on Telecommunications and Finance is expected to vote on
the bill on May 17. Section 301 is the spectrum flexibility provision of
the bill. Section 301 compels the FCC to give the extra spectrum to
incumbent broadcasters. The Section requires the Commission to set
certain standards to ensure that some minimum amount of advanced
television service is provided on the new spectrum. It also permits
the Commission discretion to "prescribe such other regulations as may
be necessary for the protection of the public interest, convenience
and necessity."
Unlike the Senate legislation, H.R. 1555 requires broadcasters to surrender
one of the two licenses in the future. The Commission is tasked with
determining the surrender date on a market-to-market basis, and must
consider whether 1) "the substantial majority of the public" have
television sets that are capable of receiving digital transmissions and 2)
whether the cessation of analog broadcasting would "render the television
receivers of a substantial potion of the public useless or otherwise cause
undue burdens on the owners of such television receivers...."
H.R. 1555 sets fees for subscription services in the same manner as S. 652.
However, the House bill requires these fees to be deposited in the U.S.
Treasury after the costs to the FCC of implementing these policies have
been recovered.
THE FCC
The FCC's role in this debate depends largely on whether telecommunications
legislation is passed in this Congress, and if it is, how much discretion
the legislation gives the agency to allocate this new spectrum. In any
event, the Commission is expected to begin a series of proceedings this
summer to determine how the new spectrum should be allocated.
FCC Chairman Hundt has spoken a great deal on this issue, and believes it
to be among the most important the agency will face in the near future.
As he has formulated his position on the issue, the Chairman has changed
direction on several occasions. Earlier this year, he told broadcasters
that they shouldn't automatically expect to receive this spectrum, and has
also talked about broadcasters giving a quid pro quo for the spectrum in
the form of free time for candidates and increased children's educational
and informational programming. Then, in an April speech at the NAB
convention, Mr. Hundt appeared to backtrack from his earlier statements -
he promised to "help" the broadcasters, and backed off from the suggestion
that there should be any increased responsibilities attendant to the new
spectrum. Instead, he said that he was "wary of the wisdom of government
mandating how [broadcasters] should take advantage of the business
opportunities that the digital revolution creates,..." In more recent
public statements, however, the Chairman appears to embrace his original
expectation that the public would receive enhanced public interest
obligations in return for broadcasters' use of the new spectrum.
ISSUES RAISED
The bottom line is that the broadcasters are seeking an extra channel of
scarce public spectrum without accepting any significant financial or
public interest obligations in exchange. This raises a number of important
issues:
o Should the broadcasters simply be given this extra spectrum for
free? Should somebody else get it, or at least get to use some
of it?
o If the broadcasters do get the spectrum for free, should there
be some quid pro quo, i.e., free time for candidates, a
quantifiable amount of educational and informational children's
programming?
o Should program services provided over the extra (and existing)
spectrum be free from public-interest obligations such as equal
time, lowest unit rate, children's educational and informational
programming?
o Once broadcasters have made the conversion to digital, should
they be required to return their original channel?
o If fees for subscription services are collected, should those
monies go towards public television, children's television or
some other public interest goal?
OPTIONS
The broadcasters' proposal is unacceptable. It is nothing more than a
"spectrum grab" by the broadcasters that leaves nothing but crumbs for
the public. There are opportunities here to increase diversity in the
marketplace of ideas; increase public discourse; and finance educational,
informational and children's programming. They should not be squandered.
There are several alternative options, not all of which are mutually
exclusive. The options depend, in part, upon whether legislation restricts
the FCC's discretion.
Option 1: "Condominium"
As mentioned previously, digital compression technology permits a
broadcaster to split up a stream of bits into five, six or more "channels."
It is not necessary, however, for a broadcaster to use every one of those
channels.
Under this option, a broadcaster would be given new spectrum to convert to
digital. Once the conversion is completed, however, the broadcaster would
be able to program one or two of the channels, at least one of which would
be devoted to free program service. The broadcaster would then lease the
remaining channels to other unaffiliated program and service providers.
This is similar to the "leased access" concept of cable television. Of
course, the broadcaster would have to return its original channel to
the FCC.
The difficulty in this option lies in the details. Who would be eligible
for carriage? Would carriage on a digital channel count for purposes of
the multiple ownership rules? Would there be preferential rates for
nonprofits and other noncommercial information providers?
Option 2: Allocate Spectrum in Exchange for Enhanced Public
Interest Obligations.
This option would give broadcasters new spectrum, but would impose, as
a quid pro quo, special public interest obligations. For example,
broadcasters could be required, on their free channel, to give one hour of
time every day for the sixty days prior to a federal election for use by
candidates. The Commission could set quantitative guidelines for news,
public affairs and/or children's programming, or it could reserve one
entire channel for the provision of that programming. Another possibility
might be a channel or two set aside for public use, similar to PEG access
channels provided by cable operators.
Option 3: Require that Fees to Engage in Non-Program Services be Placed
in a Trust Fund for Public Broadcasting and/or the Production
of Children's Informational and Educational Programming.
If spectrum fees are imposed on broadcasters for providing subscription
services, some of the money could be set aside to provide funding for
public broadcasting and/or noncommercial children's television. The
public broadcasters have made a similar suggestion in their report to
Congress on alternative funding for public broadcasting.
This option is not exclusive of the others listed here. For example, the
Commission could require enhanced public interest obligations on a number
of the digital channels, and still permit broadcasters to engage in
subscription services on others. In such a case, some or all of the fees
could still be set aside for public interest purposes. This option will
raise opposition from a number of competing interests. First, as reflected
in the House bill, there are many in Congress who simply want to apply this
money to pay down the national debt. Also, many Congressional Republicans
will be disinclined to give the money to public broadcasting, which they
are trying to defund. Another factor is the FCC, which might want the
money to fund itself.
Option 4: Adopt the FCC's Prior Decisions and Allocate the Spectrum to
Broadcasters to Provide HDTV Only.
One option is for the FCC to adopt its prior decisions giving broadcasters
new spectrum, but only for the purpose of providing HDTV. These decisions
also mandate that the broadcasters give back the existing spectrum within
15 years. This option is being promoted by the creators of the current
HDTV standard, as well as the Association for Maximum Service Television.
This option gives little back to the public, and ignores the fact that
even if the broadcasters are required to provide HDTV, there will still
be room on the spectrum to provide other services.
This raises the question of whether broadcasters should only get as much
spectrum as they need to provide digital HDTV. Or whether, if they do get
the full 6 MHz, others should be entitled to use the extra space.
Option 5: Allocate Spectrum to Others via Comparative Hearing
Perhaps the most unlikely option is for the Commission to decide to
allocate the new spectrum to parties other than existing broadcast
licensees much as they would any other broadcast license, i.e., by
comparative hearing. This option would, like the "condominium" option,
promote diversity, provided that the multiple ownership rules remain
somewhat intact.
Some would argue that the Commission is bound to this option by the Supreme
Court's decision in Ashbacker Radio Corp. v. FCC, 326 U.S. 327 (1945).
Ashbacker held that the Communications Act requires the Commission to hold
a comparative hearing for new broadcast licenses if there are two or more
applicants for that license. However, legislation mandating the Commission
to give the new spectrum to the broadcasters would effectively overrule
Ashbacker.
CONCLUSION
Led by the NAB, broadcasters are trying to obtain large amounts of a
scarce, extremely valuable public resource in exchange for absolutely
nothing. Unfortunately, Congress, and perhaps even the FCC, appear ready
to comply. The allocation of this new spectrum could lead to increased
diversity, true public access and/or increased funding for noncommercial
public interest programming. Those who still care deeply about these goals
must act now to see that this golden opportunity is not wasted.
ENDNOTES
1. Broadcasters' existing channels are also 6 MHz.
2. Digital compression converts voice, video and data into ones and zeros,
commonly known as "bits." The bits are delivered, in a stream, to a
converter box inside the television. The converter box sorts out the bits
and presents them as pictures to the viewer. The 6 MHz of spectrum can
hold 20 million bits per second of any kind of voice, video and data. In
comparison, a digital signal with the quality of today's analog television
signal requires just 4 million bits per second. HDTV requires between 6-18
million bits, depending upon how much action is in the picture.
3. "Advanced" television service is commonly recognized as one that
provides a clearer television picture than the current analog system, but
not as clear as HDTV.
4. Some have argued that this fee is equivalent to an auction of the
spectrum, because it permits the amount of fees to be, at a maximum, the
equivalent of what was paid for spectrum that will be used to provide PCS
services. However, under Section 207(a)(2), the FCC is tasked with
apportioning the fees according to the amount of spectrum and amount of
time that is devoted only to subscription services. Therefore, the less
time and space a broadcaster provides for subscription services, the lower
the fees. Moreover, setting the fee limit at the auction value for
non-broadcast spectrum automatically undervalues the broadcast spectrum.
It is commonly understood that broadcast spectrum, which heretofore has
been exempt from auctions, is far more valuable than non-broadcast
spectrum.
5. For example, officials at the Rupert Murdoch-owned Fox television
network have proposed providing an all news channel on the extra spectrum.
Under the broadcasters' plan, this station could promote candidates for
public office without having any corresponding duty to give access or the
lowest rate to opposing candidates. Another possibility would be a
continuous infomercial channel, featuring products intended primarily for
children. The scheme contemplated by the broadcasters would have no limits
on commercialization, program length commercials or "host selling."
6. For example, FCC rules that require broadcast licensees to be of good
character would not be relevant under this section.
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