FCC 95-17 Federal Communications Commission Record 10 FCC Red No. 5

sound broadcasting and expressed concern that the United Before the States would be disadvantaged if it did not participate in Federal Communications Commission this new technology. In a parallel effort, by a series of Washington, D.C. 20554 inquiries between 1989 and 1991, the Commission solicited comment on appropriate U.S. positions to be taken at the World Administrative Radio Conference to be held in Spain in 1992, on possible spectrum to be used for the GEN Docket No. 90-357 provision of digital audio programming by the broadcasting satellite service, or BSS (Sound).3 Based on the inquiries, In the Matter of and in coordination with the National Telecommunications Information Administration (NTIA), the Commission sup Amendment of the Commission©s ported a U.S. position seeking an allocation for satellite and complementary terrestrial DARS at 2310-2360 MHz.4 Rules with Regard to the 3. At WARC-92, three different BSS (Sound) allocations Establishment and Regulation of were adopted.5 For the United States, International Radio New Digital Audio Radio Services Regulation RR750B allocated the 2310-2360 MHz band for digital audio satellite broadcasting. This allocation, like those adopted for other areas of the world, was limited to REPORT AND ORDER audio broadcasting by digital modulation. Resolution 528, also adopted at WARC-92, limits the introduction of BSS Adopted: January 12,1995; Released: January 18,1995 (Sound) systems to the upper 25 MHz of each of the allocated bands, pending action at a competent conference By the Commission: Commissioners Quello, Barrett, to be convened no later than 1998 to address planning of Ness and Chong issuing separate statements. broadcast satellite services, development of procedures for coordinated use of complementary terrestrial broadcasting, 1. By this action, the Commission allocates spectrum in and criteria for sharing with other services.6 the 2310-2360 MHz band for satellite digital audio radio 4. On November 6, 1992 the Commission released the services (DARS). This domestic allocation is in accordance Notice of Proposed Rule Making and Further Notice of In with the international allocation made at the 1992 World quiry (NPRM), in which we proposed to adopt the WARC- Administrative Radio Conference (WARC-92). 1 Our action 92 allocation of 2310-2360 MHz for satellite DARS; today is the first step toward providing the American pub proposed to accommodate aeronautical telemetry services lic with new multi-channel, multi-format digital radio ser now operating in the 2310-2390 MHz band at 2360-2390 vices with sound quality equivalent to compact disks. These MHz; and solicited comment on regulatory and technical new services will be available by satellite to nationwide and aspects of satellite DARS.7 In the Further Notice of In regional audiences. Service and licensing rules for the new quiry, we recognized efforts to implement DARS within satellite DARS services will be addressed in a subsequent the existing radio broadcast spectrum. We stated that "exist rule making. This proceeding has also addressed experi ing broadcasters can and should have an opportunity to mental technologies designed to implement digital broad take advantage of new digital radio technologies," and re casting within the current AM and FM allocations. When quested comment on the latest developments in terrestrial the experimental results indicate the feasibility of imple DARS and "possible accommodation of both AM and FM menting such systems, we will act expeditiously to consider broadcasters in a new system of digital broadcasting." In any appropriate changes to our rules. 1992, we also accepted for comment a license application from Satellite CD Radio, Inc. (SCDR) to operate a satellite DARS system and invited competing applications. Digital BACKGROUND Satellite Broadcasting Company (DSBC), Primosphere 2. On August 1, 1990, the Commission issued a Notice of Limited Partnership (Primosphere), and American Mobile Inquiry (NOI) soliciting information to be used in identify Radio Corporation (AMRC) each submitted applications.8 ing spectrum and developing technical rules and regulatory As a result, there are currently four pending satellite policies for DARS in the United States.2 In the NOI, we DARS license applications. noted international interest in the development of digital

1 See International Telecommunication Union, Final Acts of located the 1452-1492 MHz band for BSS worldwide and the World Administrative Radio Conference (Malaga- 2520-2670 MHz for BSS service limited to national and regional Torremolinos, 1992) (Final Acts). systems for community reception. See Final Acts at 45, 71. 2 See Notice of Inquiry. GEN Docket No. 90-357, 5 FCC Red 6 See Final Acts at 239. 5237 (1990). 7 See NPRM, 7 FCC Red 7776 (1992). 3 See Notice of Inquiry, GEN Docket No. 89-554, 4 FCC Red 8 In the NPRM, we deferred a tentative decision on award of 8546 (1989); Second notice of inquiry, GEN Docket No. 89-554, 5 pioneer©s preferences for satellite DARS because we found that FCC Red 6046 (1990); Supplemental Notice of inquiry, GEN DARS technology was rapidly evolving, but was not yet fully Docket No. 89-554, 6 FCC Red 1914 (1991). developed. See NPRM, at note 15. In October 1993, we initiated 4 See Report, GEN Docket No. 89-554, 6 FCC Red 3900 (1991). a review of the pioneer©s preference rules in ET Docket No. We deem complementary terrestrial DARS to be an adjunct to a 93-266 to assess the effect on these rules of our authority to satellite-based system, rather than a separate, stand-alone terres assign licenses by competitive bidding, as recently authorized by trial service. See Notice of Proposed Rule Making and Further Congress. See Notice of Proposed Rule Making, 8 FCC Red 7692 Notice of Inquiry, 1 FCC Red 7776 (1992) at n.9. (1993). In the First Report and Order in that proceeding, we 5 In addition to the 2310-2360 allocation, WARC-92 also al- deferred a decision as to whether to apply our existing pioneer©s

2310 10 FCC Red No. 5 Federal Communications Commission Record FCC 95-17

5. Additionally, two industry committees are considering panies engaged in the design and manufacture of DARS technical standards issues. The Electronics Industry DARS-related systems. 10 Similarly, All Pro Sports and En Association (EIA) has formed a subcommittee to consider tertainment, Inc. (All Pro) contends that a satellite DARS the development of standards for terrestrial and satellite allocation will expand sports and entertainment program DARS. Also, the National Radio Systems Committee ming and create related jobs; and WHUR-FM, Howard (NRSC) has agreed to examine terrestrial DARS systems University (WHUR), suggests that this new technology will which would operate in the AM or FM broadcast bands, create opportunities for job training and employment. 11 and EIA and NRSC are cooperating in testing such DARS Further, the Recreation Vehicle Industry Association technologies. (RVIA) believes that the new service will increase the utility of RVs and thus promote the RV industry. 12 9. Several parties suggest that a principal benefit of sat COMMENTS ellite DARS will be the provision of high quality audio 6. Comments were received from a wide variety of par service to markets that are presently unserved or ties both in support of and in opposition to the allocation. underserved because of either geographic or social and Proponents of the allocation, including potential DARS economic considerations. For example, Muzak and DigiNet providers, equipment manufacturers, and potential users, Communications, Inc. (DigiNet) argue that satellite DARS state that there will be major benefits from satellite DARS. will allow more customers and more locations to receive These parties argue generally that a satellite-delivered sys enhanced audio service. 13 Dolby Laboratories (Dolby) rec tem will meet the needs of unserved and underserved ommends that the Commission act immediately to promote markets as well as provide enhanced quality of reception nationwide satellite DARS. U The Maine Farm Bureau As and increased audio program diversity. Further, they point sociation (Maine) states that the allocation would signifi out that a satellite DARS system that would provide en cantly increase access to sources of information and hanced quality of reception for all listeners is currently entertainment. 15 Similarly, the Wyoming Farm Bureau feasible. In addition, they assert that the allocation would Federation (Wyoming) contends that satellite DARS would create economic opportunities in the United States for alleviate many of the reception problems caused by Wyo various segments of industry, especially manufacturers of ming©s mountainous terrain and low population density. 16 DARS-related equipment. Finally, proponents argue that a The Education Development Center (EDC), a non-profit satellite DARS will improve U.S. competitiveness in the institution founded for the purpose of educational im world marketplace. provement, maintains that satellite DARS will provide the 7. Opponents, primarily existing broadcast entities, either capability to deliver educational audio programming to reject a satellite DARS allocation or recommend that an remote and rural areas of the country and extend educa allocation not be adopted until terrestrial DARS allocation tional opportunities outside of the classroom. 17 options have been fully explored. Many of these 10. Further, several other groups point out that specific commenters argue that satellite systems will adversely im niche markets hitherto unserved or underserved for social pact present AM/FM radio services by driving local stations and economic reasons may now be served by satellite out of business. This, they contend, will cause a loss of DARS. For example, the Office of Communications of the local service, which a satellite service by its nature cannot United Church of Christ (UCC) believes that satellite replace. This effect, these opponents argue, contravenes the DARS service can serve minority ethnic and cultural inter intent of the Communications Act of 1934 (the Act) that ests that might otherwise not receive programming directed local needs be met by broadcast media. In addition, oppo to a narrow audience. 18 Similarly, the National Asian nents argue that programming will become less, not more, American Telecommunications Association (NAATA) diverse as a result of satellite DARS. National Public Radio agrees that ethnic and niche groups will benefit by the and the Corporation for Public Broadcasting (NPR/CPB) introduction of a nationwide service-offering high quality, do not oppose a satellite DARS allocation, but recommend diverse programming. 19 that the Commission allocate frequencies in the 1.4-1.5 11. In addition, proponents generally agree that satellite GHz band in lieu of the proposed allocation. NPR/CPB DARS will lead to an increase in program diversity. All believe that L-band frequencies have better sharing char Pro argues that the potential demand for niche-oriented acteristics that those in the S-band.9 audio programming is analogous to the proliferation of 8. Several proponents of a satellite DARS allocation, cable television programming, which has grown because of including Muzak, DBS Division (Muzak), WPFW, and In increases in channel availability and increased market size. novative Communications Technologies, Inc. (Innovative) Not allocating spectrum to satellite DARS, All Pro asserts, assert that the allocation will create new business opportu would fail to promote diverse and equitable audio pro nities in the audio broadcast industry, especially for com gramming coverage for the entire U.S. population.20

preference rules in situations in which tentative pioneer©s pref 12 See RVIA Comments at 3. erence decisions have not been issued. See 9 FCC Red 605 13 See Muzak Comments at 2; DigiNet Comments at 2. (1994). Final action in Docket 93-266 is still pending; therefore, 14 See Dolby Comments at 2-3. we will continue to defer action on satellite DARS pioneer©s 15 See Maine Comments at 1. preference requests. 16 See Wyoming Comments at 1. 9 See Comments of NPR/CPB at 5-9. 17 See EDC Comments at 1-2. 10 See Muzak Comments at 2; Innovative Comments at 1; 18 See UCC Comments at 2. WPFW Comments at 2-3. 19 See NAATA Comments at 2; s ee also Comments of Native 11 See All Pro Comments at 2; WHUR Comments at 1. American Public Broadcasting Consortium, Inc. at 1-2. 20 See All Pro Comments at 2.

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WHUR and DigiNet believe that satellite DARS will widen system in the L-band.29 Primosphere agrees that rapid im programming possibilities for local radio regardless of geog plementation of satellite DARS will increase the ability of raphy.21 American industry to compete in international markets.30 12. In response to concerns about the impact of DARS Primosphere suggests that the Commission establish a on terrestrial broadcast service, several parties argue that timetable for moving current aeronautical telemetry users satellite DARS will have minimum impact on those ser of the band to other frequencies so that satellite DARS can vices. For example, DSBC maintains that satellite DARS be implemented by 1997.31 will not hurt the financial status of terrestrial radio and 15. Parties favoring a satellite DARS allocation generally states that terrestrial broadcasters will have an opportunity support allocating the 2310-2360 MHz band proposed in to participate in providing DARS.22 UCC contends that the NPRM and generally support immediate use of the DARS would be able to serve minority ethnic needs with entire band. Loral argues that the 2310-2360 MHz band is out hurting traditional radio service and might spur digital sufficient and appropriate for satellite DARS. DSBC and terrestrial development as well. It also argues that protec SCDR contend that the entire 50 MHz should be made tionism should not be allowed to block DARS implementa- available domestically for immediate use despite the fact . tion; rather, the decision to utilize DARS should be left to that WARC-92 Resolution 528 limited the introduction of the consumer.23 service to the upper 25 MHz of the band until a conference 13. Proponents of the satellite DARS allocation further is held to plan the BSS (Sound) service. SCDR asserts that contend that the new service will promote technological the limitation on use imposed by WARC-92 served two development and help the competitive position of the Unit purposes: to provide an orderly transition for terrestrial ed States. For example,WavePhore, Inc. (WavePhore), an services displaced from the band and to ensure that BSS equipment manufacturer, maintains that satisfying consum (Sound) orbital slots and frequencies remain available for er demand for high quality broadcast audio will benefit less developed countries. SCDR and DSBC conclude that high technology manufacturers and further the develop neither of the purposes of the policy is served by its ment of new technologies.24 On Call Communications, Inc. application in the United States and that Resolution 528 (OCC) states that DARS will aid the continued growth of should therefore not be binding on the Commission.32 Im technological developments in satellite communications mediate action on the full domestic spectrum allocation for and audio compression. 2S Similarly, DigiNet states that satellite DARS is necessary, according to DSBC, to assure permitting the allocation will lead to applications in other continued U.S. lead in high technology radio services. areas of digital communications and to advances in areas Primosphere and AMRC also urge the Commission to such as compression and satellite transmission.26 Further, allocate the entire 50 MHz at 2310-2360 MHz.33 Innovative argues that the growth of digital information 16. Because mobile use of the 2310-2390 MHz band is transmission would enhance the capabilities and utility of currently limited to aeronautical telemetering and asso the frequency spectrum and extend digital media into ciated telecommand operations for flight testing,34 the na many aspects of everyday life.27 In addition, Digital Evolu tional aerospace manufacturers are especially concerned tions, Limited (Digital) suggests that the ability to send with the choice of band for any new service. The Aero high data rate audio programming to mobile locations over space and Flight Test Radio Coordinating Council satellite DARS systems has several potential benefits, in (AFTRCC), an association of the nation©s principal aero cluding the incorporation of DARS into Intelligent Vehicle space manufacturers, agrees that allocating the 2310-2360 and Highway Systems (IVHS). Digital suggests that MHz band for satellite DARS is feasible. AFTRCC©s states IVHS/DARS could be used to transmit traffic, weather, and that it prefers an allocation of the 2310-2360 MHz band to emergency advisories directly to vehicles, and that the abil an allocation of the 1435-1530 MHz band, which had been ity to receive this information even in locations far from considered as an early option for a satellite DARS alloca metropolitan areas would increase the effectiveness of such tion. Although both of these bands are currently allocated advisories by increasing listeners© planning time and by to aeronautical telemetry, AFTRCC favors use of the widening their range of alternative routing possibilities.28 2310-2360 MHz band as the least intrusive to the needs of 14. Loral Aerospace Holdings, Inc. (Loral) states that the the aerospace testing community.35 expeditious allocation and licensing of satellite DARS is 17. Opponents of the satellite DARS spectrum allocation necessary in order to maintain the U.S. lead in technology argue that the new service would bring about the demise of over other countries, which are currently developing a local radio service by forcing current AM/FM stations out

21 See WHUR Comments at 1; DigiNet Comments at 2. See 29 See Loral Comments at 6. also Comments of Comstream Corporation at 2; Comments of 30 See Primosphere Comments at 2. Joseph Jones at 1-2. 31 See id. at 8-9. 22 See DSBC Comments at 7. Monitor Radio points out that no 32 See DSBC Comments at 12; SCDR Opposition to Petitions demonstration has been made yet that an in-band approach will to Deny and Response to Comments, filed December 1, 1992, at allow delivery of DARS in the FM band at an early date. See 21. DSBC suggests that 25 MHz be allocated for code division Comments of Monitor Radio at 1-2. multiple access and 25 MHz for other access technologies. See 23 See UCC Comments at 7. DSBC Reply Comments at 6. 24 See WavePhore Comments at 1-2. See also Comments of 33 See Primosphere Comments at 5; AMRC Comments at 4. Rollins Hudig Hall at 2. 34 See footnote US 276 to §2.106 of our Rules. 25 See OCC Comments at 2.B 35 See AFTRCC Comments at 2. We note that the National 26 See DigiNet Comments at 2. Aeronautics and Space Administration (NASA) filed comments 27 See Innovative Comments at 2. expressing concern that DARS emissions may cause interference 28 See Digital Comments at 1-2. to the NASA Deep Space Network, which receives in the 2290-2300 MHz band. See NASA Comments at 2. This concern will be addressed in the licensing and service rules to follow.

2312 10 FCC Red No. 5 Federal Communications Commission Record FCC 95-17 of business. They argue that these stations are unlikely to to free local radio service.45 Noble Broadcast Group, Inc. survive the competition of a nationwide satellite-delivered (Noble) contends that the introduction of DARS to the service. For example, Shamrock Broadcasting, Inc. et al. existing framework of commercial and non-commercial (Shamrock) argues that the radio marketplace is already broadcast stations holds great promise for improving the highly competitive, and a variety of specialized audio chan long-term commercial viability of the AM and FM services. nels is available to cable television subscribers at a cost Therefore, Noble urges the Commission to delay the au approximating that projected by potential satellite DARS thorization of satellite DARS until terrestrial DARS is well providers. Shamrock contends that the increased competi advanced.46 Noble further argues that the early introduc tion represented by satellite DARS will jeopardize local tion of terrestrial DARS, based on the existing framework radio and the public service that it provides.36 Mount of more that 11,000 aural broadcast stations, is more likely Wilson FM Broadcasters (Mount Wilson) states that many to afford a stimulus to the nation©s electronics industry new FM stations have already been added,37 and that given than satellite DARS.47 this extremely competitive market, FM stations would not 20. On September 7, 1994, SCDR submitted an ex pane be in a position to compete with a nationwide commercial filing entitled "Satellite Radio" containing an economic service such as DARS. Further, KSBJ contends that the analysis of the predicted impact of satellite DARS on tradi large budgets of satellite companies would permit them to tional radio service. On December 27, 1994 the NAB filed provide programming that would draw away local listeners, a response entitled "The Truth About Satellite Radio." In thus fragmenting local audiences to the point where small its filing, SCDR makes a number of points which it be stations could no longer survive.39 lieves suggest that DARS will pose no threat to local radio 18. Opponents also argue that satellite DARS will not be service. According to SCDR, satellite radio will be sup able to replace existing broadcast outlets with adequate ported by subscription and/or by national advertising, service. The Alabama Broadcasters Association (ABA) con whereas local radio is supported by local advertising and tends that the current rules on localism -- the main studio thus satellite radio should have little or no impact on local rule, political and cablecasting law, and broadcast renewal station advertising revenues. SCDR draws analogies be expectancies, for example are geared toward promoting tween satellite radio©s predicted small impact on terrestrial strong community radio stations. Shamrock similarly ar radio and the small impact of other services on potential gues that local radio stations will suffer fatally from the competitors such as the lack of impact by automobile competition posed by a new satellite service. Shamrock also cassette and CD players on auto radio listenership, and the notes that such a service, which will reach 261 markets small impact of cable, especially pay cable, on over-the-air throughout the entire country, unduly concentrates control television broadcasting. SCDR also predicts that satellite of radio service, in contravention of the Commission©s radio will only penetrate 3-10% of the auto radio market recent efforts to limit the number of stations that can be within 10 years. Hence, SCDR suggests that satellite radio controlled by one entity.41 BSB Communications (BSB) will have minimal impact on terrestrial radio service rev contends that the governmental interest in supporting local enues. According to SCDR, the radio industry is currently service is demonstrated again in the Cable Television Con doing quite well, measured by growth of advertising rev sumer Protection and Competition Act of 1992, which enues, share of advertising, cash flow multiples, revenue supports the maintenance of free local commercial televi per station and the rising sales price of stations. Thus, sion. Satellite DARS, on the other hand, would create a SCDR believes that the Commission should not be con national monopoly of superstations not tied to any commu cerned about any possible adverse impact on terrestrial nity.42 radio service. 19. Several opponents of allocating spectrum in the 21. In contrast, NAB claims that satellite radio could 2310-2360 band for satellite DARS argue that the Commis have a devastating impact on community service and will sion should focus its efforts on improving existing radio largely duplicate the programming and formats of local service by introducing terrestrial DARS. NAB, for exam radio stations. NAB argues that the impact of satellite radio ple, maintains that the best option for implementing digital on conventional radio is not analogous to that of cassette broadcasting is by allowing terrestrial DARS on current tapes or the impact of cable on over-the-air television. broadcast channels.43 NAB states that broadcasters have According to NAB, in 1992 60% of radio stations were been in the forefront of DARS developments and have losing money. From 1987 to 1993 real revenue per station worked consistently to develop a plan to bring the signifi declined for small market stations. While SCDR suggests cant improvements of DARS to their listening audience.44 that most of the audience for satellite radio will be people NAB argues that allocation and authorization of satellite in automobiles, NAB believes that audiences at fixed loca DARS will hinder and threaten the successful implementa tions might also listen to satellite radio so that its impact tion of terrestrial DARS and will present a potential danger on terrestrial radio audiences will be larger than that sug-

36 See Shamrock Comments at 7-11. See also Comments of 40 See ABA Comments at 3-4. Chisolm Trail Broadcasting at 1; WIN Communications Inc. at 41 See Revision of Radio Rules and Policies, 1 FCC Red 6387 1; KGNZ-Christian Broadcasting Co., Inc. at 1. (1992). 3 In MM Docket 80-90, we created new classes of FM radio 42 See BSB Comments at 1-2. stations. We estimate that at least 1300 new FM allotments were 43 See NAB Comments at 4; see also Comments of Susque- created because of Docket 80-90. hanna Radio Corporation at 2-3. 38 See Mount Wilson Comments at 2-3; see also Comments of 44 Id. at 6. Putbrese and Hunsaker at 9. 45 Id. at 9-16. 39 See KSBJ Comments at2. 46 See Noble Comments at 2-3; see also Comments of Putbrese and Hunsaker at 13. 47 See id. at 4.

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gested by SCDR. NAB predicts that satellite radio will lead communities, is a furtherance of the Commission©s com to larger audience loss, larger revenue loss and a larger mitment to an equitable distribution as set forth in Section cash flow loss for terrestrial stations than SCDR predicts. 307(b).5s The court©s reasoning in NAB v. FCC with respect Hence, NAB concludes that satellite radio will surely harm to the issues of local as opposed to national or regional terrestrial service.48 broadcasting is apposite here. The court reasoned that the framers of the Act could not have foreseen the technologi cal developments represented by satellite services, yet it DECISION would be anomalous to read the Act so as to prevent the 22. We conclude that the record supports a spectrum FCC from authorizing an innovative technology that would allocation for satellite DARS and that the allocation is in confer benefits on all Americans.56 The court therefore the public interest. Satellite DARS will provide continuous held that "not every communications service approved by radio service of compact disk quality for all listeners and the Commission need be tied to a local communi- will offer an increased choice of over-the-air audio pro ty."[original emphasis]57 Further, the court indicated that gramming.49 Further, a satellite delivery system for DARS the Act does not bestow an exclusive right on any service: will make it possible to serve segments in the United States "existing systems, like existing licensees, have no entitle which are currently underserved and unserved. As sug ment that permits them to deflect competitive pressure gested by some proponents, a satellite DARS system has the from innovative and effective technology."58 We continue potential to provide new services to rural listeners, minor to find that a nationwide service such as that being pro ity and ethnic groups, and audiences whose first language posed in satellite DARS is in fact capable of furthering the is not English. In addition, this new service will provide Congressional intent to distribute radio services widely and opportunities for domestic economic development51 and thus supplement, rather than supplant, local broadcast sta improve U.S. competitiveness in the world marketplace.52 tions, and we reject the suggestion that we must protect Finally, based upon the record before us, we are unable to one service at the expense of an entirely new technology. conclude at this time that the introduction of satellite Accordingly, we conclude that commenters© concerns with DARS will have a significant adverse impact on existing respect to attenuation of local service do not obviate our radio services.53 The size of the impact on terrestrial radio approval of the spectrum allocation for satellite DARS. will depend on many factors, including the specific num 24. As to the studies submitted by SCDR and NAB, we ber and types of services that a future satellite DARS might are not entirely persuaded by either submission. Neither offer, the cost of the service to the public, and the future commenter fully discloses the data used nor explains the development of terrestrial DARS. While we believe that it assumptions, models or methodology used to make their is possible that competition from a new regional or na predictions or projections. It may be that SCDR under tional satellite radio service might diminish the financial states the possible impact on terrestrial radio and that NAB ability of some terrestrial stations to provide local service, overstates it. However, a number of factors which we feel we are not now prepared to deny the allocation of spec may be relevant in making such predictions about the trum for future satellite DARS and the benefits that may economic impact of satellite DARS were not analyzed or accrue from the provision of such service to the public, on discussed by either SCDR or NAB. For example, the size of the basis of potential for economic harm to some stations. the listening audience for satellite DARS and its potential 23. We have previously addressed the legal issue of the for diverting listeners from terrestrial stations and cor impact of satellite services on the localism component of responding impact on station audience, revenues and ulti Section 307(b) in the context of Direct Broadcast Satellite mately cash flow and profits will depend upon many (DBS),54 and our analysis of the issue was affirmed by the factors which are unknown. Among the unknown factors court in National Association of Broadcasters v. FCC, 740 are the number and types of programs that might be F.2d 1190 (1984). Section 307(b) of the Communications offered on a satellite service; the quality of the sound Act requires a dispersal of radio services among the several provided compared to that available from terrestrial ser states and communities so as "to provide a fair, efficient, vice; the degree to which satellite services might be sub and equitable distribution of radio service to each of the scription based or advertiser supported, and if subscription same." We find that a nationwide or regional system such supported, the price of the subscription fee; and the extent as satellite DARS, which serves even the most remote to which, at the time a satellite DARS might begin operat-

48 DSBC, SCDR, and Primosphere all filed oppositions to 50 See comments in support, supra, f H 9-10. NAB©s response, and AMSC filed a letter re-asserting its convic 51 See comments in support, supra, f 13. tion that DARS should be authorized as soon as possible. DSBC 52 Id. argues that NAB has presented no new issue to the Commission 53 See discussion 1112, 20-21, which would require the delay of the DARS spectrum alloca 54 See Direct Broadcast Satellite: Report and Order in GEN tion and. points out that the Commission and the courts have Docket No. 80-603, 90 FCC 2d 676 (1982). concluded that considering the economic impact of new services 55 See also the Commission©s inquiry into the meaning of upon old is not a sound policy. Further, SCDR contends that "local" service in the course of its efforts to implement Section NAB©s arguments about the viability of traditional radio are 25 of the Cable Television Consumer Protection and Competi either mistaken or beside the point and that satellite DARS tion Act of 1992, Notice of Proposed Rule Making, 8 FCC Red represents no threat to conventional radio. Finally, Primosphere 1589 (1993). submits a statement of one of its principals which repeats the 56 See NAB v. FCC, at 740 F.2d 1198; see also Wold Commu arguments that satellite DARS will have no detrimental effect nications, Inc. v. FCC, 735 F.2d 1465, 1475 (D.C. Cir. 1984). on terrestrial radio for at least ten years and a small effect 57 NAB v. FCC, 740 F.2d at 1198. thereafter. 58 Id. 49 See comments in support, supra, H 11.

2314 10 FCC Red No. 5 Federal Communications Commission Record FCC 95-17 ing, a terrestrial DARS might also be in existence. Without which provides local news and public affairs programming. this type of information, it is impossible to conclude with When the test results indicate the feasibility of implement any degree of confidence that satellite DARS will have an ing such systems, we will act expeditiously to consider any impact on traditional radio stations that would be contrary appropriate changes to our rules. to the public interest. 25. We are prepared to adopt an allocation for this new service at this time because we believe that it will benefit ADMINISTRATIVE consumers and is in the public interest. At the same time, however, we note that when we consider service regula Final Regulatory Analysis tions to govern the obligations under which satellite DARS 29. Pursuant to 5 U.S.C. § 603, an initial Regulatory applicants would be permitted to operate, we intend to Flexibility Analysis was incorporated in the Notice in ET request information on and consider all relevant and avail Docket No. 90-357. Written comments on the proposals in able information which addresses the impact of satellite the Notice, including the Regulatory Flexibility Analysis, DARS on traditional service. were requested. 26. Regarding the band to be allocated, we believe that 30. Need for and Objective of Rules. Our objective is to the proposed 2310-2360 MHz spectrum is appropriate. provide a spectrum allocation for the introduction of sat Commenters strongly favor this band over, for example, the ellite digital audio radio services. We expect that satellite 1.5 GHz band. Of particular importance is the aeronautical DARS will benefit the public by providing higher quality, telemetry community©s support for reaccommodating exist more interference resistant digital audio and ancillary ser ing aeronautical telemetry users at 2310-2390 MHz in the vices to the American public. 2360-2390 MHz band.59 In addition, this band was allocated 31. Issues Raised by the Public in Response to the Initial for BSS (Sound) at WARC-92, and our allocation therefore Analysis. Several parties offered comments to the proposals conforms to the action of that international body. set forth in the Notice, but these did not address the initial 27. Further, while we are aware that Resolution 528, Regulatory Flexibility Analysis. adopted at WARC-92, limits the use of the allocation to the 32. Any Significant Alternative Minimizing Impact on upper 25 MHz pending an international BSS (Sound) plan Small Entities and Consistent with Stated Objectives. The ning conference to be held in 1996, we conclude that the alternative to allocating these bands to satellite DARS is reasons for the limitation on use of the band imposed by not to allocate spectrum for this service or to accommodate WARC-92 do not obtain in the present circumstance. That it in other spectrum. We conclude that the bands proposed is, the limitation on use of the allocation imposed by in the NPRM are the most desirable for satellite DARS. WARC-92 served two purposes: to provide an orderly tran Further, existing aeronautical telemetry users of the band sition for terrestrial services displaced from the band and to support the proposal. ensure that BSS (Sound) orbital slots and frequencies re main available for less developed countries. We agree with SCDR and DSBC that neither of the purposes of the policy ORDERING CLAUSE is served by its application in the United States.60 We also note that satellite DARS systems will not be operative 33. Accordingly, IT IS ORDERED that Part 2 of the before 1998, and we therefore believe that such systems can Commission©s Rules and Regulations IS AMENDED as take into account any sharing or planning conditions that specified in Appendix A, effective 30 days after publication may be imposed at a subsequent conference, if necessary. in the Federal Register. This action is taken pursuant to Accordingly, we believe that no purpose would be served sections 4(i), 303(c), (0, (g), and (r), and 309(a) of the in imposing a limit on the use of the DARS allocation at Communications Act of 1934, as amended, 47 U.S.C. sec this time. tions 154(i), 303(c), (f), (g), and (r). 28. In addition, we continue to support efforts to imple ment terrestrial DARS technology. We believe that existing FEDERAL COMMUNICATIONS COMMISSION radio broadcasters can and should have the opportunity to profit from new digital radio technologies, and we antici pate that technical advances will soon permit both AM and FM broadcasters to offer improved digital sound. As noted above, the EIA Digital Audio Radio Subcommittee is eval William F. Caton uating the technical characteristics of a variety of experi Acting Secretary mental DARS transmission systems, with NRSC cooperation on terrestrial systems. Some of the systems being tested are designed specifically to permit digital broadcasting within the existing AM and FM bands. We fully support these developments, and we see great promise in these innovations for providing improved services to consumers. These innovations will also help promote the future viability of our terrestrial broadcasting system,

59 We note that when service rules are developed for satellite and 2352.5 MHz). See footnote US276 to Section 2.106 of our DARS, we may also need to reaccommodate three frequencies Rules. allocated for space telecommand (i.e., 2312.5 MHz, 2332.5 MHz, 60 See supra, 1 16. 61 See NPRM at n.10.

2315 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. s

APPENDIX RULE CHANGES

I. Part 2 of Chapter I of Title 47 of the Code of Federal Regulations is amended as follows:

PART 2 - - FREQUENCY ALLOCATIONS AND RADIO TREATY MATTERS: GENERAL RULES AND REGULA TIONS

1. The authority citations in Part 2 continues to read:

AUTHORITY: Sec. 4, 302, 303, and 307 of the Commu nications Act of 1934, as amended, 47 U.S.C. Sections 154, 154(i), 302, 303, 303(r), and 307, unless otherwise noted.

2. Section 2.106, the Table of Frequency Allocations is amended as follows:

a. The entry for 2300-2450 MHz is removed and new entries for 2300-2450 MHz are added in numerical order. b. INTERNATIONAL FOOTNOTES Nos. 750B, 751A, AND 751B are added; No.743A is deleted; and 751 is modified. c. UNITED STATES (US) FOOTNOTES Nos. US327 AND US328 are added.

2316 Use

(7)

Radio

Special

Frequencies

Digital

Services

Audio

Designators

Use

(s)

(97)

(97)

FCC

Part

(6)

Rule

Amateur

Amateur

IB

75

US327

(5)

MHz

752

Allocation

Table

Non-Government

Amateur

2360-2390 MOBILE BROADCASTING- SATELLITE Mobile

US276 US328 Amateur

2310-2360 664

US276

US253 2390-2450

2300-2310

States

G120

G2

United

G2

G2

US327

(4)

MHz

752

751B

Allocation

Government

G120

RADIOLOCATION 2360-2390 2310-2360 MOBILE Mobile RADIOLOCATION Radiolocation Fixed RADIOLOCATION Fixed Fixed US276 Mobile US328 US253 G2

664

2300-2310 US276

2390-2450

3

(3)

MHz

752

Region

Allocation

IB

75

Table

751

2

(2)

MHz

750B

Region

Allocation

Allocations.

Amateur

664

MOBILE RADIOLOCATION

2300-2450 FIXED

International

752

Frequency

1

of

A

(1)

MHz

751

Region

Allocation

Table

FIXED MOBILE

Radiolocation

664

Amateur

2300-2450

§2.106 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. s

INTERNATIONAL FOOTNOTES

*****

743A delete footnote 750B Additional allocation: in the United States of Amer ica and India, the band 2310-2360 MHz is also allocated to the broadcasting-satellite service (sound) and complemen tary terrestrial broadcasting service on a primary basis. Such use is limited to digital audio broadcasting and is subject to the provisions of Resolution 528. 751A In France, the use of the band 2310-2360 MHz by the aeronautical mobile service for telemetry has priority over other uses by the mobile service. 751B Space stations of the broadcasting-satellite service in the band 2310-2360 MHz operating in accordance with No. 750B that may affect services to which this band is allocated in other countries shall be coordinated and noti fied in accordance with Resolution 33. Complementary terrestrial broadcasting stations shall be subject to bilateral coordination with neighboring countries prior to their bringing into use.

*****

UNITED STATES (US) FOOTNOTES *****

US327 The band 2310-2360 MHz is allocated to the broadcasting-satellite service (sound) and complementary terrestrial broadcasting service on a primary basis. Such use is limited to digital audio broadcasting and is subject to the provisions of Resolution 528. US328 In the band 2310-2360 MHz, the mobile and radiolocation services are allocated on a primary basis until 1 January 1997 or until a broadcasting-satellite (sound) service has been brought into use in such a manner as to affect or be affected by the mobile and radiolocation ser vices in those service areas, whichever is later. The broad casting-satellite (sound) service during implementation should also take cognizance of the expendable and reusable launch vehicle frequencies 2312.5, 2332.5, and 2352.5 MHz, to minimize the impact on this mobile service use to the extent possible.

*****

2318 10 FCC Red NO. 5 Federal Communications Commission Record FCC 95-1?

Separate Statement of Commissioner James H. Quello

In re: Amendment of the Commission's Rules With Regard to the Establishment and Regulation of New Digital Audio Radio Services

It is with a heavy heart, but an eager hand, that I vote today to allocate 50 Mhz of spectrum for a satellite Digital Audio Radio Service (DARS). My heart is heavy because I know only too well, as a an ex-broadcaster and an avid supporter of free, over-the-air broadcasting, of the trepidation with which broadcasters face the allocation of spectrum for a service that will compete with them for listeners. However, my hand is eager because I know, after twenty years as a Commissioner watching the explosion of the communications industry, of the promise of this new digital technology for consumers, satellite providers, and terrestrial broadcasters. Despite the challenge radio broadcasters will face from satellite DARS, I am confident that radio broadcasters will not only survive, but they will thrive. This belief is based not just on hope, but on history.

Over and over, radio broadcasters have faced new challenges that have threatened their viability. AM radio, the first broadcast service, survived the challenge of FM radio. Radio survived the introduction of television, or "radio with pictures." Radio survived (not without some pain) the allocation of more than 2,600 new FM radio stations in Docket 80-90. Radio survived the recession of the late 1980s and is now stronger than ever. Why has radio survived? Because it has distinguished itself, over and over, from the new competitors it has faced over the years. Radio's most recent success? Talk radio: though controversial, a new brand of radio characterized by its outrageousness, its personalities, its politics, its audience participation, its ratings. Moreover, this success has taken place in a marketplace bursting with a plethora of audio and video entertainment, including 12,000 radio stations, 1,520 television stations, 62.5% nationwide, over 80% VCR penetration, a rapidly growing direct broadcast satellite service (with estimated sales of 1,000,000 dishes before the summer of 1995), just to mention a few. Even more important than talk radio, the hallmark of radio that has carried it through the years is arguably the best local news and public affairs programming of any communications medium. Radio is the most immediate and universally available medium for emergency reports and warnings. Local radio stations have become vital and integral members of the communities in which they reside.

Faced with this history, I am confident that radio will stand up to satellite DARS with ingenuity and aplomb. Satellite DARS, while promising to provide CD quality sound, niche music programming, and programming to special interest groups, nonetheless will not, because of the national nature of the service, be able to provide local news and public affairs programming. Thus, satellite DARS will never be embraced by local communities (including local advertisers) in the same way as terrestrial radio.

2319 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. 5

Moreover, if radio broadcasters step up to the plate and implement their own terrestrial OARS system, they can improve promise of a digital audio system for free over-the-air radio is tremendous; its possibilities limited only by the remarkable ingenuity of broadcasters. I therefore pledge to work with broadcasters to implement, as expedrtiously as possible, a terrestrial DARS system. I will then sit back during my golden years (if they ever arrive) and watch the industry that is a part of me thrive as never before.

2320 10 FCC Red NO. s Federal Communications Commission Record FCC 95-17

SEPARATE STATEMENT

OF

COMMISSIONER ANDREW C.BARRETT

Re: In the Matter of Amendment of the Commission© a Rules with Regard to the Establishment and Regulation of New Digital Audio Radio Services, Report and Order (QEN Docket No. 90-357)

Today, the Commission allocates spectrum in the 2310-2360 MHz band for satellite digital audio radio services (DARS). In doing so, the Commission has taken an important step in encouraging the advancement of a technology that promises the proliferation of multi-channel, multi-format digital radio services to unserved and underserved communities in this country. Therefore, I support this decision. My support of the Commission©s decision, however, is not without reservation. For years, terrestrial radio broadcasters have contributed valuable community-based programming at no cost to listeners. I am concerned about the potential adverse impact on localism and the possible economic harm to these broadcasters that may result from the introduction of DARS into the marketplace. While the Commission has an obligation to further the equitable distribution of radio service, I believe that we also have an obligation to carefully evaluate the risk of economic harm that DARS may present to existing terrestrial radio, and ultimately, co local radio service. To that end, I will review with interest additional information or studies which may be submitted to the Commission on this subject. Finally, the Commission has recognized that competition benefits consumers. Therefore, I am pleased that the Commission will act expeditiously to modify its rules at such time as the existing radio broadcasters are able to determine a viable technology that will implement digital broadcasting within the current AM and FM allocations. To that same end, I will closely follow the service and licensing rulemakings for the new satellite DARS.

2321 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. s

SEPARATE STATEMENT OF COMMISSIONER SUSAN NESS

Re: Digital Audio Radio Services (Docket No. 90-357)

This Report and Order is the first step toward establishing a nationwide digital audio programming service to be delivered by satellite directly to the American public in their homes and automobiles. By this action, we are allocating at the domestic level the spectrum we fought for and received on the international level at the World Administrative Radio Conference in 1992 (WARC-92). It is a necessary step, which I fully support.

The proponents of satellite-delivered broadcasting offer the prospect of new and unique programming being made available through both subscription and advertiser- supported radio services throughout the country, including rural areas. For example, they propose to deliver narrowly focused niche services, such as ethnic and foreign language programs, which may attract a critical mass of audience nationally, but may not otherwise be economically feasible to broadcast on a market by market basis. Satellite-delivered programming will reach rural areas of the country that may currently have limited terrestrial signal coverage. Finally, DARS advances technology, by making available compact disk quality sound, through a tiny disk-shaped dish that can be installed in the car or home.

The next step for the Commission is to consider licensing and service rules for satellite-delivered programming. In this upcoming proceeding I look forward to a full discussion of the pertinent issues. There will be many questions to address. Central to the debate will be the impact -- little or large - of national, satellite-based broadcasting upon our existing and highly competitive free, over-the-air AM and FM broadcast service. I would expect to see well-researched economic data presented

2322 10 FCC Red NO. 5 Federal Communications Commission Record FCC 95-1?

for the record. Through our service rules I would hope to maximize the new and unique benefits from this service for the consumer while minimizing the negative repercussions, if any, it might have on the local radio broadcasting service -- an industry which has contributed greatly to the health and vitality of our local communities.

Among the issues to be addressed in the next proceeding will be the scope and nature of such services as well as the number of individual channels awarded each licensee and the procedure for assigning these licenses. I look forward to a discussion of whether the traditional broadcast regulatory scheme should apply to satellite providers, including any public interest or carriage obligations. I also will be exploring in our service rules ways to reconcile the public policy rationale for national and local - limitations on radio broadcast ownership -- which we reaffirmed just two months ago - with the potential for each DARS licensee to provide 30 to 50 channels of programming to our 260-plus markets.

In the broader context of considering the program delivery marketplace that will include the future satellite-delivered services as well as the current terrestrial-delivered services, I believe that it is in the public interest to facilitate use of digital technologies to improve the quality of existing services. Experiments are being conducted to test new broadcast systems designed to accommodate digital broadcasting within the existing AM and FM bands. I await these test results, and will work to address our AM and FM broadcast rules expeditiously if these tests are successful.

Our free, over-the-air broadcast system is being studied and cloned around the world as governments that once believed in strict control over broadcasting have come to -- appreciate its vitality. The underpinning of our system is technology transparent its attraction is in service to the local community, whether it is conveyed by something called amplitude modulation (AM), frequency modulation (FM), or digital audio. I

2323 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. 5

support our current local broadcast system and hope that our actions today will expedite the radio broadcasting industry's move to digital technologies.

Expanding the audio broadcast market to include programming delivered by satellite, as well as terrestrial broadcasting, has the potential to greatly enrich the programming choices available to the public. I look forward to both services competing with a variety of local and national digital quality programming.

2324 iQFCc Red NO. s Federal Communications Commission Record FCC 95-1?

SEPARATE STATEMENT OF COMMISSIONER RACHELLE B. CHONG

Re: Amendment of the Commission's Rules with Regard to the Establishment and Regulation of New Digital Audio Radio Services, Gen. Doc. No. 90-3$7

It is with great pleasure that I support the important step the Commission has taken today towards making Satellite Digital Audio Radio Service ("DARS") a reality. Section 151 of the Communications Act of 1934 mandates that this Commission make available a rapid, efficient, nation-wide communications service. I believe that allocation of this spectrum to this exciting new satellite technology fulfills this important mandate.

There are many benefits that will flow from this new satellite radio service. Digital technology will produce a better quality sound for listeners and make more efficient use of the spectrum. Moreover, satellite delivery of radio programming will permit service to areas that are underserved or currently not served at all. Again, this serves our overarching goal of ensuring a nation-wide service.

I want to make clear that my support for satellite DARS in no way diminishes support my for terrestrial broadcast service. I view satellite DARS as a complementary service to terrestrial broadcasting that will increase the diversity of programming available to the public and increase radio listenership in general.

A factor important in my decision to support satellite DARS is the fact that this service will have a nationwide or regional audience base, and offer a broad panoply of channel choices. DARS operators will be free to target their programming at audiences that may be currently underserved such as special interests or ethnic or racial groups that might not be large enough in a traditional broadcast community to support particularized programming. For example, operators might offer specialized programming targeted to foreign language communities such as those who speak Vietnamese or Armenian. This programming could help bind such a community together on a national basis. Satellite DARS operators also could offer programming to hobbyists such as American history buffs. This will add more diversity to the daily fare contained on our airwaves.

I recognize that there are some parties in this proceeding who fear the advent satellite of DARS and predict that it will diminish the viability of local broadcasters. I hope that these parties have continuing faith in their success in the marketplace and will not give into their fears. Incumbent broadcasters have many strengths that will allow them to compete with satellite delivery systems. The primary strengths of terrestrial broadcasters have always been their devotion to the needs of the local community and their manv

2325 FCC 95-17 Federal Communications Commission Record 10 FCC Red NO. s

public service achievements. They will continue to receive the support of local sponsors if they capitalize on their strengths. I also encourage continued efforts toward authorizing current radio broadcasters to implement terrestrial digital radio service.

Finally, I encourage my fellow Commissioners to commit with me to take the remaining regulatory steps necessary to bring satellite digital radio service on line. This first step has been a long time coming. The first request for this spectrum allocation was filed almost five years ago in May 1990. Surely, we can pick up the regulatory pace and bring the many benefits this service holds to the American people expeditiously. We cannot allow our regulatory processes to hold back a worthy new technology.

2326