Federal Communications Commission Record 10 FCC Red No

FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20

L. Must Carry and Retransmission Consent 79 Before the V. THIRD NOTICE OF INQUIRY 86 Federal Communications Commission VI. CONCLUSION 88 Washington, D.C. 20554 ADMINISTRATIVE MATTERS 89

MM Docket No. 87-268 I. INTRODUCTION 1. With this Fourth Further Notice of Proposed Rule In the Matter of Making and Third Notice of Inquiry ("Notice"), we con tinue the process of moving toward the next era of broad cast television: digital broadcast television. In previous Advanced Television Systems orders in this Advanced Television ("ATV") 1 proceeding, and Their Impact Upon the our focus was on fostering the development of High Defini Existing Television Broadcast tion Television ("HDTV").2 With that focus we made a Service series of decisions regarding, among other things, the na ture of the ATV service, eligibility for ATV transition channels, and the transition period. Technological evolu FOURTH FURTHER NOTICE OF PROPOSED RULE tion now obliges us to revisit some of those decisions and MAKING AND THIRD NOTICE OF INQUIRY consider new information, which we do in this document. We tentatively conclude that many of our previous de Adopted: July 28, 1995; Released: August 9, 1995 cisions -- such as our decisions that initial eligibility for ATV transition channels should be limited to existing Comment Date: October 18, 1995 broadcasters - remain sound, even under the changed cir cumstances. We believe that a few decisions, however, re Reply Comment Date: December 4, 1995 quire renewed consideration, such as our requirement that broadcasters must ultimately use the transition channel By the Commission: Chairman Hundt, Commissioners primarily for HDTV. In this document, we ask for com Quello, Barrett, Ness, and Chong issuing separate state ment on these and other issues. Our overarching goal is to ments. ensure that the introduction of digital television fully serves the public interest. TABLE OF CONTENTS Topic Paragraph I. INTRODUCTION 1 II. BACKGROUND AND SUMMARY II. BACKGROUND AND SUMMARY 2 A. Summary A. Summary 2 2. Ever since the late 1920©s when experimental station B. Technological Developments 12 permits were first issued, television broadcasting has had III. ISSUES 20 significant impact on American society. Free, over-the-air, universal broadcast television has served the public well. It A. Spectrum Issues 20 has made accessible to virtually every American a range of B. Definition of Service 22 programming, from news of international importance to C. Eligibility Issues 25 events of local significance, as well as, of course, many hours of entertainment. D. Public Interest Obligations 33 3. The broadcast television service has seen a number of E. Transition 37 significant developments in the past half-century, including 1. Simulcast Requirement 37 the allocation of UHF channels and the introduction of color broadcasting. When we began this proceeding in 2. Licensing of ATV and NTSC Stations 44 1987, we believed that we were on the cusp of another F. Transition Period 48 similar development, the introduction of a major technical improvement in picture quality over the current NTSC3 G. Recovery of Spectrum 55 television system -- High Definition Television. But the H. Length of Application/Construction Period 61 genius of the engineers who have labored to produce the I. Small Markets 66 technical advances and system developments of the past few years. has opened the door to an even more dramatic J. Noncommercial Stations 70 change in the nature of the broadcast television service: the K. All-Channel Receiver Issues 77 introduction of a dynamic and flexible digital broadcast television technology.

1 Advanced Television ("ATV") refers to any television tech vertical and horizontal resolution of NTSC, which is a picture nology that provides improved audio and video quality or en quality approaching 35 millimeter film, and has sound quality hances the current NTSC television system. Memorandum approaching that of a compact disc. Opinion and Order/Third Report and Order/Third Further Notice 3 "NTSC" is the current, analog television system, named for of Proposed Rule Making in MM Docket No. 87-268, 7 FCC Red the National Television System Committee, an industry group 6924, 6925 n.l (1992). ("Third Report/Further Notice"). that developed the monochrome television standard in 1 High Definition Television offers approximately twice the 1940-1941 and the color television standard in 1950-1953.

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4. Digital encoding and transmission technology has ensuring that the spectrum - both ATV channels and evolved and matured to the point where we are confident recovered channels will be used in a manner that best that it would not only permit the broadcast of a digital serves the public interest. High Definition Television signal over a 6 MHz channel, 7. As we explain more fully below, recent developments but that it would also allow for an array of additional do not change our view that the public interest is best alternative uses. The current state of the art, which reflects served by affording incumbent broadcasters the means to advances in digital technology and, in particular, use of provide digital advanced television. Permitting broadcasters digital compression technology and a packetized transport to transition to digital will ensure recovery of spectrum, to scheme, allows for multiple streams, or "multicasting," of which we remain fully committed. Accordingly, temporary Standard Definition Television ("SDTV")4 programming at grant of an additional 6 MHz channel for digital broadcast a quality at least comparable to, and possibly better than, ing will be explicitly conditioned on, among other things, the current analog signal. It allows for the broadcast of return of one of the channels at the end of the transition literally dozens of CD-quality audio signals. It allows for period. We invite comment on whether we should require the rapid delivery of huge amounts of data; an entire that broadcasters also change their channels at the end of edition of the local daily newspaper could be sent, for the transition period, so that the spectrum that will ulti example, in less than two seconds. It allows broadcasters to mately be recovered can be aggregated into contiguous send, simultaneously, video, voice and data. In addition, it blocks, thereby increasing its potential value for new, as yet allows broadcasters to provide a range of services dynam undefined, uses. ically, that is, it allows them to switch easily and quickly 8. While recent developments do not change our view from one type of service to another. For example, a broad that existing broadcasters should be provided temporary caster could transmit a news program consisting of four use of an additional 6 MHz channel to permit a transition separate, simultaneous SDTV program streams for local to digital technology without immediate loss of service to news, national news, weather and sports; then transmit an the NTSC-viewing public, they do change our view about HDTV commercial with embedded data about the product: what, if any, restrictions should apply to use of the second then transmit a motion picture in an HDTV format si channel. Therefore, in this Notice, we ask what limits multaneously with unrelated data. should be placed on use of the ATV channel. 5. The broadcast industry, including equipment manufac 9. Broadcasters are now subject to a number of public turers, has been at the forefront of developing digital interest requirements, including the obligation to air issue- technology for television. Direct Broadcast Satellite (DBS) responsive programming, children©s educational and in is already transmitting with digital technologies, with formational programming, and to provide access to SDTV-type quality. Other service providers are actively candidates for federal office. These public interest require exploring the introduction of digital transmission technol ments were developed for the analog world, in which each ogies. These events, coupled with the technological devel broadcast licensee could do no more than send one signal opments described above, have given rise to greater over its single channel. Digital technology allows each confidence in the practical feasibility of dynamic transmis broadcast licensee to send several streams of video pro sion of multiple streams of information and changed the gramming simultaneously, as well as a mix of video and equation that yielded the decisions contained in our 1992 non-video services. The technology also raises the possibil order. Revisiting our earlier decisions is consistent with ity that a broadcaster can send a mix of subscription and our statutory responsibility to "encourage the provision of non-subscription services. In this Notice, we ask for com new technologies and services to the public," 47 U.S.C. § ment on how the conversion to digital broadcasting should 157, as well as with our general statutory obligation to affect broadcasters© public interest obligations. promote the public interest, since these developments have the potential to provide profound benefits to the American 10. With consumer interests in mind, the Notice revisits public. Accordingly, we issue this Notice to explore how to the issue of simulcasting, as it must if broadcasters will be ensure that the introduction of digital broadcast television permitted to multicast. We ask whether we should impose furthers the public interest in all respects. a modified simulcast requirement, under which an ATV licensee would be required to simulcast the programming 6. In deciding what rules should govern the transition to presented on the NTSC channel (with the exception of digital television, we recognize our obligation to manage commercials and promotions) on a program service of the the spectrum efficiently and in the public interest and to ATV channel. Further, we revisit the issue of the transition take account of the legitimate interests of all those with a period. In setting transition rules, we must balance the stake in that transition. With the foregoing considerations benefits of a rapid conversion to digital technologies with in mind, we will pursue and balance the following goals in our concerns over the number of households that continue this proceeding: 1) preserving a free, universal broadcasting to rely on NTSC transmission. In so doing, we also take service; 2) fostering an expeditious and orderly transition to note of continuing technological advances and other factors digital technology that will allow the public to receive the that may result in a decline in the cost of receiver and benefits of digital television while taking account of con converter prices. We invite comment on what objective sumer investment in NTSC television sets; 3) managing the benchmark(s) we could use to determine when to require spectrum to permit the recovery of contiguous blocks of broadcasters to cease NTSC transmissions and surrender spectrum, so as to promote spectrum efficiency and to one of their 6 MHz channels and on what mechanisms, allow the public the full benefit of its spectrum; and 4)

4 Standard Definition Television ("SDTV") is a digital televi sion system in which picture quality is approximately equiv alent to the current NTSC television system.

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other than the date certain approach we adopted in 1992, HDTV service mentioned above - a single channel of would create incentives for rapid adoption of ATV by television with considerably enhanced visual and aural consumers, broadcasters, manufacturers and others. qualities over those of NTSC analog service. 11. In sum, this Notice invites comment on a wide range 14. Our previous decisions recognized that ATV might of issues with respect to the conversion by television broad allow for such innovations as a choice of camera angles for casters to digital television, including some not addressed viewers. Also, we believed that, in addition to HDTV, the in the foregoing discussion. Our free over-the-air television ATV system could be used to provide services analogous to service is a critical national medium and resource, and the the ancillary uses of NTSC broadcast signals such as the issues raised in this proceeding are central to the direction use of the Vertical Blanking Interval ("VBI"), Subsidiary that medium will take in the twenty-first century. The Communications Authorizations ("SCA"), and Second advent of digital technology promises a quantum leap in Audio Programming ("SAP"). These services, we contin the benefits that may be derived from television service. ued, could be used for revenue raising purposes." How Accordingly, we invite commenters to provide us with ever, because we did not want such ancillary uses to their views and available data with respect to the issues predominate over the primary HDTV use of the channel, raised in this Notice, as delineated in detail below, to we sought comment on whether we should require some ensure that the rules we fashion in this proceeding serve minimum operating schedule for ATV and deferred further the goals that we have identified above and the public defining of "ATV programming" until we had "the benefit interest in general: of a record on other types of advanced technology that might be appropriately permitted on the ATV channel." 12 B. Technological Developments 15. Since we issued our last decision in this matter, 12. This proceeding began in 1987, when we issued our significant developments have occurred. At the time of our first inquiry into how to foster ATV services. At that time last decision in this matter, there were five competing we stated that our goal was to promote the development of HDTV systems under evaluation by the Advisory Commit advanced television that would deliver television service to tee. In February of 1993, the Advisory Committee reported the public with greatly enhanced visual and aural clarity.5 that a digital HDTV system was achievable, but that all In the fall of 1987, a few months after initiating this rule four competing digital systems would benefit significantly making proceeding, we established the Advisory Committee from further development and none would be recommend on Advanced Television Service ("Advisory Committee") to ed over the others at that time. 13 In May of 1993, seven provide recommendations concerning technical, economic companies and institutions that had been proponents of the and public policy issues associated with the introduction of four tested digital ATV systems joined together in a "Grand ATV service.6 We first made the provision of HDTV ser Alliance" 14 to develop a final digital ATV system for the vices a goal in 1990.7 standard. 13. Over the past eight years, we have issued a number 16. The Grand Alliance, in cooperation and consultation of Notices concerning ATV and. based upon the comments with the Advisory Committee, has now developed a single received, have made a number of decisions.8 For example, digital system incorporating the best performance features we previously decided "that an ATV system that transmits of the four previous digital systems and improving upon the increased information of an ATV signal in a separate 6 the designs of those systems. 15 Rather than being limited to MHz channel independent from an existing NTSC channel transmitting one HDTV service, a fully digital system, such will allow for ATV introduction in the most non-disruptive as that developed by the Grand Alliance, can provide one and efficient manner."9 While not further defining the HDTV service, several SDTV services, or a host of non- service that could be provided on the ATV system, we broadcast services alone or in combination with broadcast expected that programming on the ATV channel would services. The system flexibility also permits switching "take full advantage of ATV technical capabilities." 10 We among functions as needed. contemplated that ATV would be used to provide the 17. The Advanced Television Systems Committee (ATSC) 16 has documented the Grand Alliance system in its "Digital Television Standard For HDTV Transmission."

5 Notice of Inquiry in MM Docket No. 87-268. 2 FCC Red 5125. 9 Third Report/Further Notice, supra at 6926; see also First 5127 (1987) ("First Inquiry"). Order, supra at 5627-29. 6 The Advisory Committee, chaired by former FCC Chairman 10 Third Report/Further Notice, supra at 6980. Richard Wiley, consists of a twenty-five member parent com " Id. at 6981. mittee, a Steering Committee, and three Subcommittees. 12 Id. at 6981. 7 First Report and Order in MM Docket No. 87-268 ("First © * ATV System Recommendation of the FCC Advisory Com Order"). 5 FCC Red 5627 (1990). mittee on Advanced Television Service (February 24, 1993) " First Inquiry, supra. See also Tentative Decision and Further ("ATV System Recommendation"). Notice of Inquiry in MM Docket No. 87-268, 3 FCC Red 6520 © * The members of the Grand Alliance are AT&T, General (1988) ("Second Inquiry"); First Order, supra; Notice of Proposed Instrument Corporation, Massachusetts Institute of Technology, Rule Making in MM Docket No. 87-268. 6 FCC Red 7024 (1991) Philips Electronics North America Corporation, Thomson Con ("Notice"); Second Report and Order/Further Notice of Proposed sumer Electronics, The David Sarnoff Research Center, and Rule Making in MM Docket No. 87-268, 7 FCC Red 3340 (1992) Zenith Electronics Corporation. ("Second Re port/Further Notice"); Second Further Notice of Pro 15 In March of this year, the Grand Alliance completed con posed Rule Making in MM Docket No. 87-268, 7 FCC Red 5376 struction of its prototype system and delivered it to the Ad (1992) ("Second Further Notice"); Third Report/Further Notice, vanced Television Test Center for testing by the Advisory supra. Committee. The Advisory Committee expects to submit to us its final recommendation on the ATV standard later this year. 16 ATSC was formed by the member organizations of the Joint

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That standard includes discrete subsystem descriptions for difficulties, we intend to prepare each of these Notices video source coding and compression, audio source coding expeditiously and to act promptly upon our receipt of and compression, service multiplex and transport, and responsive comments. RF/transmission. It has been developed from the "Digital HDTV Grand Alliance" proposal to the Advisory Commit tee. The standard documents the system©s ability to deliver III. ISSUES one HDTV video program, one or more associated audio services, data for ancillary services and other services as A. Spectrum Issues. may be developed. Although the Grand Alliance system 20. Previous Decision. The Commission previously de was not designed to include SDTV. broadcasters have in cided that ATV would be introduced dicated a by assigning existing substantial interest in it. The Grand Alliance broadcasters a temporary channel system appears on which to operate an capable of supporting multiple SDTV ser ATV station during a transition period and that the spec vices, and, accordingly, the ATSC©s Technology Group on trum needed for the transition would be obtained from Distribution the (T3) voted to recommend a revision of the spectrum currently allocated to broadcasting.20 The transi standard to include SDTV video formats that are consistent tion was premised on avoiding a severe disruption to exist with the Grand Alliance HDTV system. The revision is ing service, as both broadcasters and consumers would currently being considered under letter ballot by the full have to obtain new equipment to enable them to provide ATSC committee. and enjoy, respectively, the benefits of ATV service.21 18. Many aspects of the Grand Alliance system promote Moreover, the Commission decided that, for reasons of compatibility with computer applications and thus enhance spectrum efficiency, any ATV system would have to "trans its ability to support the National Information Infrastruc mit the increased information of an HDTV signal in the ture ("Nil"), an important feature in guiding our delibera same 6 MHz channel space used in the current television tions. The Grand Alliance has employed a layered, channel plan."22 all-digital architecture, including a transport scheme that is 21. Discussion. As noted above, the transmission system based on the widely-accepted MPEG-2 standard.17 Compati has been designed for a 6 MHz channel and the Grand bility with computers is also aided by the Grand Alliance Alliance has achieved remarkable results in developing a system©s use of square pixels in most scanning formats and system with great capability and flexibility that can operate support for progressive scan video inputs and progressive within this confine. We thus continue to believe that pro compression formats. 18 The Grand Alliance system accom viding 6 MHz channels for ATV purposes represents the modates both progressive and interlaced scanning by defin optimum balance of broadcast needs and spectrum effi ing a variety of transmission formats which can be ciency. We invite comment, however, on any means of converted as required on a display chosen by consumers achieving greater spectrum efficiency. based on their specific requirements. In these ways, the Grand Alliance has attempted to accommodate computer industry concern, which has earned widespread support B. Definition of Service from that industry. 19 22. As the next generation of television -- digital televi 19. It has become apparent that the flexibility of the sion -- moves from the drawing board into American Grand Alliance system will allow for more applications homes, we reaffirm in this proceeding our intention to and alternative uses than we had previously contemplated. preserve and promote universal, free, over-the-air televi This causes us to revisit some of our assumptions and to sion. Broadcast television has become an important part of re-evaluate a number of our prior decisions. We are issuing the fabric of our society by making available to every this Fourth Further Notice of Proposed Rule Making and American a vast array of programming, including news, Third Notice of Inquiry to invite comment on several as public affairs, educational, and entertainment program pects of this changed ATV environment and their ramifica ming. In order to ensure that broadcast television has the tions for this proceeding. We also expect to issue another opportunity to grow and,compete against alternative video Notice after we receive a recommendation concerning an providers, we envision that the 6 MHz channel earmarked ATV standard from the Advisory Committee: and an addi for ATV will be used for free, over-the-air broadcasting. tional Notice proposing an ATV Table of Allotments and 23. The digital transmission system designed by the assignment methodology. Barring any unforeseen Grand Alliance, as currently proposed, would provide broadcasters with new flexibility and new capabilities as they embark on serving the American public with the next

Committee on InterSociety Coordination ("JCIC") for the pur 19 "Report on the Workshop on Advanced Digital Video in the pose of exploring the need for and, where appropriate, to co National Information Infrastructure," NISTIR 5457, U.S. De ordinate development of the documentation of ATV systems. partment of Commerce, Technology Administration, National The JCIC is composed of the Electronic Industries Association, Institute of Standards and Technology, July, 1994. the Institute of Electrical and Electronics Engineers, the Na 20 See Second Inquiry, supra at 6521. tional Association of Broadcasters, the National Cable Television 21 See generally Second Report/Further Notice, supra at 3353-55. Association, and the Society of Motion Picture and Television 22 First Order, supra at 5628. Although commenting parties Engineers. proposed different spectrum requirements ranging from 6 MHz 17 ISO/IEC IS 13818-1, International Standard (1994), MPEG-2 to 12 MHz per station, we tentatively concluded that "systems Systems and ISO/IEC IS 13818-2, International Standard (1994), requiring more than 6 MHz to broadcast a noncompatible sig MPEG-2 Video. ISO/IEC is the International Organization for nal... will not be authorized for terrestrial broadcast service." Standardization/International Electrotechnical Commission. Second Inquiry, supra at 6521. 18 See ATV System Recommendation, supra at 4-4, 8-11 and Glossary.

10543 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20 generation of television. Broadcasters will be capable of other video service is offered have any significance? What providing through ATV not only a vastly improved high administrative process should we use to enforce such a definition picture, but also multiple program streams. In requirement self reporting, complaints from the public, addition, the ATV system is capable of nonbroadcast uses operating logs, etc. -- and what costs would be associated that are nonvideo and/or subscription-based in nature. Al with each? lowing at least some level of flexibility would increase the ability of broadcasters to compete in an increasingly com C. Eligibility Issues. petitive marketplace, and would allow them to serve the 25. Previous Decision. In the Second Report/Further Notice public with new and innovative services. Flexibility could the Commission established that during the initial period, also allow for a more rapid transition to digital broadcast existing broadcasters would have the first opportunity to ing. Nonetheless, any flexibility afforded broadcasters must acquire ATV channels. Included in the class of existing not undermine our American system of universal, free, broadcasters were: a) all full-service television broadcast over-the-air television. In establishing a regulatory frame station licensees; b) permittees authorized as of October 24, work for the provision of ATV in light of this new flexibil 1991, the date of adoption of the Notice in this proceeding; ity, we therefore seek comment on the following questions: and c) all parties with applications for a construction per mit on file as of October 24, 1991, who are ultimately Should we require broadcasters to provide a awarded full-service broadcast station licenses.24 minimum amount of HDTV and, if so, what mini 26. The eligibility determination was premised on the mum amount should be required? expectation that HDTV would be a single channel method To what extent should we allow broadcasters to use of delivering higher picture and sound quality. The Com their ATV spectrum for uses other than free, over- mission previously set forth several reasons for limiting the-air broadcasting? We recognize that we currently initial eligibility to existing broadcasters. These included: allow broadcasters to use a portion of their analog spectrum for ancillary and supplementary uses that "[Existing broadcasters© continued involvement in do not interfere with or detract from their primary ATV is the most practical, expeditious, and non- broadcast function. Should such uses of the ATV disruptive way to bring improved service to the spectrum be© permitted and. if so, how should they American public. [Footnote omitted.] Existing broad be defined? What portion of the ATV system©s capac casters possess the know-how and experience neces ity should be allowed to be used for ancillary and sary to implement ATV swiftly and efficiently. They supplementary services? have invested considerable resources in the present To what extent should we allow broadcasters to use system and represent a large pool of experienced their ATV spectrum for services that go beyond tradi talent. As initial participants in the transition to tional broadcast television or ancillary and supple ATV, existing broadcasters will be making an appre mentary uses analogous to those allowed under our ciable capital investment in this new technology and current regulatory regime? Should broadcasters be will undertake the business risks associated with be permitted to provide nonbroadcast and/or subscrip ing in the forefront of such new developments."25 tion services? If so. how should such services be Setting an eligibility standard avoids the delay that defined and how much of the ATV system©s capacity would be caused by allowing a wider pool to apply should be allowed for such uses? If allowed, what and having to hold comparative hearings. Limiting regulation, if any, would be appropriate for such eligibility, at least for the initial period, is the most services? practical, expeditious, and non-disruptive way to bring about improved service.26 24. In responding to the above questions, if commenters Defining eligibility allows the Commission to estab propose that licensees be required to meet any require lish an orderly transition period, with the end result ments (such as a minimum HDTV requirement) or be being the recovery of a block of spectrum.27 limited in providing ancillary and supplementary services, they should include comment on the administrative pro cesses we would use to implement any requirements or We also noted that the exclusive initial eligibility period limitations. For instance, how should we measure use by would last only a brief period of time and would not the amount of time, data packet "headers," or by some indefinitely impede new entrants.28 We view the process as other means? Should the time of day when broadcast or one in which broadcasters will engage in an exchange of spectrum: the temporary use of two channels to ensure

23 We note that, under our current rules, a licensee may tion for a construction permit pending as of October 24, 1991. provide video programming primarily on a subscription basis. In the event that we were not able to accommodate all eligible We also note pending legislative proposals that contemplate existing broadcasters with an ATV channel, there are other granting us the authority to require licensees to pay annual options, such as switching directly to ATV service at some point spectrum fees where licensees charge the public for the new during or at the end of the transition period without first services provided on the conversion channels. We will publish a requiring a period of operation by the broadcaster of both an Public Notice or other appropriate document with respect to the NTSC and an ATV facility. We will address this issue in the effect on our ATV decisions of any relevant law enacted. context of our subsequent Further Notice of Proposed Rule 24 Later, in the Third Report/Further Notice, the Commission Making on the ATV Table of Allotments. established that, in the event of a spectrum shortfall, eligible 25 Second Report/Further Notice, supra at 3343. parties would be ranked in the following order: 1) licensees and 26 id. at 3342. permittees with constructed facilities having program test au 27 Id. at 3343. thority; 2) other permittees; and 3) all parties with an applica 28 Id.

10544 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315 continued service to the NTSC-viewing public, with the 30. While we reiterate our tentative conclusion to limit certain return of one of those channels no later than the initial eligibility for ATV frequencies to existing broad end of the transition period. The recovered spectrum will casters, we seek comment on the potential impact our be available for broadcast or other services as we shall proposal would have on the Commission©s long standing determine in the future. policy of fostering programming and ownership diversity. 27. Discussion. We continue to believe that initial eli Specifically, we seek comment on what measures, if any. gibility should be limited to existing broadcasters given the the Commission may adopt to include new entrants into shortage of suitable spectrum and our decision not to this emerging era of digital television. allocate additional spectrum for this purpose. We are still 31. Some parties have suggested that we should auction asking existing broadcasters to inaugurate a television ser the spectrum intended to be used for ATV service. Section vice that will deliver a signal of superior quality.29 309(j) of the Communications Act of 1934, as amended, 28. Furthermore, we are not creating a new service, and limits the uses of spectrum that is subject to being auc our eligibility restriction does not ultimately result in more tioned. It specifically requires that, "the principal use of spectrum for broadcasters or less spectrum for others. We such spectrum will involve, or is reasonably likely to in are merely moving each existing broadcaster from one volve, the licensee receiving compensation from subscrib channel to a different channel in a one-for-one exchange ers...." Our experience and our judgment concerning designed to accomplish a number of long-term public in market conditions lead us to believe that the broadcasters terest goals.30 Broadcasters will be required to cease their would use this spectrum for free over-the-air broadcast analog operations after a relatively short period, thereby service: therefore, it cannot be auctioned under Section permitting a swift, certain transition to digital technology 309(j). For .this reason, as well as those set forth above, we and a rapid recovery of spectrum for the benefit of the reiterate our previous decision to limit initial eligibility to public. existing licensees. Commenters may address whether any 29. We believe that we are not precluded by Ashbacker changed circumstances should alter this conclusion. Radio Corp. v. FCC, 326 U.S. 327 (1945), from limiting 32. Finally, given our decision not to allocate additional initial eligibility to incumbent broadcasters, even if we spectrum for television broadcasting, the number of transi permit flexible use of the digital system and especially since tion channels is limited. Therefore, we also solicit com the broadcasters© "analog" operations will be shut down ment on granting eligibility status to those broadcasters that and one of the channels will be relinquished.31 Under are in bankruptcy, off-the-air, have construction permits or Section 309 of the Communications Act, as applied by the are otherwise non-operational, or otherwise incapable of Supreme Court in United Slates v. Scorer Broadcasting engaging in the transition to digital television. We specifi Co.,32 we are authorized to set licensee eligibility cally request comment on whether the transition channels standards.33 As an independent matter, we note that we also identified for these licensees or permittees would be better have authority under Section 316 of the Communications used to support service to the public if instead they were Act, 47 U.S.C. § 316, to modify existing licenses as the made available to new entrants. public interest requires. In so doing, our actions are not governed by the hearing and other requirements of Section D. Public Interest Obligations 309 of the Act.34 In light of our authority under both Storer 33. Previous Decisions. Our rules imposing public inter and Section 316 of the Act. we invite comment on our est obligations on broadcast licensees flow from the statu tentative conclusion that no Ashbacker problem is pre tory mandate that broadcasters serve the "public interest, sented by our proposals. convenience and necessity." 35 as well as other provisions of the Communications Act. Broadcasters are required to air programming responsive to community needs and

29 For instance, a digital TV signal will provide viewers with rights would be triggered because we are defining the category the same video quality throughout the digital TV station©s ser of eligible applicants rather than rejecting one bona fide ap vice area. This is different from today©s analog TV transmis plicant without comparing it to the others. sions, where the video quality normally is degraded for viewers 32 351 U.S. 192(1956). located farther from the transmitter, near the edge of the ser 33 In Storer, the Court held that the Commission©s promulga vice area. tion of rules limiting eligibility to apply for a broadcast license 30 There is ample precedent for our reallocation of spectrum does not violate the applicant©s right to a hearing. Accord, in the public interest, even where such reallocation results in Aeronautical Radio, Inc. v. FCC, 928 F.2d 428, 439 (D.C. Cir. displacement of current users of the spectrum, and it is clear 1991) (the Commission may reject, without a hearing, applica that we have broad discretion to do so. Indeed, the Court of tions that do not meet valid eligibility requirements). Indeed, in Appeals has recognized our broad discretion to make spectrum a number of other contexts we have concluded that we are not allocation and reallocation decisions. NARUC v. FCC, 525 F.2d precluded by Ashbacker from establishing initial eligibility cri 630, 636 (D.C. Cir. 1976), cert, denied, 425 U.S. 992 (1976). See teria in the public interest. See Notice of Proposed Rule Making NAB v. FCC, 740 F. 2d 1190, 1209-10 (D.C. Cir. 1984). (FCC has in PR Docket No. 93-144. 8 FCC Red 3950, 3955 & n.46 ( 1993); authority to prefer one service over another); WLVA, Inc. v. Amendment of the Commission©s Rules to Permit FM Channel FCC, 459 F. 2d 1286, 1303 (D.C. Cir. 1972) (it is for the and Class Modifications by Application, 8 FCC Red 4735, Commission, not the Courts, to pass on a channel allocation 4738-39(1993). scheme); Coastal Bend Television Co. v. FCC, 234 F. 2d 686, 690 34 Section 316 does not require us to accept petitions to deny (D.C. Cir. 1956) (same). We have, in a number of contexts, an application filed as a result of a proposed modification, but it moved users of spectrum to different bands. does require us to consider protests filed by other licensees or 31 The Court of Appeals has held that Ashbacker applies only permittees who believe their own licenses or permits would be to parties whose applications have been declared mutually ex modified by the Section 316 modification. See 47 U;S.C. § clusive and does not apply to "prospective applicants." Reuters 316(a)(3). Ltd. v. FCC, 781 F.2d 946, 951 (D.C. Cir. 1986). No Ashbacker 35 47 U.S.C. § 307(c). See also id. § 307(a).

10545 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20 interests.36 They are required to air programming designed operate the facilities associated with its 6 MHz ATV chan to "servfe] the educational and informational needs of chil nel in the public interest? We note that attaching a public dren."37 They must provide "reasonable access" to can interest requirement on one type of "service" could skew didates for federal elective office, and must afford "equal broadcaster investment away from providing that service - opportunities" to candidates for any public office.38 Broad a situation that could potentially result in a net public casters are also obliged to refrain from airing certain pro interest loss. Commenters are requested to discuss whether, gramming, such as indecent programming outside the "safe if Congress grants the Commission the requisite authority, harbor" period.39 Finally, in order to promote diversity of we should consider imposing spectrum fees for that portion viewpoint, broadcasters must refrain from discriminating in of the spectrum used by broadcasters to provide subscrip employment and must establish and maintain an equal tion services. We note that the use of spectrum fees may employment opportunity ("EEO") program designed to allow the Commission to establish a regulatory framework provide equal employment opportunities for minorities and that does not discourage broadcasters from providing free women.40 Our previous orders reflect the assumption that over-the-air channels or other services to which public public interest obligations would attach to ATV broadcast interest obligations might attach. We also invite comment ing. Indeed, that broadcasters "have an obligation to serve on whether the conversion to digital broadcasting justifies the public interest" is one of our reasons for limiting other changes in our public interest framework. initial eligibility for ATV channels to existing 36. Finally, we express our intention to continue to broadcasters.41 apply EEO requirements on broadcasters. We ask, how 34. Request for Comment. We remain committed to en ever, whether there are additional means available to fur forcing our statutory mandate to ensure that broadcasters ther our objective of promoting diversity of viewpoints in a serve the public interest. Our current public interest rules, digital world. including those implementing specific statutory require ments, were developed for broadcasters essentially limited E. Transition. by technology to a single, analog video programming ser vice. The potential for more flexible and dynamic use of I. Simulcast Requirement. the advanced television channel than what broadcasters currently enjoy gives rise to important questions about the 37. Previous Decision. Previously, we have expressed our nature of public interest obligations in the digital broad belief that maintaining existing service is extremely impor casting world. We request comment on how the conversion tant, and that the public interest would be served by avoid to digital broadcasting should affect broadcasters© obligation ing any substantial dislocation of service to existing to serve the public interest. viewers. Accordingly, we determined that ATV licensees should simulcast on their NTSC stations the programming 35. Our future rules may allow broadcasters to use their offered on their ATV stations.42 We preliminarily decided advanced television channels to provide a high definition that, beginning one year after the six year application and television service, multiple standard definition television construction period, ATV licensees would have to simul services and perhaps other services, some of which may be cast 50 percent of their ATV programming, increasing to on a subscription basis. Should a licensee©s public interest 100 percent two years later.43 Additionally, we indicated obligations depend on the nature of the services it chooses that we would review this schedule at the time of our to provide and, if that is the case, how so? For example, if initial review of the pace of conversion at the end of the a broadcaster chooses to provide multiple standard defini application/construction period and immediately prior to tion services, should public interest obligations attach to the imposition of 100 percent simulcasting.44 each one? What if one or more of those services are provided on a subscription basis? Alternatively, should 38. Our concern was, and remains, that consumers not public interest obligations be seen as attaching not to ser be prematurely deprived of the benefits of existing televi- vices but to licensees, each of whom would be required to

36 See En Bane Programming Inquiry, 44 FCC 2303, 2312 38 47 U.S.C. § 312(a)(7); 47 C.F.R. § 73.1944 (reasonable ac (1960). Toward that end, broadcasters are required to maintain cess); 47 U.S.C. § 315; 47 C.F.R. § 73.1941 (equal opportunities). lists of programs aired addressing community issues. 47 C.F.R. 1 See also 47 C.F.R. § 73.1920 (personal attack rule); 47 C.F.R. § f 73.3526(a)(8) & (9). Service to the community of license is 73.1930 (right to reply). also considered in determining whether a broadcaster©s license 39 18 U.S.C. § 1464; 47 U.S.C. § 303; 47 C.F.R. § 73.3999. The should be renewed. See, e.g., Cowles Broadcasting, Inc., 86 FCC United States Court of Appeals for the District of Columbia 2d 993 (1981), affd sub noni. Central Florida Enterprises, Inc. v. Circuit recently upheld a ban on the broadcasting of indecent FCC, 683 F.2d 503 (D.C. Cir. 1982). In 1984, the Commission programs between 6:00 a.m. and 10:00 p.m. See Action for eliminated quantitative guidelines under which uncontested re Children©s Television v. FCC, No. 93-1092 (D.C. Cir. June 30, newal applications demonstrating less than 10 percent non- 1995). entertainment programming could not be routinely processed 40 47 C.F.R. § 73.2080. by staff. Revision of Programming and Commercialization Poli 41 Second Report/Further Notice, supra at 3342. cies, Ascertainment Requirements, and Program Log Require 42 We defined simulcasting as the broadcast on the NTSC ments for Commercial Television Stations, Report and Order, 98 channel of the same basic material broadcast on the ATV chan FCC2d 1076(1984). nel, excluding commercials and promotions, within 24-hours. 37 47 U.S.C. § 303(b), 47 C.F.R. § 73.671. We recently issued a Id. at 6978. Notice of Proposed Rule Making requesting comment on a num 43 See Second Report/Further Notice, supra at 3355, 3357; see ber of proposals to amend our rules implementing the Chil also Third Report/Further Notice, supra at 6970-71. dren©s Television Act of 1990. Notice of Proposed Rule Making 44 Id. at 6971. in MM Docket No. 93-48, FCC 95-143 (released April 7, 1995). We will incorporate relevant comments filed in MM Docket No. 93-48 into the record of this proceeding.

10546 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315 sion equipment.45 We also stated that requiring program is available only on the analog service, then all simulcasting would assist us in reclaiming the analog chan viewers (those with digitally capable and analog-only sets) nel as soon as possible by minimizing broadcaster and will need to watch it in the analog service. In a simulcast consumer reliance on the ATV and NTSC channels carry environment, the number of consumers who will lose ac ing separately programmed services.411 Additionally, we be cess to a specific program service will be reduced by the lieved that a simulcast requirement would "give added number who have a digitally capable set or set top con impetus to ATV receiver penetration by eliminating the verter.4" need for dual mode receivers capable of receiving both 42. We ask parties to comment on this proposal, includ NTSC and ATV," thereby helping to lower the cost of ATV ing assessing its impact on broadcasters© ability to provide receivers, spurring increased penetration.4 IIDTV service, and to offer other viable alternatives, keep 39. Changed Circumstances and Proposal. These decisions ing in mind our goals of avoiding a reliance on NTSC were appropriate and practical at a time when it appeared service and assuring recovery of large blocks of contiguous that ATV would primarily consist of the broadcast of a spectrum at the conclusion of a speedy and smooth transi single HDTV program service. However, it is apparent that tion process. We are open to suggestions and will consider a digital TV system can be used in many other ways, any option that does not slow the conversion to digital including to transmit multiple simultaneous SDTV pro television. For instance, commenters may wish to comment gram services. A licensee may. for instance, utilize its ATV on whether the simulcast requirement should be tradeahle. channel to air four SDTV program services. Obviously, That is. should a licensee be permitted to purchase time on that licensee would be unable to simulcast all four program a competitor©s ATV station on which to broadcast its ana services on its NTSC channel. Under such circumstances, it log programming? is clear that our simulcasting requirement must be revisited 43. Also, we seek comment on the phasing in of a and we must consider alternatives. simulcasting requirement. We believe that at the beginning 40. As stated above, the simulcasting requirement was in of the transition a broadcaster should be required to simul large measure intended to allow consumers to avoid being cast little or no NTSC programming. F-©ew viewers would prematurely deprived of the benefits of their NTSC video have ATV receivers at that stage. Later, as fewer consumers equipment. We hoped to avoid having broadcasters move depend upon analog television and ATV equipment prolif their best programs to HDTV. with the result that large erates, we tentatively believe that the simulcasting require numbers of viewers that do not have HDTV equipment ment should be increased. Commenters are invited to would lose much of the value of broadcast television ser comment on the relevant time periods for each phase anil vice. At the present time, this no longer appears to be a the amount of simulcasting that should be required in each likely prospect. We do not foresee broadcasters taking their such phase. best programming off of their NTSC stations and putting it on HDTV where potential audiences will, at first, be small. _©. Licensing of ATV and ATSC Stations. Similarly, we do not see broadcasters moving their best 44. Previous Decision. As a related issue, we must revisit programming off of NTSC and on to ATV early in the the question of whether licensees© NTSC and ATV station conversion process. We believe that, instead, the market licenses should be considered a single license or two sepa will continue to serve consumer demand by assuring the rate and distinct licenses. We previously decided to treat continued presence of good programming on NTSC chan the licensee as having two paired licenses. 5" That is. each nels. However, we still perceive a need for a simulcast licensee©s NTSC and ATV station would receive a separate requirement, albeit different from that first envisioned. license. Because the licenses were to be paired, however, if 41. Some number of consumers, unaware of the transi a licensee©s NTSC license were to be revoked or not re tion to digital television or unable to afford replacement newed while its ATV application was pending, the licensee equipment, may continue viewing analog television would lose its priority eligibility status. Also, if either a throughout the transition period. At the end of the transi licensee©s NTSC or ATV license were revoked or not re tion period, we may be confronted with the choice of newed, the remaining license would automatically suffer either terminating analog service, causing such viewers to the same fate. We nonetheless indicated that we would lose their only source of free broadcast service, or. consider permitting a licensee to voluntarily surrender its alternatively, allowing analog broadcasting to continue, NTSC channel while retaining the corresponding ATV thereby depriving the broad general public of the benefits channel on a case-by-case basis in the interest of spectrum that we believe are to be found from the recovery of one of efficiency. the channels. We wish to avoid either alternative and be 45. We decided that broadcasters would be operating two lieve that a simulcasting requirement may be useful in distinct facilities having different characteristics and. fre speeding the migration of these consumers from analog to quently, transmitting from different locations. Treating the digital broadcasting. Accordingly, we propose to require the ATV and NTSC channels as separately licensed facilities simulcast of all material being broadcast on the licensee©s would, we concluded, simplify enforcement and admin NTSC station (with the exception of commercials and pro istration. However, we paired the two licenses to prevent motions)4" on a program service of the ATV channel. If a

45 Second Report/Further Notice, supra at 3355; Third Re 4Q In the "All-Channel Receiver Issues" section, infra, we dis port/Further Notice, supra at 6970-72. cuss all-channel receiver issues that could possibly minimize or 46 Id. at 3356. potentially eliminate this potential problem. 47 Id. at 3356. Second Report;Further Notice, supra at 3344. 48 As indicated above, both commercial and promotional ma terial were specifically excluded from our original definition of what must be simulcast.

10547 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20

the separate transfer of one channel of the pair because we 49. We stated that the establishment of a firm date for believed that would make it impossible to recapture one of full transition to digital transmission technologies would be the 6 MHz channels at the end of the transition period and in the public interest because it would keep administration still leave the existing licensee with a broadcast outlet.51 simple, assure progress toward freeing spectrum on a time 46. Changed Circumstances and Request for Comments. ly basis, and give affected parties the benefits of a clearly We tentatively conclude that substantial benefits could be defined planning horizon.54 At the time, we believed that a obtained if, instead of licensing the NTSC and ATV facili 15-year transition period was reasonably supported by the ties separately, \ve authorized both under a single, unified data then available.55 We recognized, however, that the data license. It would ease administrative burdens on the Com upon which we were relying consisted of projections that mission and broadcasters alike by reducing the number of were subject to change as more information regarding ATV applications that would have to be filled out, filed and was obtained. Therefore, we established a series of periodic processed. Licensing the two facilities under a single au reviews to avoid making an inflexible decision that may be thorization is also consistent with our view that the au overtaken by future events.56 We also stated that should the thorizations may be issued pursuant to our broad authority periodic reviews demonstrate that the transition period under Section 316 of the Act to modify an existing license. should be advanced, we would consider accelerating the Finally, treating the two facilities under a single license deadline.57 would retain the sound policy announced in the Second 50. Changed Circumstances and Request for Comments. At Report/Further Notice of treating both facilities the same this juncture, there may be reasons to expect that broad from the revocation/non-renewal standpoint.52 We seek casters will adopt ATV more rapidly than was anticipated comment on this tentative conclusion. in 1992, when we last analyzed the transition period. The 47. Commenters advocating separate licenses for the broadcast industry, including equipment manufacturers, ATV channels may wish to address whether, if NTSC and have been at the forefront of developing digital technology ATV licenses were licensed separately, we should allow the for television. Direct Broadcast Satellite (DBS) is already sale of an authorization for an unbuilt ATV facility. Allow transmitting with digital technologies with SDTV-type qual ing such transfers could speed the transition to digital ATV ity. Cable systems have been aggressively evaluating and by putting transition spectrum into the hands of parties investing in digital technology to increase programming willing and able to construct ATV facilities. Commenters capacity, improve picture quality and provide new services should be mindful, however, that even if NTSC and ATV to consumers. Wireless cable operators have announced licenses were to be issued separately and unpaired the their interest in using digital compression technologies to NTSC licensee would have to cease its NTSC operations at increase the number of program streams they provide. the end of the transition period. Moreover, unpairing the Other new services, such as "video dialtone." that would NTSC and ATV licenses would raise complex issues regard use digital transmission technologies are also being initiated ing simulcast and retransmission/must carry rights. In the or planned. In this environment, broadcasters have added event we adopt an NTSC-ATV simulcast requirement, incentive to convert mofe rapidly in order to remain com should the transfer of a separated ATV license be permitted petitive. only if the programming on the accompanying NTSC li 51. Consumers will buy or rent digitally capable receiv cense were simulcast in digital? ers or set-top converters as their choice of digitally-based video products expands. For each household which transi F. Transition Period. tions to any of the new media, including over-the-air digi 48. Previous Decision. In the Third Report/Further Notice tal, there will be at least one less television set reliant upon we made a preliminary decision to establish a transition over-the-air NTSC analog transmissions. Given the degree period that concludes 15 years from the date of adoption of of competition that exists between suppliers of electronic an ATV system or a final Table of ATV Allotments is equipment, and expected economies of scale resulting from effective, whichever is later.53 In addition, we adopted a the proliferation of digitally based media, we anticipate that schedule of periodic reviews to permit us to monitor the declining costs will translate into reduced prices and in progress of ATV implementation and to make any neces creased sales of digital receivers and converters to consum sary adjustments. We decided that the transition period ers. should not be modified without a substantial showing that 52. We previously cautioned that broadcasters© cessation the change is in the public interest. We reiterated that we of NTSC transmission and surrender of a 6 MHz channel planned to award broadcasters interim use of an additional would depend on ATV becoming the prevalent medium, 6 MHz channel to permit a smooth, efficient transition to stemming in part from our concern over the number of an improved technology with as much certainty and as households that might continue to rely on NTSC transmis little inconvenience to the public and the industry as possi sions.58 As discussed above, purchase of an ATV receiver or ble. Finally, we clarified that, in general, broadcasters who converter is not the only means of ending reliance on do not convert to ATV will nevertheless have to cease NTSC transmission, so projections solely of ATV receiver broadcasting in NTSC at the end of the 15-year transition penetration may not be the most accurate benchmark for period. deciding when broadcasters should cease NTSC transmis sion and surrender a 6 MHz channel.

5 Second Report/Further Notice, supra at 3344. 3 Second Report/Further Notice, supra at 3353. 52 Second Report/Further Notice, supra at 3344. 55 Third Report/Further Notice, supra at 6964. 53 Second Report/Further Notice, supra at 3353-54. 56 Id. at 6964-65. 57 Id. at 6968. 58 Second Report/Further Notice, supra at 3353.

10548 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315

53. We now wish to consider whether some objective for the transition to ATV has significant value for other benchmark(s) could be used to determine when broad services and benefits and that any delay in reclaiming the casters should cease NTSC transmission. Is it possible to reversion spectrum carries potential costs to the public." end the transition period in a market by tying the transi 57. Changed Circumstances and Proposal. When the tran tion period to some objective benchmark(s)? If so, what sition to digital technologies is complete, we must have benchmark(s) should be used? The conversion could be some mechanism in place to recover the extra 6 MHz considered complete when the number of households that channel. One option would be to continue renewing li rely on NTSC has fallen to a given percentage. We ask censes for five year periods but explicitly terminate author parties to comment on tying the transition period and final ity to use one of the 6 MHz channels at the end of the conversion date to the percentage of households in a mar transition period. If we were to adopt a "two-license" ap ket that rely on NTSC transmission. If the final conversion proach, one of the two licenses could expire at the end of date is triggered when the number of households that rely the transition period. We ask parties to comment on the on NTSC falls to a given percentage, what should the advantages and disadvantages of each approach. threshold percentage be that triggers the final conversion 58. We remain committed to the recovery of spectrum. date? How would we measure the number of households In addition, we believe that spectrum will be of greater that rely on NTSC transmission from year to year? Should value if available in large contiguous nationwide bjocks. To we measure households or television sets? What other ob create contiguous blocks of spectrum following the transi jective benchmarks should we consider in determining the tion period, it may be necessary to move some digital transition period and the final conversion date? To what broadcast stations to new channels that are contiguous with extent should the availability of inexpensive digital receiv others. This would have the effect of condensing broadcast ers and converters be used as a benchmark in determining assignments to a narrower band of spectrum without elimi the length of the transition period? nating any licenses. Today, television broadcasters have 54. We previously reasoned that by adopting a target date over 400 MHz assigned to them, but NTSC technology does approach we could speed the transition to digital technol not permit all of the channels to be used in the same ogies. Are there mechanisms other than the date certain geographic area.62 We believe that the "Grand Alliance" approach that we adopted in 1992, that we could put in digital system does not have these difficulties. By moving place to create incentives for rapid adoption of ATV by some digital broadcast stations, we would be able to obtain consumers, broadcasters, manufacturers, and others? For a more spectrum-efficient arrangement by condensing example, should we consider having the transition period broadcasting assignments to less than 400 MHz. We believe end at the earlier of a date certain or attainment of an that information concerning spectrum recovery and mov objective benchmark? We seek information on how broad ing some digital broadcast stations to new channels should casters could assist consumers by providing alternate meth be solicited at this time to assure the future availability of ods of acquiring or leasing digital equipment in the short contiguous spectrum and encourage immediate planning term so that the transition costs can be reduced and the and investment in new services. We request comment on transition schedule can be shortened. Could broadcasters in our tentative plans to create contiguous blocks of spectrum. a market cooperate in leasing converters and/or ATV re 59. While broadcasters have been given notice that they ceivers to consumers? Would cooperation between broad must surrender a 6 MHz channel after full conversion to casters in a market raise anti-competitive concerns? If so. digital technologies, no final decisions have been made how could the cooperative arrangements of broadcasters be concerning which of the two channels would be surren adapted to reduce household reliance on NTSC transmis dered. Allowing licensees to determine which 6 MHz chan sion without raising these concerns? nel they would use for digital transmission and which channel they would surrender may result in broadcasters G. Recovery of Spectrum. providing digital services on channels scattered throughout 55. Previous Decision. In the Second Report/Further No the VHP and UHF broadcast band. Allowing this would tice, we put broadcasters on notice that when ATV inhibit the formation of large contiguous blocks of spec becomes the prevalent medium, they will be required to trum. To minimize the number of digital broadcast stations surrender a 6 MHz channel and cease broadcasting in that may need to be moved to new channels to facilitate NTSC.59 In the Third Report/Further Notice, we reiterated the creation of large contiguous blocks of VHP and/or that we are awarding broadcasters interim use of an addi UHF spectrum, it will likely be necessary for us, not the tional 6 MHz channel and we clarified that broadcasters licensee, to determine which 6 MHz channel the broad who do not convert to ATV will nevertheless have to cease caster must use for digital transmission and which channel broadcasting in NTSC.60 must be surrendered. Also, we believe that by making these 56. The Commission has previously stated that interim decisions early we can aid broadcasters in their investment use of an additional 6 MHz channel was necessary to decisions. permit a smooth, efficient transition to an improved tech 60. In order to create the maximum amount of contig nology. The rationale underlying the recovery of spectrum uous spectrum following the transition period, it may be was the freeing of spectrum of significant value for other necessary to move some digital broadcast stations to new uses. The Commission stated that the spectrum to be used channels. We recognize that there are costs associated with moving stations to new channels. We request comment on the benefits and costs of moving stations to new channels.

59 Second Report/Further Notice, supra at 3353. 60 Third Report/Further Notice, supra at 6967. 61 Second Report/Further Notice, supra at 3354. 62 See First Inquiry, 2 FCC Red at 5132-34.

10549 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20

We also seek comment on how to minimize the costs of oped and demonstrated. Commenters should provide moving stations to new channels. Finally, we ask parties to information on their ability to apply for and construct comment on whether each broadcaster should pay for its ATV facilities and discuss the difficulties they would have own move, whether all broadcasters should pay for the in meeting a shorter time frame. costs of relocation, or whether the licensee that bumps the 65. Nevertheless, we are mindful of the difficulties to be broadcaster should pay to move the broadcaster, as was encountered by television broadcasters converting to ATV. done in the emerging technologies band for PCS.63 Sources of financing may be limited and their willingness to support the conversion is unknown. For some stations H. Length of Application/Construction Period. tower sites may need to be found, leases negotiated and 61. Previous Decision. In the Third Report/Further Notice towers built. Equipment will have to be purchased and we made a preliminary decision concerning the application installed, and the capacity of industry to supply over 1500 and construction period that affected the length of the broadcasters67 with new equipment, from cameras to trans transition period. We granted existing broadcasters three mitters to antennas, all within the same time frame is not years from the effective date of ATV system selection or an currently known. Given the different aspect ratio for ATV ATV Allotment Table, whichever is later, in which they as opposed to NTSC, new studio sets may have to be exclusively may apply for a preferred or "set-aside" ATV designed and constructed in order for stations to originate channel, and a total of six years to both apply for and programming. We fully appreciate that this transition will construct an ATV facility.65 not be an easy task. Accordingly, we request comment on have in successfully 62. We previously stated that such factors as the time the practical difficulties licensees will needed to raise the necessary capital to invest in ATV undertaking the conversion and on proposed solutions. technology, to plan for the creation of a new station, including, in some cases, having to locate a new transmitter /. Small Markets site, and to allow ATV equipment to become available, 66. Previous Decision. In the Third Report/Further Notice, required that we establish these application and construc we decided not to adopt a "staggered approach" to initial tion periods. ATV implementation with large markets required to imple 63. Proposal. We propose to establish a procedure by ment first and small markets last.68 While recognizing that which broadcasters have six months in which to make an small market stations produce less revenue than those in election and confirm to the Commission that they want an large markets, adversely affecting their ability to finance ATV license. After that, they would have the remainder of the transition, we also noted that our extension of the the three-year period in which to supply supporting data as application/construction period to a total of six years, and we may require. If they elect not to construct an ATV our "sliding scale" approach69 should provide small market facility, or elect to construct but do not proceed to do so, stations adequate relief. Moreover, we noted that, "[ejven in their NTSC licenses will expire at the end of the ATV the smallest markets, industry figures show that the most conversion period and they will have to cease broadcasting. profitable group of stations, which accounted for one quar This process would have the benefit of identifying early on ter of all stations, made an average of $923.495 in pre-tax locations where existing broadcasters do not want to transi profits in 1990," whereas, "(i]n contrast, even in the top tion to ATV and where applications from new entrants for ten markets, the bottom quarter stations lost money on ATV stations could therefore be considered. average."(Footnote omitted.)70 This suggested to us that a 64. We ask that commenters address all aspects of the staggered approach based on market size alone would not construction period. Is the current six^year period appro necessarily target the correct stations. Nevertheless, we in period appeared priate, too long, or is it insufficient? We believe that the dicated that if the application/construction exclusive eligibility period can be shortened, primarily by insufficient, we could adjust it at later reviews. requiring licensees to make an election within the first six 67. Changed Circumstances and Request for Comments. months after the adoption of an ATV standard or final We now seek comment on whether we should reconsider Table of Allocations, whichever is later, as to whether to this decision, and if so, on what type of relief should be convert.66 This should not place an undue burden on provided from the six year deadline and to whom? For licensees. Broadcasters have now been on notice for a example, should there be a general extension of the dead number of years of the general direction in which we are line for a certain class of stations? If so, for how long and moving toward digital television and some, we understand, to whom? Should it be to stations that make a showing of have begun planning in earnest for the transition. More financial hardship and if so how would that be defined? over, much digital broadcasting equipment has been devel Should there be a different rule for small markets? What

63 See Third Report and Order and Memorandum Opinion and mainder of the application period and the full three-year con Order in ET Docket No. 92-9, 8 FCC Red 6589 (1993). struction period in which to construct. Thus, they would have a 64 Second Report/Further Notice, supra at 3346; Third Re longer time to devote to construction of ATV facilities than port/Further Notice, supra at 6937-40. Other parties would also those applying later. This, we stated, "should permit those be able to apply.for ATV facilities if they were to find a new applying early additional time to cope with any unforeseen allotment and get the Table of Allotments amended accordingly. problems that arise." Third Report/Further Notice, supra at 6939. 65 Third Report/Further Order, supra at 6938-39. Should we adopt our proposal to require an election by the end 66 See, "Length of Application/Construction Period," supra. of the sixth month, licensees filing earlier in the remaining 67 As of May 31, 1995, there were 1539 full service television two-and-one-half years would still have more time in which to stations licensed. "Broadcast Station Totals as of May 31, 1995," construct than those filing later in that period. Mimeo No. 54516, June 23, 1995. 70 Third Report/Further Notice, supra at 6947. 68 Third Report/Further Notice, supra at 6946. 69 Under the sliding scale approach, parties applying early in the six-year application/construction period would have the re

10550 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315 about stations serving economically disadvantaged areas? Rather, it believes such licensees should be given three How should "small markets" or "economically disadvan years after the filing of an ATV application to demonstrate, taged areas" be defined? Commenters should address with a business plan, how they will raise matching funds whether such a general extension would result in slowing and that public broadcasters should not have to make any the implementation of advanced television in these mar showing with respect to having sufficient access to funds to kets. meet their operating costs in the first 90 days of operation. 68. We also seek comment on whether a waiver would Public Television asks that we accept no competing ap be an appropriate way to address the issues of stations who plications while that application is being processed. In this can not afford to make the transition to digital. If way, public broadcasters would be able to timely file and commenters believe a waiver would be an appropriate avoid the possibility of being able to obtain only a short- mechanism, they should specify what factors the Commis spaced UHF channel, a VHP transition channel, or no sion should consider in granting such a waiver. They channel at all. should also address ways to reduce the administrative bur 72. The National Association of College Broadcasters den of such a waiver process on the Commission and on ("NACB") asks that the Commission reserve ATV channels licensees. in the same proportion as they are reserved on NTSC. 69. Finally, we seek comment on an alternative proposal Arizona State also urges that each vacant noncommercial which would allow the Commission to automatically ex allocation be kept in reserve for future public ATV use.76 tend the deadline for a licensee that has not built after the Both NACB and Arizona State ask that we provide six-year period if no one else files for the ATV license. If, noncommercial educational television stations with addi at the end of the six-year period, another party applies to tional time in which to apply for, and construct ATV construct the unbuilt ATV facility, should we permit the facilities. incumbent broadcaster to retain its preferential status if it 73. Proposal and Request for Comments. It is clear from makes a sufficient showing in this regard? Such a policy the comments that noncommercial licensees will face would recognize that in some markets economic factors unique problems in their transition to ATV. These prob may not support all of the stations introducing digital lems are chiefly in the area of funding, where broadcast within the six-year time frame. If. however, there noncommercial broadcasters appear to be subject to the is a new entrant who can provide service immediately, vagaries of forces and parties beyond their control. Indeed, then the public might be better served by the immediate historically, we have recognized "that in making our statu initiation of service. tory findings as to financial qualifications, greater leeway must be accorded the educational station because of its J. Noncommercial Stations. very nature." NTA Television Broadcasting Corp., 44 FCC 70. Previous Decision. In the Third Report/Further Notice 2563, 2574 (1961). (Citation omitted.) Thus, even though at we sought comment on whether some additional measures the time of the NTA decision we required a "stringent" of relief or further action should be taken on behalf of financial showing of commercial applicants, we found that noncommercial stations with respect to the presumptive for noncommercial applicants the public interest required six-year application/construction deadline. © We indicated only a showing that assurance of financial wherewithal to that we would consider a wide array of alternatives to build and operate the station was "reasonable." Id. at 2574. mitigate the problems faced by noncommercial broadcast To do otherwise, we said, "would preclude - unnecessarily ers. and against the public interest - many worthwhile educa tional television endeavors." Id. 71. Comments. Commenters addressing the difficulties of noncommercial broadcasters in converting to digital televi 74. Commenters should address whether noncommercial sion chiefly seek relief with respect to the financial quali broadcasters would obtain sufficient relief in the event that fications that they would have to demonstrate. The we adopt for all existing broadcasters a paired channel Association of America©s Public Television Stations, Cor assignment scheme and requirements such as proposed poration for Public Broadcasting, and Public Broadcasting above. If we do not adopt that proposal or, if adopted, it Service ("Public Television") argue that, because of does not provide sufficient relief for noncommercial broad funding constraints,73 it will take substantially longer than casters, we ask for comment on what further relief would three, or even six years, for public stations to be able to be appropriate and will permit them to participate in the obtain necessary funds to convert to ATV.© 5 Public Televi channel assignment process on an equitable basis. In par sion asks that noncommercial educational stations be al ticular, commenters may address the implications of our lowed to file ATV applications without certifying or system instead of a fixed channel scheme.7 © demonstrating financial qualifications on the filing date.

71 Third Report/Further Notice, supra at 6930, 6947-6948. broadcasters who, they fear, will be unable to meet the "aggres 72 Id. at 6948. sive timetable" the Commission has set for ATV transition. 73 Noncommercial broadcasters have noted the unique However, they ask that if the Commission grants difficulties that they face in obtaining assured financing for the noncommercial licensees relaxed filing or financial require transition, since they rely on government appropriations, foun ments, we extend the same treatment to commercial licensees. dation grants, and corporate and viewer donations. As indicated above, there is longstanding precedent for granting 74 As previously indicated, in the Third Report/Further Notice noncommercial licensees special consideration particularly with we extended the application period from two to three years. respect to financial showings. The action we are taking will 75 Public Television Comments at 18. continue that precedent. We see, however, no reason to extend 76 Arizona State at 5. the same treatment to commercial licensees whose financial 77 GHTV, Inc., SCI Television, Inc., and Busse Broadcasting environment is so much different from that of noncommercial Corp., in joint comments, support relief for noncommercial broadcasters.

10551 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20

75. A second problem that noncommercial broadcasters should be required to have the ability to receive an HDTV commented on was the length of the applica signal or vice versa, and whether we should regulate how tion/construction period. Both Arizona State and NACB such a signal must be displayed. We understand that com express the belief that a six-year period is insufficient for panies are working on receiver designs that would display noncommercial broadcasters. We have previously expressed the Grand Alliance HDTV signal as a lower resolution our belief that to provide different schedules for commer SDTV picture. Such a conversion could result in relatively cial and noncommercial broadcasters would not be conduc inexpensive receivers or converter boxes for NTSC receiv ive to the goal of a speedy and smooth transition. It is still ers, compared with the projected HDTV receiver costs. We our preference to establish a firm transition schedule, but seek comment on whether permitting the manufacture and with the safeguard of having that schedule subject to peri sale of receivers that display only NTSC, SDTV, or HDTV odic review. Additionally, unique problems can be dealt signals, or a combination of two but not "all three, would with on a case-by-case basis. We believe this may be prefer be consistent with the All Channel Receiver Act or other able to establishing two separate classes of broadcasters, wise would be in the public interest. Should we require each with its own schedule, causing confusion to the pub that, during the transition period, all sets be capable of lic and additional administrative burdens to the Commis receiving and displaying NTSC and SDTV signals? Should sion. we require "all-format" receivers capable of receiving and 76. Additionally, commenters should address other things displaying NTSC, SDTV and HDTV signals, and, if so. how that the Commission can do to assist them in their conver should we require HDTV signals to be displayed, in a true sion to ATV. For instance, the broadcast of "advertise HDTV fashion or as a lower resolution SDTV picture? ments" is currently prohibited by Section 399B of the What impact should a decision not to require HDTV Communications Act. Commenters may want to address broadcasting have on whether we should require all receiv whether this should be viewed as applying only to one ers to have HDTV reception and display capabilities? program service or, if to all program services broadcast by Should a decision on one be coupled with the other? What noncommercial broadcasters, whether it would be desirable impact should a decision to adopt only minimal broadcast for the Commission to seek legislative alteration of this SDTV requirements have on this question? Would limiting prohibition. We also ask commenters to discuss whether the sale of NTSC equipment help consumers by assuring the transition to digital by noncommercial broadcasters that they do not purchase equipment that will soon be might be facilitated through re-defining what obsolete, or harm them by, for example, depriving them of "noncommercial" means. If the Commission mandated access to equipment they may need to obtain the benefit of only that the minimum required broadcast programming other video equipment they have, such as VCRs? If we must be "noncommercial," would it be possible for permit the sale of NTSC equipment, should we require a noncommercial broadcasters to finance the transition visible label warning that, as of a date certain, it will no through commercial and flexible uses of the spectrum that longer be able to provide over-the-air broadcast reception? would not interfere with the noncommercial broadcast Or, if we permit the sale of NTSC equipment after the stream? Is there other relief that we can grant specified date, should we require that the sale of such noncommercial broadcasters to minimize restrictions on equipment be accompanied by the provision of or ability to their operations and allow them greater flexibility? use a digital converter? We believe that the All Channel Receiver Act provides us with adequate authority to ad K. All-Channel Receiver Issues. dress these issues. We ask for comment on how we should exercise it. 11. Previous Decision. Traditionally, we have not regu lated broadcast receivers except insofar as they incidentally radiate energy/8 In 1962, Congress adopted the All Chan L. Must Carry and Retransmission Consent nel Receiver Act. which authorizes us to require that tele 79. Statutory Must Carry and Retransmission Consent Re vision receivers "be capable of adequately receiving all quirements. We have not previously addressed the impact of frequencies allocated by the Commission to television ATV on cable television carriage or retransmission consent broadcasting.©" 9 Pursuant to this authority we required that obligations. Sections 614 and 615 of the Communications all TV receivers be capable of UHF channel reception and Act of 1934 contain the cable television "must carry" re adopted standards to make reception of UHF channels quirements. Section 325 contains revised "retransmission comparable with reception of VHF channels.80 We pre consent" requirements, pursuant to which cable operators viously determined in this proceeding that the All Channel may be required to obtain the consent of broadcasters Receiver Act does not mandate the manufacture of dual- before retransmitting their signals. Within local market mode (ATV and NTSC) receivers. We expressed concern areas broadcasters have an option to proceed under either that such a requirement might overly or prematurely bur the retransmission consent or the mandatory carriage re den consumers, and sought comment on whether .there is quirements. These provisions were added by the Cable any need to require that manufacturers produce receivers Television Consumer Protection and Competition Act of capable of both NTSC and ATV reception during the pe 1992,82 subsequent to the adoption of our last decision in riod prior to full conversion to ATV.81 this proceeding. 78. Changed Circumstances and Request for Comments. 80. Under the mandatory carriage provisions, cable oper With ATV now considered to include both HDTV and ators, subject to certain capacity based limitations, are gen SDTV, we request comment on whether SDTV receivers erally required to carry the signals of local television

/8 See 47 C.F.R. §§ 15.101 et seq. 81 Third Report/Further Notice, supra at 6984. 79 47 U.S.C. §303(s). 82 P.L. 102-385, 106 Stat. 1460, codified at 47 U.S.C. § 521 et 80 See 47 C.F.R. §15.117. seq.

10552 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315 stations on their cable systems.83 Systems with more than policies in order to facilitate the most productive possible 12 usable activated channels must carry the signals of local interaction between ATV broadcasting and cable television commercial television stations, "up to one-third of the service. aggregate number of usable activated channels of such 83. We seek comment on any relevant differences in systemfs]."84 In addition, cable systems are obliged to carry rules or policies that might be needed both during the local noncommercial educational television stations accord transition and as a consequence of ATV having replaced ing to a different formula, based upon a system©s number NTSC broadcasting. For instance, how should channel ca of usable activated channels. These statutory requirements pacity be defined in a digital environment, i.e., in terms of are reflected in Section 76.56 of the Commission©s Rules.85 channels, bandwidth, or bits of data per second? Does 81. Section 614(b)(4)(B) of the Act requires that, at the "on-channel" carriage have the same meaning in a digital time we prescribe standards for advanced television, we as it does in an analog environment? Should "substantially "initiate a proceeding to establish any changes in the signal duplicates" include duplication of programming in dif carriage requirements of cable television systems necessary ferent transmission formats? Will changes in station cov to ensure cable carriage of such broadcast signals of local erage require changes in carriage obligations? Additionally, commercial television stations which have been changed to what is the meaning of "primary video" in the context of conform with such ... standards." While we have not yet digital broadcast transmission?1" Is there an appropriate prescribed standards for advanced television, in the sense of parallel to line 21 of the vertical blanking interval of NTSC having defined or determined final standards, we believe it stations for ATV stations? What, if any, flexibility does the timely to begin our consideration of must-carry obligations Commission have under Section 614(b)(4)(B) to modify at this point. requirements applied by the Communications Act to NTSC 82. Request for Comment. Clearly, during the transition signals in the new digital environment? For example, does period, at least the station©s NTSC channel will be subject the Commission have authority to address "A/B" switch to must carry obligations. During the transition period, issues to enhance subscriber access to signals or portions of when, under our original plan, the NTSC channel would signals that may not receive carriage notwithstanding the have been carrying 100% of the HDTV programming be existing prohibition? Is a revised definition of "basic tier" ing aired on the conversion channel, there did not appear needed? Is a common retransmission/must carry election to be a must-carry problem because, as long as the two required for all of the video programming from an individ were carrying duplicative programming, the NTSC and ual broadcast licensee in a market or just for one "primary commonly owned HDTV stations would not both have had video" stream, as defined by the broadcast licensee? In the to have been carried.8" But. if we change the simulcast more flexible broadcast environment associated with digital requirement, programming on the NTSC and ATV chan transmission would changes be needed in the rules that nels might not be duplicative, and both might qualify for mandate that local signals be carried in their entirety even carriage. Additional issues are raised if the conversion if carried under the retransmission consent option?88 Are channel is being used for the transmission of multiple there other issues relatfng to the retransmission consent SDTV program services. If carriage of all material being process that would need to be addressed? broadcast by the station were required, the dedication of, 84. A second set of issues relates to the technical inter for instance, five cable channels (one for the NTSC pro face and associated cost and rate issues. We expect that gramming and, for example, four multicast programs being there will be parallel development of both cable and broad offered on the conversion channel) might be required. cast digital video communications. At the same time, it is Thus, a review of the must carry and retransmission con inevitable that particular cable systems and particular sent rules now is an important component of this proceed broadcast markets will progress on different time schedules. ing. In addition, it is necessary to clearly identify any issues Accordingly, issues will arise as to how digital broadcasts regarding cable carriage that need to be factored into the may be carried on cable systems that are still entirely ATV transitional rules, technical standards, and regulatory analog in their operations, are partially analog and partially

83 Included in the existing rules are the following types of quirements. Turner Broadcasting System v. FCC, 114 S. Ct. 2445 obligations and responsibilities: 1) only a portion of channel (1994), we assume for purposes of this discussion the validity of capacity must be devoted to carriage of local signals; 2) stations the existing statutory provisions. Parties are welcome to com are entitled to "on channel" carriage: 3) signals must be carried ment on the implications of any of the issues involved in this "without material degradation;" 4) stations not providing a de proceeding in terms of the judicial sustainability of any future fined level of signal quality to the system need not be carried; 5) requirements. all such signals must be on a basic service tier; 6) systems need 86 See Section 614(b)(5) of the Communications Act of 1934, as only carry the "primary video" and certain defined program amended (47 U.S.C. § 534(b)(5)). ming that is broadcast on the vertical blanking interval; 7) rules 87 Section 614 of the Act requires carriage of "the primary requiring cable operators to provide a switch (input selector or video, accompanying audio, and line 21 closed caption transmis A/B switch) to permit the viewing of over-the-air signals may sion" of each local commercial broadcast station carried on the not be adopted; 8) a cable operator "shall not be required to cable system. Also required, to the extent technically feasible, is carry the signal of any local commercial television station that carriage of program-related material carried in the vertical substantially duplicates the signal of another local commercial blanking interval or on subcarriers. Similar requirements are television station which is carried on the cable system;" and 9) a found in Section 615 with respect to noncommercial educa cable operator may not request or accept. any consideration tional stations. However, "[rjetransmission of other material in from a television station in fulfillment of these obligations the vertical blanking interval or other nonprogram-related ma (other than copyright payments and costs associated with terial (including teletext and other subscription and advertiser delivering a good quality signal to the cable system©s headend). supported information services) shall be at the discretion of the 84 47 U.S.C. § 534(b). cable operator." *5 47 C.F.R. § 76.56. Although we recognize that there is an 88 See Memorandum Opinion and Order in Docket 92-259, 9 ongoing challenge to the constitutionality of the existing re FCC Red 6723, paras 96-107 (1994).

10553 FCC 95-315 Federal Communications Commission Record 10 FCC Red No. 20

digital, or that are entirely digital. With respect to each 87. Today, TV broadcasters have over 400 MHz assigned type of operation there are potential issues relating to to them, but because of interference and market forces, on headend equipment, transmission plant, subscriber prem average only 80 MHz is used per market. In the top ises equipment, and type of digital transmission system that markets, around 120 MHz is used. Digital broadcasting will may arise. Accordingly, we seek information on what tech allow much more efficient and intensive use of this spec nical modifications may be needed to enable cable systems trum. During the transition period, however, digital TV to deliver ATV signals to subscribers and -what costs may stations must operate alongside NTSC stations. The digital be associated with these modifications. How should digital TV system will enable us to authorize these stations under broadcast programming be required to be carried? Should controlled circumstances (each channel will be available it be required to be carried digitally or would it be ade only at certain locations with limits on radiated power and quate to have it carried in whatever format the cable effective antenna height) to minimize interference to NTSC operator selects? Does "material degradation" in the statute and digital TV service. While these digital stations allow for require that HDTV signals be carried in an HDTV format? the development of many new broadcast services, they Further, we need to begin to consider and seek comment would be of limited value for other users because they on what, if any, changes may be warranted in the rate generally would not occupy a contiguous block of chan regulation process, in the technical standards, or in other nels, there would be no common nationwide channels, and rules to account for the changes resulting from ATV car their use would be restricted by the need to avoid interfer riage. ence with NTSC analog television sets. When the transition 85. Assuming that an appropriate set of rules can be to digital is completed, however, and the analog NTSC developed for application at the end of the transition pe stations are turned off, we have an opportunity to create riod, an interim process is still needed to govern the transi contiguous blocks of spectrum nationwide. Some or all of tion from NTSC to ATV broadcasting. During the period this spectrum could be reallocated and auctioned. We ask when broadcast licensees are broadcasting in both the exist commenters to provide estimates of the total amount of ing NTSC analog mode and in the new ATV mode, what contiguous spectrum blocks that could be created following should the carriage obligations be? Must both signals be recovery of the NTSC channels. We also seek estimates of carried and if not should the change from NTSC to the the total market value of these contiguous blocks of spec ATV signals be at the discretion of the cable operator or trum. What services would be most efficiently provided the broadcaster? Alternatively, should it be based on a using contiguous blocks of spectrum? We request that fixed transition schedule or on an external event such as commenters explain the methodology and analysis used to the market penetration of digital television receivers or the derive estimates of the amount and value of contiguous system operator©s transmission of its own digital video pro spectrum. In addition to the broadcast industry, we solicit gramming? Given the complex economic and technical comment from other industries (e.g., land mobile and com interrelationships between broadcasters and cable operators puter) that may have an interest in providing services using during this transitional period, are there market mecha these blocks of spectrum. nisms that can be incorporated into the rules to facilitate cooperation? VI. CONCLUSION 88. By this Fourth Further Notice of Proposed Rule Mak V. THIRD NOTICE OF INQUIRY ing and Third Notice of Inquiry, we request comments on 86. Over 400 MHz of spectrum in the VHP and UHF the many issues pertinent to the conversion by television bands is currently allocated to television broadcasting. As broadcasters to digital technology. The speedy conversion part of our long-term plans to promote spectrum effi to digital technology will have profound public interest ciency, we are considering reducing the amount of spec benefits, permitting efficient spectrum use. optimizing the trum allocated to television broadcasting, which, as development of new technologies and services to consum explained above, could be accomplished in the digital envi ers, and fostering diversity and competition. We intend to ronment without reducing the number of broadcasters in conduct a searching and thorough review of the issues to any market due to the inherent efficiencies of the proposed ensure that the rules we adopt serve us well in fashioning a "Grand Alliance" system. If we were to readjust channel digital television broadcast system for the twenty-first cen assignments, we would need to know where in current tury. To that end, we invite commenters to give serious and broadcast spectrum broadcasters would eventually be lo thoughtful consideration to the important issues raised cated. Although we previously preliminarily viewed UHF herein and to provide us their views on these issues, as well as the part of the spectrum to which all television broad as supporting data and analysis. casting would be moved,89 we now question that tentative conclusion. Accordingly, at this time, we ask parties to comment on the best place for broadcasting. Specifically, ADMINISTRATIVE MATTERS we seek comment on which parts of the VHP and UHF 89. Pursuant to applicable procedures set forth in Sec bands are most highly valued for broadcast use (e.g., VHF, tions 1.415 and 1.419 of the Commission©s Rules, 47 C.F.R. lower UHF, middle UHF, upper UHF). We also request Sections 1.415 and 1.419, interested parties may file com commenters to identify the costs associated with placing ments on or before October 18, 1995, and reply comments television broadcasting in each of the four possible loca on or before December 4, 1995. To file formally in this tions. proceeding, you must file an original plus five copies of all comments, reply comments, and supporting comments. If

89 Second Further Notice of Proposed Rule Making, supra at 5379.

10554 10 FCC Red No. 20 Federal Communications Commission Record FCC 95-315 you want each Commissioner to receive a personal copy of VI. Description, potential impact and number of small your comments, you must file an original plus nine copies. entities involved. You should send comments and reply comments to Office There are approximately 1,539 UHF and VHF, commer of the Secretary, Federal Communications Commission, cial and educational television stations, 2,509 UHF 1919 M Street, N.W., Washington, D.C. 20554. Comments translator stations, 2,261 VHF translator stations, and 1,648 and reply comments will be available for public inspection UHF and VHF low power television stations which would during regular business hours in the FCC Reference Center be affected by decisions reached in this proceeding. The (Room 239), 1919 M Street, N.W., Washington, D.C. impact of actions taken in this proceeding on small entities 20554. would ultimately depend on the final decisions taken by 90. This is a non-restricted notice and comment the Commission. However, the Commission, in taking fu rulemaking proceeding. Ex pane presentations are ture action will continue to balance the need to provide permitted, except during the Sunshine Agenda period, pro the public with affordable, flexible, accessible high defini vided they are disclosed as provided in the Commission tion television service with the economic and administra Rules. See generally 47 C.F.R. Sections 1.1202, 1.1203, and tive interests of the affected industries. 1.1206(a). VII. Any significant alternatives minimizing the impact on small entities consistent with stated objectives. INITIAL REGULATORY FLEXIBILITY ACT STATEMENT In re-examining issues discussed in past decisions, the Commission is seeking not only to establish a more com I. Reason for Action prehensive,© reliable record, but, with that intent, is solicit The Commission seeks comment not only on a variety of ing comments and suggestions that hopefully will represent new issues central to the development of advanced televi the views of all of the.industries concerned, and thus the sion service in the United States, but on several of the Commission will be better able to minimize whatever nega tentative decisions made earlier in this proceeding because tive impact might face small entities as a result of our of the rapidly changing nature of digital television. Ad decisions. vanced television, at the time this proceeding was initiated was envisioned primarily as a system for improving higher Ordering Clause picture and sound quality, limited to transmitting/receiving 91. Accordingly, IT IS ORDERED that pursuant to the a single channel of television. The emergence of digital authority contained in Sections 4 and 303 of the Commu^ technology with its extensive flexibility and the approach of nications Act of 1934, as amended, 47 U.S.C. Sections 154 the National Information Infrastructure require that the and 303, this Fourth Further Notice of Proposed Rule Commission review the issues surrounding high definition Making and Third Notice of Inquiry IS ADOPTED. television from a new, more expansive perspective. 92. Additional Information: For additional information regarding this proceeding, contact Saul Shapiro II. Objectives of the Action (202-418-2600) or Roger Holberg (202-776-1653), Mass Me The Fourth Further Notice of Proposed Rulemaking por dia Bureau. tion of this decision solicits comment on a variety of issues, 93. As required by Section 603 of the Regulatory Flexi several of which are being revisited, in order to establish an bility Act, the Commission has prepared an Initial accurate, comprehensive, reliable record on which to base Regulatory Flexibility Analysis (IRFA) of the expected im the Commission©s ultimate decisions in this proceeding. pact on small entities of the proposals suggested in this The record established from comments filed in response to document. The IRFA is set forth above. Written public this decision, as well as other Commission decisions, and comments are requested on the IRFA. These comments the combined efforts of the Commission, the affected in must be filed in accordance with the same filing deadlines dustries, the Advisory Committee on Advanced Television as comments on the rest of the Notice, but they must have Service, and the ATV testing process, will lead to im a separate and distinct heading designating them as re plementation of ATV in the most harmonious fashion and sponses to the Initial Regulatory Flexibility Analysis. The to selection of the most desirable ATV system. Secretary shall send a copy of this Fourth Further Notice of Proposed Rule Making and Third Notice of Inquiry, III. Legal Basis including the Initial Regulatory Flexibility Analysis, to the Authority for this action may be found at 47 U.S.C. Chief Counsel for Advocacy of the Small Business Admin §§154 and 303. istration in accordance with paragraph 603(a) of the Regu latory Flexibility Act. Pub. L. No. 96-354, 94 Stat. 1164, 5 IV. Reporting, recordkeeping and other compliance re U.S.C. Section 601 el seq (1981). quirements Such requirements are not proposed in this phase of the FEDERAL COMMUNICATIONS COMMISSION proceeding, but may be raised and comment sought in future decisions in this proceeding.

V. Federal rules which overlap, duplicate or conflict with these rules. William F. Caton There are no rules which would overlap, duplicate, or Acting Secretary conflict with these rules.

10555 FCC 95-315 Federal Communications Commission Record 10 FCC Red NO. 20

Separate Statement

of

Commissioner James H. Quello

Re: Advanced Television Systems and Their Impact Upon the Existing Television Broadcast Service

Underlying my analysis of every aspect of this item is one vitally important proposition: that the preservation of a universal, free, over-the-air television service is critical to the health of our democratic society. The promises of a high definition picture are exciting; the many channels of a digital system are enticing; and the potential ancillary uses of the spectrum are alluring. Nonetheless, without the backbone of a free, over-the-air broadcast system, these service enhancements, and, more importantly, the underlying programming produced, will be available only to those in our society who can afford to pay. In my judgment, this result would not serve the overall public interest and therefore should not be contemplated.

It will be with this overriding principle in mind that I will decide the many issues before us in this proceeding. For example, I am at this time inclined toward: (1) requiring that the predominant use of the ATV spectrum be for free over-the-air broadcasting, and that a two- to four-hour per day minimum HDTV requirement be imposed; (2) concluding that existing broadcasters have primary eligibility for the ATV spectrum; (3) finding that current public interest obligations remain in place; (4) determining that a transition period should be based on the realities that will likely face broadcasters in constructing new and expensive facilities, as well as the consumer acceptance of this new technology; (5) devising some relief for small market/small station broadcasters and noncommercial broadcasters; and (6) attaching must carry obligations and retransmission consent rights to all free programming streams provided by broadcasters.

In structuring this new digital world, we must also be ever-vigilant against the threat to free, over-the-air broadcasting posed by any "social contract" between broadcasters and the Federal government. The social contract envisioned by some would slowly and painfully extract from broadcasters control over the content of the programming that they air in exchange for the ATV spectrum. My response to this proposal is threefold: (1) How can the public interest be "contractually" reduced into a simple, standard pablum for a diverse industry? (2) What evidence is there that the current public interest requirements applicable to broadcasters are not working and that Big Brother needs a new regulatory mechanism as restrictive as a "social contract"? (3) What about the First Amendment?

10556 10 FCC Red NO. 20 Federal Communications Commission Record FCC 95-315

The public interest is not now, and has never been, a static, isolated concept. Rather, the public interest was designed as a mechanism for reflecting the public©s ever-changing moods and interests, as well as the complexion of the marketplace. The marketplace today is very different from the marketplace of ten years ago. Broadcasting today is a single-channel medium in an ever-growing, multichannel, multimedia world. Also, why should we be imposing additional regulatory burdens on broadcasters, the only universal free medium which is facing more and more multichannel competition from 100-1- cable channels, DBS, MMDS, VCRs and now even the Internet? We are now in an era of more competition and less, not more, regulation, particularly in the area of program content.

Perhaps as important, if not more important, than the issues we address in the proceeding before us today is an issue that is not currently before us. Some parties have suggested that the Commission should auction this spectrum rather than give it to existing broadcasters in exchange for their analog channel. There are several fatal flaws with this proposal. First, auctioning the spectrum would threaten to change the fundamental nature of free, over-the-air broadcasting by putting the spectrum into the hands of those with the most money, rather than those that arc the most interested in serving the public interest. Second, auctioning the spectrum in less than 6 MHz blocks would spell the death of HDTV, which is technically incapable of operating with less than 6 MHz of contiguous spectrum. Third, auctioning the spectrum would substantially impede the ability of broadcasters to compete with their multichannel competitors. How could broadcasters of the future, with one channel, possibly compete with the hundreds of channels provided by its multichannel competitors?

We should remember that HDTV and digital compression were developed primarily by the communications industry over a period of seven years, not by the government. In my opinion, current broadcast licensees who undergo the expense and risks of implementing HDTV and compression techniques with their assigned frequencies should be entitled to use their new channels to improve and expand free over-the-air service. If broadcasters are allowed to use some of the capacity for nonbroadcast subscription services, broadcasters should pay reasonable spectrum fees.

The importance of the decisions we will ultimately reach in this proceeding cannot be overstated. This proceeding marks the evolution of television broadcasting beyond black and white, beyond color, to a digital world in which the potential exists for the public to receive much, much more than just one channel of free programming. However, if the fundamental nature of our free, over-the-air broadcasting service changes, digital television will become a technology of haves and have-nots. Those who have money will receive all of the exciting new services this technology offers; those without money will receive nothing. I cannot support any decisions by this Commission that would lead to that outcome.

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