[Federal Register Volume 63, Number 239 (Monday, December 14, 1998)]
[Proposed Rules]
[Pages 68722-68729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33007]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 98-203; FCC 98-304]
Ancillary or Supplementary Use of Digital Television Capacity by
Noncommercial Licensees
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission initiates this Notice of Proposed Rule Making
to seek comment on whether we should impose limits on activities
undertaken by noncommercial educational (``NCE'') television licensees
on their DTV capacity. The request for clarification made by AAPTS/PBS
raises significant issues regarding the service and funding
opportunities made available to NCE stations as a result of the
transition to digital transmission. We recognize the importance of this
issue to the future of public television as it enters the digital age.
Therefore, we believe it is appropriate to seek further comment on the
AAPTS/PBS petition in order to establish a more complete record on the
issues it raises.
EFFECTIVE DATES: Comments are due on or before January 28, 1999; reply
comments are due on or before March 1, 1999.
ADDRESSES: Federal Communications Commission, 445 12th Street, Room TW-
A306, SW, Washington, DC 20554. In addition to filing comments with the
Secretary, a copy of any comments on the information collections
contained herein should be submitted to Judy Boley, Federal
Communications Commission, Room C-1804, 445 12th Street, SW,
Washington, DC 20554, or via the Internet to jboley@fcc.gov and to
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, NW,
Washington, DC 20503 or via the Internet to fain__t@al.eop.gov.
Comments may also be filed by using the Commission's Electronic Comment
Filing System (ECFS), via the Internet to http://www.fcc.gov.e-file/
ecfs.html.
FOR FURTHER INFORMATION CONTACT: Jane Gross or Robert Somers, Policy
and Rules Division, Mass Media Bureau (202) 418-2130.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 98-203, adopted November
19, 1998 and released November 23, 1998. The full text of this
Commission decision is available for inspection and copying during
normal business hours in the FCC Reference Center (Room 239), 1919 M
Street, NW, Washington, DC. The complete text of this decision may also
be purchased from the Commission's copy contractor, International
Transcription Services, Inc., 1231 20th Street, NW, Washington, DC,
20036, (202) 857-3800.
Synopsis of Notice of Proposed Rulemaking
I. Introduction
1. In our Fifth Report and Order, 62 FR 26966 (May 16, 1997), in
the digital television (``DTV'') proceeding, we adopted rules
implementing a transition to digital technology for all existing
television broadcasters. Among other things, we established standards
for license eligibility, a transition and construction schedule and a
requirement that broadcasters continue to provide one free over-the-air
television service in accordance with section 336 of the
Telecommunications
[[Page 68723]]
Act of 1996 (``1996 Act''). We also adopted rules permitting DTV
licensees, without distinguishing between commercial and noncommercial
licensees, to use their DTV capacity to provide ancillary or
supplementary services provided these services do not derogate the free
digital television service.
2. In their Petition for Reconsideration of the Fifth Report and
Order, the Association of America's Public Television Stations and the
Public Broadcasting Service (AAPTS/PBS) requested clarification on the
ability of public television stations to use excess capacity on DTV
channels for commercial purposes. In opposing this request in part,
Media Access Project and other public interest parties (``MAP''),
jointly argued that, while public television stations should be able to
provide some revenue-generating ancillary and supplementary services,
these services must be consistent with the noncommercial nature of
public television as set forth in section 399B of the Communications
Act, the provision restricting advertising by these stations.
3. We initiate this Notice of Proposed Rule Making to seek comment
on whether we should impose limits on remunerative activities
undertaken by noncommercial educational (``NCE'') television licensees
on their DTV capacity. The request for clarification made by AAPTS/PBS
raises significant issues regarding the service and funding
opportunities made available to NCE stations as a result of the
transition to digital transmission. We recognize the importance of this
issue to the future of public television as it enters the digital age.
Therefore, we believe it is appropriate to seek further comment on the
AAPTS/PBS petition in order to establish a more complete record on the
issues it raises.
4. In their Petition for Reconsideration AAPTS/PBS also requested
that the Commission exempt public television licensees from any fee
assessed in connection with use of digital spectrum for ancillary or
supplementary services to the extent revenues from those services are
used to support the licensee's mission-related activities. Section
336(e) of the 1996 Act requires DTV licensees receiving fees or certain
other compensation for ancillary or supplementary services provided on
the DTV spectrum to return a portion of that revenue to the public. The
Commission was charged with establishing a means of assessing and
collecting fees for those ancillary or supplementary services specified
in the statute. In the Notice of Proposed Rule Making, 63 FR 460
(January 6, 1998), In the Matter of Fees for Ancillary or Supplementary
Use of Digital Television Spectrum (``Fees Proceeding''), we sought
comment on AAPTS/PBS's request. In the Fees Proceeding we determined
that the request for such an exemption should be considered in this
proceeding. We therefore seek additional comment on this issue in light
of the comments received on this issue in the Fees Proceeding and the
tentative proposals outlined below.
II. Background
5. Ancillary or Supplementary Services on DTV Capacity. The DTV
standard we adopted will allow for the simultaneous transmission of
multiple streams of programming, information, and other non-broadcast
services. To enable licensees to take full advantage of the
opportunities provided by digital technology, the 1996 Act provided
that DTV licensees may use a portion of their new DTV capacity for
ancillary or supplementary services.
6. Specifically, section 336 of the Communications Act authorizes
the Commission to permit DTV licensees to offer ancillary or
supplementary services on their DTV capacity as long as the provision
of these services does not derogate any advanced television services
the Commission may require and is ``consistent with the public
interest, convenience, and necessity.'' The statute does not
distinguish between commercial and noncommercial DTV licensees, nor
does the legislative history of section 336 draw any such distinction.
7. In the Fifth Report and Order in our DTV proceeding we adopted
rules to allow broadcasters the flexibility to respond to the demands
of their audience by providing ancillary or supplementary services,
provided that these services do not derogate the mandated free, over-
the-air program service. We found that this approach would serve the
public interest by fostering the provision of innovative services to
the public and by permitting the realization of the full possibilities
of DTV. We recognized the benefit of permitting broadcasters the
opportunity to develop additional revenue streams from innovative
digital services. We also found that allowing such services contributes
to efficient spectrum use and can expand and enhance the use of
existing spectrum. At the same time, we noted our expectation that the
fundamental use of the DTV licenses will be for the provision of free
over-the-air television.
8. We clarified that ``we will consider as ancillary or
supplementary any service provided on the digital channel other than
free, over-the-air video services.'' We noted that this approach is
consistent with Commission precedent that has treated
telecommunications services provided by an NTSC station other than the
regular television program service as ancillary. We also did not impose
a requirement that the ancillary or supplementary services provided by
the broadcaster must be broadcast-related. We explained that such
ancillary or supplementary services could include, but are not limited
to, subscription television programming, computer software
distribution, data transmissions, teletext, interactive services, and
audio signals.
9. Section 336(e)(1) of the 1996 Act also requires that a fee be
assessed upon any ancillary or supplementary services on DTV spectrum
``for which the payment of a subscription fee is required in order to
receive such services'' or ``for which the licensee directly or
indirectly receives compensation from a third party in return for
transmitting materials furnished by such third party.'' The Act
specifically exempts from the fee any service which relies only upon
``commercial advertisements used to support broadcasting for which a
subscription fee is not required.'' In our Fees Proceeding we have
adopted rules to implement this provision with respect to commercial
DTV licensees.
10. Noncommercial Educational Television. Throughout the DTV
proceeding, the Commission has acknowledged that noncommercial
licensees will face unique problems in the transition to DTV. In the
Fifth Report and Order, we recognized the high quality programming
service noncommercial stations have provided to American viewers over
the years and reaffirmed our commitment to noncommercial educational
television service. We also observed that public broadcasters have been
pioneers in experimenting with the capabilities of digital technology.
We further noted our awareness of the unique financial difficulties
faced by noncommercial stations and reiterated our view that these
stations will need and warrant special relief to assist them in the
transition to DTV. In this regard, for example, we applied a six-year
construction period timetable to noncommercial stations, the longest
permitted to any category of DTV applicant. We also found, however,
that at that time it was premature to attempt to resolve the issue of
what additional special treatment, if any, should be afforded to
noncommercial broadcasters. We stated that we would
[[Page 68724]]
consider these issues in our periodic reviews examining the progress of
the DTV transition.
11. AAPTS/PBS's Request for Clarification--Use of DTV Capacity. In
its Petition for Reconsideration of the Fifth Report and Order, AAPTS/
PBS requested clarification on the ability of public television
stations to use capacity on DTV channels for commercial purposes. As
neither section 336 nor the Commission's DTV rules distinguishes
between commercial and noncommercial stations, AAPTS/PBS argued that
both are intended to allow public stations to offer ancillary or
supplementary services for revenue-generating purposes.
12. AAPTS/PBS states that public television stations are exploring
various revenue generating options such as: leasing capacity to other
digital operators; joint ventures with commercial entities; and
subscription channels for popular PBS programming. It emphasizes the
importance of the revenue potential of these services in order to
continue public television's commitment to providing a high quality
noncommercial, educational broadcast service. AAPTS/PBS has noted that
the multiple programming streams offered by the extra capacity of
digital transmission will enable public broadcasters to extend the
reach of their educational services. New expanded ``multicast''
programming channels planned by public television as a result of
multicasting capabilities include: PBS's Ready-to-Learn service for
children; K-12 instructional programming; college credit telecourses;
workforce training; and local public affairs programming. AAPTS/PBS
notes that many public stations are relying on the revenue from
ancillary or supplementary services to help fund the construction of
DTV facilities and the operation of both DTV and NTSC facilities. Such
flexibility is crucial, it maintains, as federal and corporate funding
have become increasingly difficult to obtain.
13. Specifically, AAPTS/PBS requests that the Commission clarify
that Sec. 73.621 of its rules, which requires public stations to
provide a noncommercial service, is not applicable to ancillary or
supplementary services provided on DTV capacity. It proposes that the
Commission make clear that, as long as a public station provides one
noncommercial broadcast service pursuant to Sec. 73.621, it can use its
additional DTV capacity as a source of revenue, subject only to the
requirement of non-derogation in Sec. 73.624.
14. AAPTS/PBS notes that its proposal to use its additional DTV
capacity as a source of revenue is consistent with existing
Secs. 73.621(f) and (g), and 73.646(b) and (d) of the Commission's
rules, which allow public television stations to use the vertical
blanking interval (``VBI''), and auxiliary broadcast services for
revenue generating activities. It argues that use of their DTV capacity
as a source of revenue follows rationally from these provisions.
Similarly, public television licensees seek the opportunity to use that
portion of their DTV spectrum that is not necessary for their primary
public television mission as a means of financing their DTV broadcast
operations.
15. In opposing AAPTS/PBS's request in part, MAP requests that the
Commission make clear that any leased or joint-venture programming
undertaken by public television licensees that is advertiser-supported
would violate the advertising ban of section 399B of the Act. MAP
argues that AAPTS/PBS's request is unclear as to what specific
programming would be offered or whether it would comport with the
requirements of section 399B. For example, MAP specifies programming
that it believes would violate the advertising ban as ``programming
that is predominantly utilized for the transmission of sales
presentations or program length commercials, such as home shopping or
infomercials, or that otherwise encourages or solicits the purchase of
goods and services from commercial entities.'' MAP also argues that
because section 336 of the Act does not explicitly permit noncommercial
stations to broadcast advertisements on any ancillary or supplementary
services, AAPTS/PBS's argument that section 336 extends to both
commercial and noncommercial entities is possible only if the
inconsistent requirements of section 399B were repealed. MAP notes
that, while public television stations should be able to provide some
revenue-generating ancillary services, these services must be
consistent with the nature of noncommercial public television as set
forth in that section.
16. In reply, AAPTS/PBS acknowledges that the advertisement ban of
section 399B will apply to the primary noncommercial broadcast service,
but argues that it should not extend to the provision of ancillary and
supplementary services on DTV spectrum. AAPTS/PBS points out that
section 399B was enacted by Congress in 1981 in an effort to reduce
public television's dependence on federal appropriations. Although
Congress was also concerned that public broadcasting's primary
broadcasting service remain noncommercial, AAPTS/PBS notes that the
balance Congress struck in section 399B was to allow such remunerative
activities, provided that the public broadcast service remained
noncommercial.
17. AAPTS/PBS also notes that previous Commission decisions have
allowed noncommercial licensees to provide subsidiary communications
services without regard to whether they include advertisements. AAPTS/
PBS maintains that even if the section 399B advertising restrictions
are found to apply to these services, the Commission has discretion
under section 336(a)(2) to allow public TV licensees to include
advertiser-supported services if it finds these services to be in the
public interest. AAPTS/PBS urges an interpretation in which the
advertising ban in section 399B would continue to apply to the primary
noncommercial broadcast service, while any ancillary and supplementary
use of DTV channels would be free from the restrictions of this
section.
18. AAPTS/PBS's Request for Exemption From Fees under section
336(e). In its Petition for Reconsideration of the Fifth Report and
Order, AAPTS/PBS requested that the Commission exempt public television
licensees from any fee assessed in connection with revenue-generating
use of the ancillary or supplementary services on their DTV spectrum
``to the extent that revenues from those services are used to support
the licensee's mission-related activities.'' We sought comment in the
Fees Proceeding on whether noncommercial television licensees should be
exempt from such fees or subject to a nominal fee where they offer
ancillary and supplementary services as a source of funding for public
television.
19. In its comments in the Fees Proceeding, AAPTS/PBS argues that
public television stations should be exempt from such fees because the
statutory purposes of section 336(e)(2) do not apply to services
provided by public television licensees. AAPTS/PBS notes that if these
revenues would be used to support noncommercial activities, there would
be no need to ``recover'' a portion of the value of the spectrum for
the public and that an exemption would not result in any ``unjust
enrichment''. AAPTS/PBS also argues that, as public television stations
are not auctioned, there is no equivalent amount that would have been
received at auction. Further, AAPTS/PBS contends that such an exemption
would be consistent with other Congressional
[[Page 68725]]
and regulatory policies, and that the Commission has concluded in other
proceedings that the imposition of a fee on public broadcasting would
dilute the financial support paid to public broadcasting by Congress.
20. MAP generally supports allowing public broadcasters to be
exempt from such fees, but only if they do not provide advertiser-
supported ancillary and supplementary services. MAP asserts that the
statute makes no distinction between noncommercial and commercial
licensees, either in their ability to provide advertiser-supported
ancillary and supplementary services, or in their obligation to pay
fees on such services. We have determined that AAPTS/PBS's request for
such exemption should be considered in this proceeding. Accordingly, we
seek additional comment on this issue in light of the comments received
in the Fees Proceeding and the tentative proposals set forth in this
Notice.
III. Request for Comments
21. Noncommercial Educational Television. Public broadcasting's
mission has long been to provide quality educational and cultural
programming to a wide and diverse audience. Noncommercial educational
television stations have also been at the forefront of exploring
innovative services and new technologies to accomplish this mission.
These stations also appear poised to take full advantage of the
opportunities made available by digital technology. We fully recognize
the public interest benefits inherent in the services that may be
offered by NCE licensees on the digital spectrum.
22. As we stated in the Fifth Report and Order, granting
broadcasters the flexibility to offer the ancillary or supplementary
services they choose will help them attract consumers to the service,
which will, in turn, speed the transition to digital television. We
stated that such flexibility will encourage entrepreneurship and
innovation, will contribute to efficient spectrum use, and will expand
and enhance use of existing spectrum. We seek comment on whether these
same considerations apply to the NCE context.
23. Throughout the development of the public broadcasting system,
both Congress and the Commission have continually balanced the desire
to maintain the integrity of its noncommercial status with the fact
that public television must have access to adequate funding in order to
survive. Congress enacted the Public Broadcasting Act of 1967 in
response to increasing public demand for the government to sponsor
independent sources of broadcast programming as an alternative to
commercial broadcasting. This legislation sought to promote the
development of noncommercial, educational broadcasting stations and
established the framework for today's public broadcasting system.
24. Public television has since flourished and developed from an
experimental educational service into the valuable and unique
programming service that exists today. The Commission has supported the
goals of the public broadcasting system and promulgated rules to
implement the public broadcasting provisions of the Communications Act.
For example, in 1952, recognizing the important and unique role to be
served by public television, the Commission reserved spectrum
exclusively for the noncommercial broadcasting service.
25. We are consequently sympathetic to the relief requested in the
AAPTS/PBS petition. The petition describes a range of revenue-
generating ancillary or supplementary services that could help NCE
stations flourish in a digital age. We seek comment on these new
services and specifically on NCE stations' plans for using excess
digital capacity. We note that the costs of converting to digital
service will be considerable, and that many NCE stations rely on public
funds to provide the build-out to DTV service. At the same time we are
sensitive to the concerns raised by MAP that in permitting NCE stations
flexibility in providing such services we must be consistent with
section 399B and also not undermine their fundamental mission of
providing a noncommercial educational broadcast service. To help us
determine the limits, if any, on the remunerative activities of NCE
licensees on their DTV capacity, we seek comment below on a number of
issues.
26. Noncommercial Educational Television: Funding Issues. Many NCE
stations have traditionally received most of their funding from
federal, state and local government sources in addition to corporate
and viewer contributions. In its request for clarification, AAPTS/PBS
notes the uncertainty of continued federal financial support and the
tightening of support from the corporate sector. We seek comment on
such funding trends and on NCE licensees' specific funding needs to
convert to digital and maintain a robust NCE television service. We
also seek comment on the appropriate role of the Commission in ensuring
that such funding needs are met.
27. Ancillary or Supplementary Services. In the Fifth Report and
Order, we adopted rules implementing section 336 to allow broadcasters
the flexibility to respond to the demands of their audience by
providing ancillary or supplementary services, including subscription
television, providing that these services do not derogate the mandated
free, over-the-air program service. As an initial matter, we generally
invite comment on AAPTS/PBS's request that we clarify that Sec. 73.621
of our rules, which requires public stations to provide a noncommercial
service, is not applicable to ancillary or supplementary services
provided on DTV capacity. We also seek comment on whether such a
clarification is consistent with the provisions of section 399B.
28. The Communications Act defines a ``noncommercial educational
broadcast station'' and ``public broadcast station,'' as ``a
noncommercial educational radio or television broadcast station which
is owned and operated by a public agency or nonprofit private
foundation, cooperation, or association'' or ``is owned and operated by
a municipality and which transmits only noncommercial programs for
educational purposes.'' In 1981, Congress amended the Communications
Act to give public broadcasters more flexibility to generate funds for
their operations. As amended, section 399B of the Act permits public
stations to provide facilities and services in exchange for
remuneration as long as those uses do not interfere with the stations'
provision of public telecommunications services. In addition, under
Sec. 73.621 of the Commission's rules, public television stations are
required to furnish primarily an educational as well as a nonprofit and
noncommercial broadcast service.
29. We have previously been called on to determine the extent to
which public television stations can transmit subscription television
(``STV'') or other revenue-generating services on their analog channels
consistent with the statutory and regulatory requirements we have just
described. In particular, in 1984, the Commission considered amending
its rules to permit public television stations to engage in
subscription television operations. The Commission stated that it
``clearly has the authority [under section 399B of the Act] in
particular instances and under certain circumstances to permit STV
operation by public television.'' But the Commission expressed sympathy
with concerns expressed by some parties in that proceeding that such a
rule change could result in public television service, then operating
with analog technology, being ``dominated'' by STV. It therefore
[[Page 68726]]
concluded at the time that it should not generally authorize such
operation through a rule change.
30. The Commission nonetheless recognized that STV operations can
benefit public stations as a supplementary funding source. It
consequently stated that it would permit individual public television
stations to engage in STV operations on a waiver basis. The Commission
has also given public television stations flexibility in their use of
the analog channels in other ways. In particular, the Commission has
ruled that noncommercial spectrum, like commercial spectrum, can be
used for remunerative ancillary services such as data delivery or
teletext provided by NTSC licensees on the vertical blanking interval
(VBI) and the video portion of the analog signal in accordance with
section 399B of the Act.
31. The AAPTS/PBS petition raises many of the same legal and policy
questions raised by our previous consideration of requests to provide
STV and other revenue-generating ancillary services on analog NCE
channels. Unlike the previous requests, however, the AAPTS/PBS petition
concerns digital television, which offers significant new challenges
and opportunities to NCE stations. We are inclined to permit NCE
stations to take advantage of these opportunities and offer innovative
ancillary and supplementary services that are remunerative and
consistent with their educational mission. We therefore seek comment on
whether, and under what conditions, NCE licensees should be permitted
to use their DTV capacity to offer ancillary or supplementary services,
including STV, on a remunerative basis.
32. In particular, we seek comment on whether and how we should
amend Sec. 73.621 of our Rules, which requires NCE stations to provide
a noncommercial service that ``primarily'' serves the educational needs
of the community. For example, should we extend this requirement to
ancillary or supplementary services provided by noncommercial licensees
on their DTV capacity? Should we clarify that an NCE licensee's
obligation to provide a primarily educational service applies to its
entire DTV bitstream? Under this proposal, NCE stations would be
permitted to provide ancillary or supplementary services, but still
would be required to ensure that their overall digital bitstream was
primarily devoted to serving the educational needs of the community.
Should we clarify that the requirement to provide a primarily
educational service applies only to the single, free-over-the-air
broadcast service it is required to provide? We seek comment on these
and any other options for amending Sec. 73.621 in this regard.
33. We also seek comment on whether and how we can permit NCE
stations to provide remunerative ancillary or supplementary services in
a manner that does ``not interfere with the provision of public
telecommunications services'' by such stations as required by section
399B of the Act. In particular, we seek comment on whether NCE DTV
stations will have the capacity to provide ancillary or supplementary
services without interfering with their ability to provide a primarily
educational NCE service. We also seek comment on whether such ancillary
or supplementary services can provide an important funding source that
could facilitate the transition to DTV for NCE stations, and, more
generally, enhance their primary mission of providing a robust
noncommercial, educational broadcasting service.
34. We ask commenters specifically to address how the provision of
ancillary or supplementary services would affect our noncommercial
channel reservation policies, regulatory treatment of noncommercial
licensees, and other government support for noncommercial stations.
While we are inclined to give NCE stations some flexibility in offering
remunerative ancillary or supplementary services, we will continue to
expect these stations to adhere to their fundamental mission of
providing a noncommercial, educational broadcast service, as required
by Sec. 73.621(a) of the Commission's rules. We therefore seek comment
on whether parties believe our proposed amendment to Sec. 73.621 should
incorporate any particular safeguards regarding a public television
station's use of its DTV capacity to provide remunerative services to
ensure that its DTV license is primarily being used for a noncommercial
educational broadcast service, and that the proceeds of such services
are used to support its NCE programming. We also ask commenters to
address whether the accounting procedures and funding restrictions
outlined in section 399B should apply to the provision of ancillary or
supplementary services by NCE licensees on DTV capacity.
35. We note that in addition to those restrictions imposed by
provisions in the Communications Act and the Commission's rules, the
commercial activities of NCE stations are also restricted by their
status as nonprofit corporations, as well as by state and local
government oversight. We seek comment on the scope of these existing
limits and oversight and on the extent to which they help ensure that
public television stations offering remunerative ancillary or
supplementary services continue to serve their mission of providing a
noncommercial educational broadcasting service?
36. Advertising. We also seek comment on how the advertising ban
set forth in section 399B of the Communications Act implicates the
provision of remunerative services by public DTV stations. Section 399B
prohibits a public station from ``making its facilities available to
any person for the broadcasting of any advertisement.'' By its plain
language, this section would appear to prohibit advertisements on any
service that would constitute ``broadcasting,'' while permitting a
public DTV station to air advertisements on any ``nonbroadcast''
service. The term ``broadcasting'' is defined in the Communications Act
as ``the dissemination of radio communications intended to be received
by the public, directly or by the intermediary of relay stations.'' The
Commission further clarified the definition of ``broadcasting'' in its
1986 Subscription Video proceeding. In that decision the Commission
determined that the term ``broadcasting'' as defined by the
Communications Act ``refers only to those signals which the sender
intends to be received by the indeterminate public.'' We therefore
found that ``a necessary condition for the classification of a service
as broadcasting is that the licensee's programming is available to all
members of the public, without any special arrangements or equipment.''
Based on these criteria, the Commission ruled that subscription
television does not constitute broadcasting.
37. Applying these factors to the issue before us, we tentatively
conclude that while section 399B continues to apply to all video
broadcast programming streams provided by public DTV stations, it does
not apply to any subscription services they provide on their DTV
channels since such services do not constitute ``broadcasting.'' We
seek comment on this view. We also seek comment on the extent to which
section 399B applies to advertising carried on any other non-
subscription ancillary or supplementary services carried by a public TV
station. Finally, we ask parties to address AAPTS/PBS's argument that
even if section 399B's advertising restrictions apply to some ancillary
or supplementary services, the Commission has discretion under section
336(a)(2) of the Act to allow public TV licensees to include
advertiser-supported services if it finds
[[Page 68727]]
these services to be in the public interest.
38. Fees Under section 336. In the Fees Proceeding we determined
that the issue of whether ancillary or supplementary services offered
by noncommercial licensees are subject to fees should be considered in
this proceeding. We take this opportunity to seek additional comment in
light of the comments received in the Fees Proceeding and the tentative
proposals outlined above. In the event that we clarify that Sec. 73.621
does not apply to ancillary or supplementary services provided by
noncommercial licensees on their DTV capacity, we seek comment on
whether noncommercial licensees should be exempt from DTV fees when
they offer ancillary or supplementary services as a source of funding
for their mission related activities.
39. AAPTS/PBS submitted comments in the Fees Proceeding arguing
that there is no need to ``recover'' a portion of the value of the DTV
spectrum for the public if the revenue is used to support noncommercial
services that Congress has declared to be in the public interest.
AAPTS/PBS also argues that exemption would not result in any ``unjust
enrichment'' because these revenues would be used to support
noncommercial activities, and that as public television stations are
not auctioned, there is no equivalent amount that would have been
received at auction. An exemption from fees would allow public
television stations to dedicate greater resources to their mission.
Indeed, this reasoning has prompted Congress and the Commission to
exempt public television stations from other regulatory and filing
fees. We seek comment generally on AAPTS/PBS's arguments to exempt
noncommercial licensees from fees for remunerative ancillary or
supplementary services offered on their excess digital capacity.
40. We particularly seek comment on whether such an exemption is
consistent with section 336. Specifically, section 336(e)(1) draws no
distinction between commercial and noncommercial stations in stating
that the Commission ``shall establish a program to assess and collect *
* * an annual fee'' from DTV licensees offering subscription-based
ancillary or supplementary services. Can this provision, or the
criteria for establishing the fee set forth in section 336(e)(2) be
interpreted to permit an exemption from such fees for noncommercial
licensees? If an exemption is inconsistent with the statute, would a
nominal or reduced fee be consistent with the statute? We also ask
parties to address MAP's argument that if we allow noncommercial
licensees to include advertising in any ancillary or supplementary
services, these licensees should pay a fee comparable to that imposed
on commercial broadcasters.
IV. Administrative matters
41. To file paper copies formally in this proceeding, you must file
an original plus four copies of all comments, reply comments, and
supporting comments. If you want each Commissioner to receive a copy of
your comments, you must file an original plus nine copies. You should
send comments and reply comments to Office of the Secretary, Federal
Communications Commission, 445 Twelfth Street, S.W.; TW-A306;
Washington, D.C. 20554. Comments and reply comments will be available
for public inspection during regular business hours in the FCC
Reference Center (Room 239), 1919 M Street, N.W., Washington, D.C.
20554.
42. Comments filed through the ECFS can be sent as an electronic
file via the Internet to http://www.fcc.gov.e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send am e-mail to ecfs@fcc.gov, and
should include the following words in the body of the message, ``get
form jboley@fcc.gov and to Timothy
Fain, OMB Desk Officer, 10236 NEOB, 725-17th Street, NW, Washington, DC
20503 or via the Internet to fain__t@al.eop.gov.
44. Ex Parte Rules. This proceeding will be treated as a ``permit-
but-disclose'' proceeding. Ex parte presentations are permissible if
disclosed in accordance with Commission rules, except during the
Sunshine Agenda period when presentations, ex parte or otherwise, are
generally prohibited. Persons making oral ex parte presentations are
reminded that a memorandum summarizing a presentation must contain a
summary of the substance of the presentation and not merely a listing
of the subjects discussed. More than a one or two sentence description
of the views and arguments presented is generally required. See 47 CFR
1.1206(b)(2), as revised. Additional rules pertaining to oral and
written presentations are set forth in Sec. 1.1206(b).
45. Initial Regulatory Flexibility Analysis. As required by the
Regulatory Flexibility Act, see 5 U.S.C. 603, the Commission has
prepared an Initial Regulatory Flexibility Analysis (IRFA) of the
possible impact on small entities of the proposals suggested in this
document. The IRFA is set forth as Attachment A. Written public
comments are requested with respect to the IRFA. These comments must be
filed in accordance with the same filing deadlines for comments on the
rest of the NPRM, but they must have a separate and distinct heading,
[[Page 68728]]
designating the comments as responses to the IRFA. The Office of Public
Affairs, Reference Operations Division, will send a copy of this NPRM,
including the IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration, in accordance with the Regulatory Flexibility
Act.
46. Accordingly, it is ordered that pursuant to authority contained
in section 4(i), 303, and 336 of the Communications Act of 1934, as
amended, 47 U.S.C. 154(i), 303, 307 and 336, this Notice of Proposed
Rulemaking is adopted.
47. It is further ordered that the Commission's Office of Public
Affairs, Reference Operations Division, SHALL SEND a copy of this
Notice, including the Initial Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration.
48. Additional Information. For additional information on this
proceeding, please contact Jane Gross or Robert Somers, Policy and
Rules Division, Mass Media Bureau (202) 418-2130.
Initial Regulatory Flexibility Analysis
49. As required by the Regulatory Flexibility Act (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on small entities by
the policies and rules proposed in the present Notice of Proposed
Rulemaking. Written public comments are requested on this IRFA.
Comments must be identified as responses to the IRFA and must be filed
by the deadlines for comments on the IRFA provided above in paragraph
46. The Commission will send a copy of the NPRM, including this IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration.
See 5 U.S.C. 603(a). In addition, the NPRM and IRFA (or summaries
thereof) will be published in the Federal Register. See id.
Need For and Objectives of the Proposed Rule Change
50. In the Fifth Report and Order the Commission adopted rules
permitting broadcasters to offer feeable ancillary or supplementary use
of digital television (DTV) capacity. In their Petition for
Reconsideration, the Association of America's Public Television
Stations and the Public Broadcasting Service (AAPTS/PBS) requested
clarification on the ability of public television stations to use
excess capacity on DTV channels for commercial purposes. Media Access
Project and other public interest parties jointly opposed this request,
arguing that while public television stations should be able to provide
some revenue-generating ancillary and supplementary services, these
services must be consistent with the noncommercial nature of public
television as set forth in section 399B of the Communications Act, the
provision restricting advertising by these stations. AAPTS/PBS also
requested that the Commission exempt, to the extent feasible, public
television licensees from any obligation to pay fees when they offer
ancillary services on their DTV capacity as a source of funding for
their public television operation.
51. The petition describes a range of revenue-generating ancillary
or supplementary services that could help noncommercial educational
(``NCE'') stations flourish in a digital age. The Notice in this
proceeding notes that the costs of converting to digital service will
be considerable, and that many NCE stations rely on public funds to
provide the build-out to DTV service. This Notice seeks comment on
these new services and on whether, and under what conditions, NCE
licensees should be permitted to use their DTV capacity to offer
ancillary or supplementary services, including subscription television,
on a remunerative basis. This Notice also seeks comment on whether and
in what circumstances NCE stations should be subject to fees for these
ancillary or supplementary services.
52. Legal Basis: Authority for the actions proposed in this Notice
may be found in section 4(i), 303 and 336 of the Commissions Act of
1934, as amended, 47 U.S.C. 154(i), 303, 307 and 336.
53. Description and Estimate of the Number of Small Entities to
Which the Rules Would Apply: The RFA directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted. The
RFA generally defines the term ``small entity `` as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small governmental jurisdiction.'' The RFA generally defines the term
``small organization'' to mean ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.'' A
small organization is generally ``any not-for-profit enterprise which
is independently owned and operated and is not dominant in its field.''
Nationwide, as of 1992, there were approximately 275,801 small
organizations. Below, we further describe and estimate the number of
small entity licensees and regulatees that may be affected by the
proposed rules, if adopted.
54. The proposed rules and policies will apply to television
broadcasting licensees, particularly those television stations licensed
to operate on channels reserved as ``noncommercial educational.''
Television broadcasting stations consist of establishments primarily
engaged in broadcasting visual programs by television to the public,
except cable and other pay television services. Included in this
industry are commercial, religious, educational, and other television
stations. Also included are establishments primarily engaged in
television broadcasting and which produce taped television program
materials. There were 1,509 television stations operating in the nation
in 1992, of which 362 were noncommercial educational stations. That
number has remained fairly constant as indicated by the approximately
1,583 operating television broadcasting stations in the nation as of
August 31, 1998, of which 368 were noncommercial educational stations.
55. In addition to owners of operating television stations, any
entity who seeks or desires to obtain a television broadcast license,
particularly for a noncommercial educational station, may be affected
by the proposals contained in this item. The number of entities that
may seek to obtain a noncommercial educational television broadcast
license is unknown.
56. We seek comment on these estimates and data regarding the
number of small entities affected by the proposals in this Notice.
Reporting, Recordkeeping, and Other Compliance Requirements
57. The Commission is not proposing any new or modified reporting,
recordkeeping, information collection, or compliance requirements in
this proceeding.
Any Significant Alternatives Minimizing the Impact on Small Entities
and Consistent with the Stated Objectives
58. This Notice solicits comment on a variety of alternatives
discussed herein. Any significant alternatives presented in the
comments will be considered. This proposal may ultimately benefit all
noncommercial educational television stations. We seek comment on the
alternatives proposed in this Notice and on whether there is a
significant economic impact on any class of small licensees or
permittees as a result of any of our proposed approaches.
[[Page 68729]]
Federal Rules that Overlap, Duplicate, or Conflict with the Proposed
Rules
59. The initiatives and proposed rules raised in this proceeding do
not overlap, duplicate or conflict with any other rules.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-33007 Filed 12-11-98; 8:45 am]
BILLING CODE 6712-01-P
