07-3958. Digital Audio Broadcasting Systems and Their Impact on the Terrestrial Radio Broadcast Service

AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule.

SUMMARY:

In this document, the Commission proposes rules to address issues that were left unresolved in the Commission's Second Report and Order, FCC 07-33. Specifically, the Commission seeks comment on how to ensure that the amount of subscription-based radio service is limited, whether the Commission can and should impose spectrum fees on portions of the digital bandwidth used by broadcasters to provide subscription services, whether statutory requirements and subscription regulations should apply to subscription-based services, whether any new public interest requirements should be imposed on digital audio broadcasters, whether enhanced public disclosure rules should apply to radio stations, and whether the rules regarding unattended stations should be reviewed and modified.

DATES:

Comments for this proceeding are due on or before October 15, 2007; reply comments are due on or before November 13, 2007.

ADDRESSES:

You may submit comments, identified by MM Docket No. 99-325, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Federal Communications Commission's Web site: http://www.fcc.gov/​cgb/​ecfs/​. Follow the instructions for submitting comments.
• People With Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: [e-mail] or phone: [phone] or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:

For additional information on this proceeding, contact Ann Gallagher, [e-mail] of the Media Bureau, Audio Division, [phone], or Brendan Murray, [e-mail] of the Media Bureau, Policy Division, [phone].

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking, FCC 07-33, adopted on March 22, 2007, and released on May 31, 2007. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available via ECFS (http://www.fcc.gov/​cgb/​ecfs/​). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to [e-mail] or call the Commission's Consumer and Governmental Affairs Bureau at [phone] (voice), [phone] (TTY).

Initial Paperwork Reduction Act of 1995 Analysis

This document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Summary of the Notice of Proposed Rulemaking

1. Preserving the existing system of free over-the-air terrestrial radio service as radio stations convert to digital broadcasting remains important. In order to accomplish this goal, we seek comment on how to ensure that the amount of subscription-based radio services is limited. For example, should we implement a requirement which states that no more than 20 to 25 percent of a station's digital capacity be devoted to subscription services? In the digital television context, we have not imposed a specific cap on the amount of subscription services that could be offered. Rather, we have permitted television stations to use their digital capacity for any purpose as long as they transmit at least one over-the-air video program signal at no direct charge to viewers. This estimate is based on current analog FM SCA usage and the scalability of the digital stream in 1 kbps or smaller increments. How should any limitation on digital subscription services be specified—in terms of occupied bandwidth, or in terms of total digital capacity? Would limiting digital subscription services to 20 to 25 percent be sufficient to ensure that the free over-the-air radio service is not compromised? Should there be different rules for NCE radio stations? What kinds of subscription services do radio stations, both NCE and commercial, plan to offer once they commence digital broadcasting? For example, iBiquity states that it will continue to develop new applications for DAB including store and replay, on-demand services, and a “buy button.” iBiquity has not made it clear whether these services would be offered on a subscription basis. Would any subscription services be broadcast services? With regard to DTV, Congress explicitly authorized the Commission to permit digital television stations to offer ancillary and supplementary subscription-based services. Given that there is no similar statutory provision for DAB, we will proceed cautiously to ensure that free over-the-air service is preserved. We note that radio stations are permitted to offer subscription services during the pendency of this Second Further Notice of Proposed Rulemaking, but are put on notice that we will adopt new rules in this area that may affect such offerings.

2. In the DAB FNPRM, we sought comment on whether we can and should impose spectrum fees for that portion of digital bandwidth used by broadcasters to provide subscription services. Given that we are further considering the issues surrounding the provision of subscription services, we now seek additional input from the public on the fee issue. With regard to DTV, Congress authorized the Commission to impose a fee on certain ancillary or supplementary services. The Commission subsequently adopted a rule requiring DTV licensees to pay a fee of five percent of the gross revenues derived from all ancillary or supplemental services that are feeable, as defined by the rules. Given that no express statutory authority exists in the DAB context, do we have the authority to impose a five percent or other fee based on the Commission's jurisdiction ancillary to its regulation of broadcasting? Can we, therefore, impose a similar fee for subscription digital radio? What limits should we place on subscription services, particularly if we are unable to impose a fee? Should broadcasters have to provide a free digital stream at least equal in quality to the best subscription service if they decide to provide a subscription service?

3. In the Second Report and Order (published elsewhere in this issue), we rule that several statutory requirements and Commission regulations would apply to all free over-the-air digital programming streams. Here, we seek comment on whether those same requirements, as outlined in Section D.1, above, should apply to subscription services. We note that the Commission has applied certain public interest obligations to other subscription services, including cable television and satellite radio, pursuant to our authority to regulate subscription services ancillary to the regulation of broadcasting. We tentatively conclude that we should apply the requirements outlined above to subscription services offered by terrestrial radio stations, and that we have the statutory authority to do so. We seek comment on this tentative conclusion.

4. As stated above, the Commission must ensure that broadcast radio and television stations serve the “public interest, convenience and necessity.” To ensure that broadcasters serve the public interest, convenience and necessity, the Commission requires licensees to comply with various program-related and operational duties. Broadcasters, for example, are required to air programming responsive to community needs and interests and have other service obligations. We will continue to enforce our statutory mandate to ensure that broadcasters serve the public interest, and remind broadcasters of the importance of meeting their existing public interest obligations. As stated above, IBOC provides broadcasters the potential for a more flexible and dynamic use of the radio spectrum and raises questions about the nature of program-related and operating obligations in digital broadcasting because the scope of those responsibilities has not been defined. Certain parties have proposed new public interest requirements for DAB, while others have argued that there is no reason to change our existing rules. We seek comment on whether we should adopt any new public interest requirements for digital audio broadcasters.

5. In the context of examining possible changes to television station public interest obligations in the digital environment, the Commission is considering whether the current requirements pertaining to television stations' public inspection files are sufficient to ensure that the public has adequate access to information on how the stations are serving their communities. As we undertake an examination of possible changes to radio station public interest obligations in the digital environment, we believe it is also appropriate to consider whether the current requirements for radio stations' public inspection files are sufficient to ensure that the public has adequate access to information on how these stations are serving their communities. In the Enhanced Disclosure NPRM, we proposed that television broadcast station licensees should use a standardized form to provide information on how the station serves the public interest in a variety of areas, and that the form should be provided on a quarterly basis and maintained in the station's public inspection file in place of the currently required issues/programs lists. We also proposed to enhance the public's ability to access public interest information by requiring licensees to make the contents of their public inspection files, including the form, available on the station's or a state broadcasters association's Internet Web site. We seek comment on whether we should consider applying such rules to radio stations, whether operating in analog or digital. Would the benefits or burdens of requiring the public inspection file to also be placed on the Internet be the same, lesser, or greater for radio stations than for television stations? In what specific ways, if any, should the rules differ for radio? Are there ways we can reduce the burden on small radio stations?

I. Procedural Matters

A. Filing Requirements

6. Ex Parte Rules. The Second Further Notice of Proposed Rulemaking in this proceeding will be treated as a “permit-but-disclose” subject to the “permit-but-disclose” requirements under Section 1.1206(b) of the Commission's rules. 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. Additional rules pertaining to oral and written presentations are set forth in Section 1.1206(b).

7. Comments and Reply Comments. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using: (1) the Commission's Electronic Comment Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies.

• Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/​cgb/​ecfs/​ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should follow the instructions provided on the Web site for submitting comments.
• For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. 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, filers should send an e-mail to [e-mail], and include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.
• Paper Filers: Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail (although we continue to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW., Washington, DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an e-mail to [e-mail] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

8. Availability of Documents. Comments, reply comments, and ex parte submissions will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. Persons with disabilities who need assistance in the FCC Reference Center may contact Bill Cline at [phone] (voice), [phone] (TTY), or [e-mail]. These documents also will be available from the Commission's Electronic Comment Filing System. Documents are available electronically in ASCII, Word 97, and Adobe Acrobat. Copies of filings in this proceeding may be obtained from Best Copy and Printing, Inc., Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554; they can also be reached by telephone, at [phone] or [phone]; by e-mail at [e-mail]; or via their Web site at http://www.bcpiweb.com. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail to [e-mail] or call the Consumer and Governmental Affairs Bureau at [phone] (voice), [phone] (TTY).

9. Additional Information. For additional information on this proceeding, contact Ann Gallagher, [e-mail], of the Media Bureau, Audio Division, [phone] or Brendan Murray, [e-mail], of the Media Bureau, Policy Division, [phone].

B. Initial and Final Regulatory Flexibility Analysis

10. The Regulatory Flexibility Act of 1980, as amended (“RFA”), requires that a regulatory flexibility analysis be prepared for notice and comment rule making proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). By the issuance of this Second Further Notice of Proposed Rulemaking, we seek comment on the impact our suggested proposals would have on small business entities.

11. Act. As required by the Regulatory Flexibility Act, the Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Second Report and Order and First Order on Reconsideration.

C. Paperwork Reduction Act Analysis

This document does not contain proposed information collection(s) subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Initial Regulatory Flexibility Analysis

12. As required by the Regulatory Flexibility Act of 1980, as amended, the Commission has prepared this Initial Regulatory Flexibility Analysis of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the Second Further 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 Second Further Notice of Proposed Rulemaking. The Commission will send a copy of this entire Second Further Notice of Proposed Rulemaking (“FNPRM”), including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (“SBA”). In addition, the Second Further Notice of Proposed Rulemaking and the IRFA (or summaries thereof) will be published in the Federal Register.

13. Need for, and Objectives of, the Proposed Rules. The Second FNPRM has been initiated to obtain further comments concerning the development and implementation of terrestrial digital audio broadcasting. Because free over-the-air terrestrial broadcasting is in the public interest, and because spectrum is a limited resource, in the Second FNPRM the Commission seeks comment on how to limit ancillary subscription services provided by radio stations converting to the IBOC DAB format so that terrestrial radio broadcasting remains an essentially free over-the-air service. The Commission also seeks comment on, inter alia, the application of several statutory and regulatory public interest requirements to subscription services.

14. Legal Basis. The authority for this Second Further Notice of Proposed Rulemaking is contained in Sections 1, 2, 4(i), 303, 307, 312(a)(7), 315, 317, 507, and 508 of the Communications Act of 1934, 47 U.S.C 151, 152, 154(i), 303, 307, 312(a)(7), 315, 317, 508, and 509.

15. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the proposed rules. The RFA generally defines the term “small entity” as encompassing the terms “small business,” “small organization,” and “small governmental entity.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (“SBA”).

16. Radio Stations. The proposed rules and policies potentially will apply to all AM and commercial FM radio broadcasting licensees and potential licensees. The SBA defines a radio broadcasting station that has $6.5 million or less in annual receipts as a small business. A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. Included in this industry are commercial, religious, educational, and other radio stations. Radio broadcasting stations which primarily are engaged in radio broadcasting and which produce radio program materials are similarly included. However, radio stations that are separate establishments and are primarily engaged in producing radio program material are classified under another NAICS number. According to Commission staff review of BIA Publications, Inc. Master Access Radio Analyzer Database on March 31, 2005, about 10,840 (95%) of 11,410 commercial radio stations have revenue of $6.5 million or less. We note, however, that many radio stations are affiliated with much larger corporations having much higher revenue. Our estimate, therefore, likely overstates the number of small entities that might be affected by our action.

17. Electronics Equipment Manufacturers. The rules adopted in this proceeding will apply to manufacturers of DAB receiving equipment and other types of consumer electronics equipment. The appropriate small business size standard is that which the SBA has established for radio and television broadcasting and wireless communications equipment manufacturing. This category encompasses entities that primarily manufacture radio, television, and wireless communications equipment. Under this standard, firms are considered small if they have 1000 or fewer employees. Census Bureau data for 2002 indicate that, for that year, there were a total of 1,041 establishments in this category. Of those, 1,023 had employment under 1,000. Given the above, the Commission estimates that the great majority of equipment manufacturers affected by these rules are small businesses.

18. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements. The proposed rules on subscription services may impose additional reporting or recordkeeping requirements on existing radio stations, depending upon how the Commission decides to limit subscription services. We seek comment on the possible burden these requirements would place on small entities. Also, we seek comment on whether a special approach toward any possible compliance burdens on small entities might be appropriate.

19. Steps Taken To Minimize Significant Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

20. In the Second Report and Order, the Commission permits radio stations to offer high quality digital radio signals, multicast digital audio programming streams, and datacasting. In the Second Further Notice of Proposed Rulemaking, the Commission seeks comment on what limitations on ancillary subscription services are necessary and appropriate to ensure the viability of free over-the-air radio broadcasting. This is an issue of first impression for the Commission; there is no history that indicates whether limits on ancillary subscription services will be adverse or beneficial to small businesses. Therefore, we make no judgment on whether limits on ancillary subscription services will adversely affect small business. We welcome commenters to address whether limits on ancillary subscription services will have any adverse effects on small businesses.

21. Federal Rules Which Duplicate, Overlap, or Conflict With, the Commission's Proposals. None.

22. The Commission will send a copy of the Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking and FRFA (or summaries thereof) will also be published in the Federal Register.

II. Ordering Clauses

23. Accordingly, it is ordered, pursuant to the authority contained in Sections 1, 2, 4(i), 303, 307, 312, 315, 317, 507, and 508 of the Communications Act of 1934, 47 U.S.C. 151, 152, 154(i), 303, 307, 312, 315, 508, and 509, this Second Report and Order First Order on Reconsideration and Second Further Notice of Proposed Rulemaking is adopted.

24. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Second Report and Order First Order on Reconsideration and Second Further Notice of Proposed Rulemaking including the Initial and Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 73

• Digital television
• Radio

Federal Communications Commission.

Marlene H. Dortch,

Secretary.