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In a recent decision, the FCC upheld the dismissal of a noncommercial FM application filed during the 2007 NCE FM window, despite the fact that the application was not mutually exclusive with any other pending application. This somewhat unusual result came about following the selection of a winner from among a group of mutually exclusive noncommercial applications. That group of mutually exclusive applicants (or, as the FCC calls it, an “MX Group”) contained a number of applications in a “daisy chain.”   As an example, a daisy chain would be where Applicant A was mutually exclusive with Applicant B, and Applicant B was mutually exclusive with Applicant C, and Applicant C was mutually exclusive with Applicant D, but Applicants C and A were not themselves mutually exclusive.  In the case decided last week, there were actually 13 applications in the chain.  When the FCC used its point system for evaluating noncommercial applications, it selected a winner and dismissed all of the remaining applicants.  One of those dismissed applicants, The Helpline, asked the FCC to reconsider the dismissal of its application, arguing that, when you dismissed all of the applications that were mutually exclusive with the winning applicant, the technical facilities proposed by the Helpline would no longer be mutually exclusive with any application and thus could be granted as well. The FCC denied that request.

Why was that request denied? In its order establishing the rules governing the processing of noncommercial FM applications in the 2007 NCE window, the FCC decided that it would grant only one application out of any MX Group, even where not all of the applications in that group were mutually exclusive with each other. According to last week's order, the Commission considered allowing the grant of more than one applicant in a group, but determined that doing so could lead to the grant of an application that is “inferior” to other applications, and which would not necessarily represent the best use of the spectrum, so they decided to grant only one applicant from each MX Group.

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In a decision just released, the FCC fined a noncommercial FM station $8000 for failing to make its public inspection file available when it was requested.  The FCC made clear that past cases where a noncommercial station was given only an admonition for similar violations were no longer good law, finding that the public file was an important part of the station's obligations to the public and the failure to make it available was a serious violation.  This case should serve as a warning to all stations, commercial and noncommercial, that they need to have people at the station at all times who know where the public file is located, and that all visitors who request access to the file need to be given such access.

This case was perhaps a bit more egregious than most, as the visitor who requested access to the fine was known to the station, as the person was employed by a college that had tried unsuccessfully to buy the station.  After its request to purchase the station was turned down, the prospective buyer had allegedly filed a number of pleadings at the FCC trying to force the licensee to sell the station.  When the person appeared at the station to request access to the public file, the person was first told to return another day.  After protesting that was illegal, an official of the College which is the station licensee, arrived at the scene and told the visitor that he had to leave, and could only view the public file after having made a prior appointment with the college's attorney.  When reached by phone, the attorney allegedly told the visitor to leave the premises or he would be arrested.  Only when he returned another day, after being initially turned down yet again, was the visitor eventually able to persuade the station employees that refusal to give him access to the file was illegal.  When he was finally able to gain access to the file, he stated that he found it to be incomplete.

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A reminder that by February 1 noncommercial radio stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York, and noncommercial television stations in Kansas, Nebraska, and Oklahoma must prepare and file electronically a biennial Ownership Report with the Federal Communications Commission (FCC) using the current noncommercial FCC Form 323-E.

Please note, this filing date applies only to noncommercial radio and TV stations in the states listed above. The FCC has revised its rules regarding the reporting of ownership interests for commercial broadcast stations, and has revised the commercial Ownership Report – Form 323. Although commercial broadcast stations will file on a unified reporting deadline, by Order released late December 2009, the FCC has suspended indefinitely the filing of biennial Ownership Reports for commercial broadcast stations as we've posted previously. The Commission is taking additional time to address certain issues raised by petitioners and to revise the new form further.  Once the FCC re-releases the form, stations will have 90 days to file the report, so stations should watch this space or the FCC's releases for future news about the return of the Ownership Report for commercial stations. 

Noncommercial stations, on the other hand, continue to follow the previous rules filing biennial Ownership Reports on FCC Form 323-E, which has not been revised. The FCC is conducting a rule making proceeding to change, potentially, some of the ownership reporting rules for noncommercial licensees, but meanwhile, noncommercial broadcast stations continue to follow the existing rules.  Accordingly, as Feb. 1, 2010, marks the two-year anniversary of the filing of a biennial Ownership Report for noncommercial stations in the above-referenced services and states, those stations must now file a biennial Ownership Report to update their ownership information or affirm the information currently on file.  More information about this filing deadline can be found in our recent client advisory, available here.  

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The earthquake in Haiti has caused many to look for ways to help - including broadcasters.  While many broadcasters are already pitching in to do their part to aide relief efforts, noncommercial broadcasters are, in some cases, limited in what they can do.  Noncommercial stations cannot raise funds, even for other noncommercial groups, if that fundraising "substantially alters or suspends regular programming" of the station.  Under these rules, NCE ("Noncommercial educational) stations are thus forbidden to hold a telethon or other pledge drive that suspends normal programming where the proceeds would go to a third party - even a nonprofit third party group.  Thus, recognizing the magnitude of the tragedy in Haiti, the FCC has agreed to grant liberal waivers of these policies, issuing a public notice announcing that NCE stations wishing to conduct such efforts can simply file an electronic request, by email, with certain supervisors in the Media Bureau's Audio and Video divisions, setting out the nature of the programming, its length, and the beneficiary.

We obviously applaud the FCC's rapid response on this issue.  But we note that it is interesting that the Public Notice states that applicants for one of these waivers also must state whether the special fund-raising effort is part of the station's normal fundraising, or if it is a separate program. The public notice does not mention that noncommercial stations can make fundraising appeals for third parties under the current FCC policies, as long as those appeals do not suspend or interfere with normal station programming.  It would seem to me that such appeals would permit a DJ on an NCE station, in a normal programming break, to urge listeners to contribute to the Red Cross or some other charity, or for a regularly scheduled talk show on a station to feature a discussion of the situation in Haiti and of how people can assist with disaster relief, without needing any specific approval of the FCC.  The key to whether a waiver of the FCC policies is necessary is whether there is a substantial alteration or suspension of the normal programming of the station.

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The new FCC Form 323 Ownership Report is expected to be available in the FCC's CDBS electronic filing database by Wednesday, December 9, according to a Public Notice released by the FCC yesterday - so that commercial broadcasters should have a month to prepare the form in time for the January 11 filing deadline.  As we've written before, the form and filing deadline have been much delayed as the Commission struggled to work out kinks in its electronic filing process.  In the Public Notice issued yesterday, the Commission also announced that stations can file their ownership reports on the new form even if each attributable owner of the company has not yet received an FCC Registration Number (an "FRN"), which requires the provision of a Social Security Number (for individuals) or a Taxpayer ID Number (for business entities).  Seemingly, the FCC has recognized that there has been much consternation among shareholders, officers and directors of broadcast companies about providing their Social Security Numbers to companies in which they have interests to in turn be provided to the FCC so that an FRN can be obtained.  So that licensees can have more time to deal with these issues, the provision for a temporary FRN has been adopted.  The FCC Public Notice also indicates that the FCC will host a workshop on December 9 at 2 PM Eastern time to help the public with issues as to the filing of this report.

The Social Security Number issue has perhaps created the most concern about this new form.  While the allowance for the temporary FRN will take some immediate pressure off broadcasters, these temporary numbers should not be viewed as a permanent reprieve from obtaining FRNs from all attributable owners.  The Commission in the revised Questions and Answers on the Form 323 makes clear, the temporary FRN for those holders of attributable interests in broadcast stations is a temporary measure.  Licensees are cautioned that they should use their best efforts to obtain these numbers (or to have the attributable owners, on their own, register for the FRN).  Even if that cannot be accomplished by the January 11 deadline, the licensee has an obligation to keep trying and to amend its filing when it finally obtains the required information as to the permanent FRN of each person or entity holding an attributable interest in the company .  The FCC seems to leave the door open to enforcement actions if a licensee does not obtain that information in a reasonable (though not defined) period of time.

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Last Friday we posted about the FCC's announcement that it would open a filing window in December for noncommercial applicants interested in seeking authority for 67 existing vacant FM allotments.  Today, the FCC revised the timing of that window and postponed the opening until February 2010.  Accordingly, rather than accepting applications for these vacant noncommercial allocations in December, the window for filing will now be from February 19 through February 26, 2010.  In addition, the accompanying freeze on the filing of commercial and noncommercial minor modifications will now go into effect on February 6th and last through the closing of the window on February 26, 2010.  The FCC postponed the window in response to a request from a group of noncommercial entities and associations who said that two months would not be enough time for interested applicants to get approval from their boards and pull together an application.  The FCC agreed and pushed the date back.  So noncommercial entities interested in filing for these new stations have some additional time to prepare.  Further information is available in our earlier blog and in the FCC's Public Notice released today. 

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The FCC today announced the opening of a filing window for noncommercial applicants interested in seeking authority for 67 existing vacant FM allotments.  Applications on FCC Form 340 will be accepted from December 11th through December 18th for these vacant FM allotments in the non-reserved band between Channels 221 and 300.  A full listing of the allotments that are available can be found here.  Although the vacant channels are in the non-reserved FM Band these particular allocations have been reserved exclusively for noncommercial use.  Thus, the window is restricted to noncommercial educational applicants only.

In the event that multiple applications are filed seeking the same allotment, then the channel will be awarded by applying the Commission's comparative point system for noncommercial applicants.  Further details on filing an application can be found in today's Public Notice, and complete step-by-step instructions are available on the Commission's website here. 

In order to provide stability and predictability for applicants interested in filing for these vacant allotments, the FCC is imposing a freeze on the filing of minor change applications for both commercial and noncommercial FM radio stations.  The freeze will go into effect after 11:59 PM on November 25, 2009 and remain in effect through the close of the filing window.  Accordingly, any existing FM stations that intend to file a minor modification in November and December should plan ahead so they don't get delayed by the freeze.  In addition, the FCC has also imposed a freeze, effective immediately, on any applications proposing to change the reference coordinates for these 67 allotments.  Similarly, petitions or counterproposals proposing a change in the class, channel, or community of license of any of the allotments will not be accepted until December 19th, after the filing window has closed. 

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The FCC today announced that, effective October 27, noncommercial FM stations need no longer protect Channel 6 analog television channels.  The lower end of the FM band, which is reserved for noncommercial educational FM broadcasting, is immediately adjacent to TV Channel 6.  As most television stations abandoned Channel 6 in June when the digital television transition occurred, noncommercial stations had been protecting stations that were no longer there.  However, as we wrote here, the FCC wanted to deal with noncommercial licensees that were trying to jump the gun by filing applications contingent on the disappearance of the Channel 6 station even before the analog television stations had stopped operating.  To give all noncommercial FM stations an equal opportunity to take advantage of the clearing of Channel 6 in most television markets, the Commission set this uniform date for taking advantage of this change in television station operations.  Of course, noncommercial FM stations need to protect the handful of television stations that continue to operate digitally on Channel 6.  Today's public notice notes that noncommercial FM applications trying to take advantage of the fact that Channel 6 has been vacated in their market by filing an application before the October 27 date will be dismissed unless they had specific unconditional permission of the Channel 6 station.

Note that while the FCC has made the process equal for all noncommercial FM stations, there are questions about whether an unfair advantage may have been given to some LPTV stations in the recent LPTV filing window, where channel 6 applications were not prohibited (see our post here).  Some noncommercial broadcasters were concerned that some of these LPTV applicants could take advantage of the vacating of Channel 6 in their market by filing an application for a new LPTV station that could preclude the filing of an FM application once the window announced in this public notice opened.  To some extent, this may not be a major issue, as the LPTV window for applications for major markets does not open until January.  But we will see if this concern actually resulted in any issues in more rural areas as the LPTV applications that have already been filed in these areas are processed in coming months.  But for NCE FM stations that were precluded from filing for upgrades by a Channel 6 TV station that disappeared after the digital transition, the wait for filing opportunities will soon be over.

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The Corporation for Public Broadcasting has entered into a settlement with SoundExchange extending their current agreement on Internet Radio royalties for "Public" radio stations through 2015.  The previous deal, about which we wrote here, covered the period from 2006 to 2010.  This new agreement picks up in 2011 and covers included stations through 2015.  As in the previous deal, the new agreement has a payment by CPB to SoundExchange satisfying all royalties for all of the covered stations.  This was the fourth agreement that was announced last week, about which we wrote here, although details of this deal had not previously been released.  We have written about the other deals entered into under the Webcaster Settlement Act of 2009 ("WSA"), including the deals with Sirius XM (here) and with other noncommercial webcasters (here). 

This agreement covers stations affiliated with NPR, American Public Media, Public Radio International, and the Public Radio Exchange. CPB will pay to SoundExchange $2,400,000 in five yearly installments, covering up to 490 public radio stations in the first year, and up to 10 additional stations per year thereafter (up to 530 in 2015).  The fee is also subject to adjustment if all of the covered stations exceed certain listening levels.  Those levels, and the required true-up for performances in excess of the caps, are set out below.  However, the CPB payments for excess performances are limited to a total of $480,000 over the 5 year period of the Agreement:

Year              Music ATH Cap              Per Performance Rate

2011                279,500,000                         $0.00057

2012                280,897,500                         $0.00067

2013                282,301,988                         $0.00073

2014                283,713,497                         $0.00077

2015                285,132,065                         $0.00083

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Noncommercial webcasters were provided with two royalty options under settlements reached with SoundExchange pursuant to the Webcaster Settlement Act of 2009 ("WSA").  One settlement was with Noncommercial Educational Webcasters.  The other, when announced, was characterized by SoundExchange as being a settlement with noncommercial religious broadcasters, though it applies to any noncommercial webcaster who elects to be subject to its terms.  As set forth below, except for certain mid-sized noncommercial webcasters who have more forgiving recordkeeping options under the Educational deal, it would seem that the settlement with the religious broadcasters provides far more advantageous terms, and it also reaches back to cover the period from 2006 through 2010.  The Educational webcasters agreement covers only the rates for the periods from 2011-2015.  These settlements provide another example of the issue raised before the Senate Judiciary Committee of the arbitrary nature of the precedential nature that will be accorded to WSA settlements in future webcasting proceedings.  The noncommercial agreement with significantly higer prices has been accorded precedential weight in future CRB proceedings, while the one with lower rates is, by its terms, not precedential in future proceedings.

It is easiest to start with a review of the 'Religious" broadcaters settlement (which, as we said above, is open to any noncommecial webcaster).  The agreement provides for a $500 per channel fee for each channel or stream offered by the noncommercial webcaster.  For that flat fee of $500 per channel, the webcaster can stream up to 159,140 monthly aggregate tuning hours of programming on each stream.  An Aggregate Tuning Hour ("ATH") is one hour of programming streamed to one person.  Thus, if you have 2 people who each listen for an hour, you would have two aggegate tuning hours.  A station with 2 listeners who each listen for half an hour would have one ATH of listening.  4 listeners for 15 minutes each would also add up to one ATH.  The 159,140 monthly ATH number represents listening of approximately 221 average simultaneous listeners 24 hours a day, 7 days a week.  If a webcaster exceeds this listening level, it must pay for excess listening on a per performance (per song per listener) basis, at the rates set out below.

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This afternoon, the FCC issued an erratum revising the deadline for submitting Comments in the rule making proceeding regarding potential modifications to the ownership report filing requirements for noncommercial broadcasters.  Comments in this proceeding are now due by June 26th, not June 29th as previously indicated.  Please see our earlier post, here, discussing the questions that the FCC has raised in this rule making.  The deadline for Reply Comments is unchanged, and is still July 13th. 

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UPDATE:  On June 2, the FCC issued an erratum revising the Comment date in this proceeding to June 26th.  We've updated our earlier post to reflect the change.

The FCC today issued a Public Notice announcing the filing deadline for comments regarding potential modifications to the ownership report filing requirements for noncommercial broadcasters (see our post, here, on the questions that the FCC is asking).  Comments are due on June 26, with replies on July 13.  As mentioned in our earlier post, the FCC also issued today an Order suspending the requirement that commercial broadcasters who have upcoming ownership report filing deadlines (including the deadline on Monday for on June 1 for radio stations in Arizona, District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming, and television stations in Michigan and Ohio).  This is a new policy, and thus supersedes the information in our post two weeks ago.  As all commercial broadcasters will now have to file reports on the same time - November 1 - the need for a second report was deemed unnecessary, especially given the upcoming revisions to the Form 323 to require more detailed information about some otherwise non-attributable owners, and for certain entities not now required to file.

As we have stated, the FCC is interested in obtaining more detailed ownership information in order to better assess whether additional steps to promote minority ownership are justified.  Watch for details of the new November filing requirement in the near future. 

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A decision released by the FCC's Media Bureau staff this week makes clear that the permittee of a noncommercial station, who was awarded the permit based on a 307(b) preference, cannot change transmitter sites so as to abandon service to the area that it promised to cover in order to get the preference - even if it proposes to cover an equivalent amount of underserved area from its new transmitter site.  In addition, the decision held that the change in transmitter site was not justified even though the underserved area that had existed at the time the construction permit was granted no longer existed.  Other stations had changed their facilities since the date of the construction permit's grant, and now provided coverage to the area that had been underserved at the time of the grant. The Commission said that the coverage promises made by an applicant, and on which the permit was conditioned, were a snapshot in time that could not be changed even after the grant.  The decision should serve as a reminder to all the noncommercial applicants with applications that are now pending or to be filed in the next noncommercial window (whenever that may be) that they should not propose a technical facility in order to win a construction permit on 307(b) grounds if they can't really construct the station at the site they propose, as they may well be stuck with it - and forfeit the permit if they can't build the station in the way that they promised.

One wonders if a decision like this one will be appealed.  While there is no question that an applicant who makes promises that lead to the award of a permit should be held to those promises (to do otherwise would undermine the system), is it really in the public interest to hold the applicant to these promises in such a way so as to ignore reality?  If the underserved area that the applicant had promised to serve is no longer underserved, and some new underserved area that would have resulted in the applicant receiving the same preference is to be served by the modified proposal, isn't the public better off getting service to these truly underserved areas?  We will have to watch this case to see what develops.

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The full text of the FCC's revisions to its ownership report filing process was released last week.  The new rules will require that all commercial stations (including LPTV stations) file an updated Form 323 on November 1 every other year - starting in 2009.  The Order does not add much to the summary that we provided when the decision was first announced, though it does make clear that the electronic form will be revised to no longer allow for PDF attachments, instead requiring that all information be provided on the electronic form itself, so that it can be more easily searched.  With complex ownership structures, which are sometimes not easily explained in the confines of an FCC form, this may create some difficulties.  The Order did not seem to freeze the obligations for the filing of Form 323 Ownership Reports on the old version of the form on the current schedule while the new form is being created and approved by the Office of Management and Budget under the Paperwork Reduction Act, so stations in states with June 1 deadlines for their biennial reports should continue their preparation (see our Advisory on the the reports that are due on June 1 for radio stations in Arizona, District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming, and television stations in Michigan and Ohio).

The Order also asked for further comment on the Ownership Report requirements for noncommercial licensees, including LPFM stations.  The Commission asks not only for comments on whether noncommercial operators should be required to file their reports on the same two year cycle as commercial broadcasters, but also for comments on what information should be required from these operators.  As noted by the FCC, the question of who controls a noncommercial station is often not an easy one - as there are varying degrees of control and oversight of station operations at many of the institutions that hold noncommercial licenses.  As noted by the FCC, there has been a Notice of Inquiry into noncommercial broadcast station ownership pending since 1989, trying to set out when there is a transfer of control of such entities that needs prior FCC approval.  Noncommercial stations have been operating under the interim policy set forth in that Notice for almost 20 years.  While the Commission does not seemingly ask for any change in the interim policy at this point, by gathering information about what ownership information should be reported on the new ownership report for a noncommercial entity, a resolution of that long-pending proceeding could potentially be in the works.

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In a decision fining a noncommercial radio station $7200 for failure to have several year's worth of quarterly issues programs lists in its public inspection file, the FCC specifically stated that it does not have a reduced scale for fines for noncommercial broadcasters.  Instead, noncommercial station licensees, like the college that was involved in this case, have to justify a reduction in the amount of a fine based on financial hardship by providing a financial statement for the licensee itself - not just a showing of the budget for the radio station.  Thus, a college or university station that is in violation of an FCC rule, and which is issued a Notice of Apparent Liability, cannot justify a reduction in the fine merely by saying that the station cannot afford the fine - they will have to show that the institution itself is unable to pay the fine that the FCC imposes. 

This case is but one of a number of noncommercial stations that have received fines in recent days.  Just yesterday, another noncommercial station owned by a college was fined $7000 for not having timely filed its license renewal application.  The college's explanation that the regulatory failure was due to "poor administration" of the station didn't fly - as the FCC is clearly not going to reduce a fine because the licensee was not paying attention to the actions of its agents.  These cases and others like it demonstrate that the FCC is going to hold noncommercial stations to the same level of scrutiny as commercial operators.  The days when noncommercial broadcasters could count on being treated by the FCC with a lighter regulatory touch are over.  And many college, universities and other nonprofits that had not paid attention to the actions of their broadcast stations need to pay attention now, as in these days of tightened budgets, nonprofit groups can hardly afford the costs of paying an unexpected FCC fine. 

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The FCC today issued a long-awaited public notice, clarifying the relationship between FM educational stations and the analog Channel 6 TV stations that have or will be disappearing after the digital transition.  As we've written before, the question of whether noncommercial FM stations could seek improvements in their facilities based on the imminent disappearance of the Channel 6 stations has been pending for quite some time.  In the Public Notice issued today, the FCC made clear that no application for an improvement in a noncommercial FM station will be accepted before the DTV deadline unless it provides full protection to analog Channel 6 stations.  Even after the transition, applications will only be accepted after procedures are established in another public notice to be issued by the FCC at some later date.  Applications that are currently pending which don't comply with the current rules that require educational stations to protect Channel 6 TV operations (either protecting them from interference or having unequivocal consent from the TV station to the construction at any time of the FM station not conditioned on the digital transition) will be dismissed.

The dismissal will be particularly crucial in deciding between competing applications still being processed as past of the 2007 window for filing for new noncommercial FM stations.  In that window, many applicants submitted applications ignoring the existence of Channel 6 TV stations, while others protected those stations.  Those who ignored the Channel 6 operations would have received significant comparative coverage advantages had the FCC not taken the action announced today - dismissing those applications who ignored the Channel 6 operations. While this notice seems to be definitive - given the processing issues on these applications so far - we probably have not heard the last of this issue.

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Last week, the FCC issued several fines to noncommercial broadcasters who had underwriting announcements that sounded too commercial.  In these decisions, the Commission found that the stations had broadcast promotional announcements for commercial businesses - and those announcements did not conform to the FCC's rules requiring that announcements acknowledging contributions to noncommercial stations cannot contain qualitative claims about the sponsor, nor can they contain "calls to action" suggesting that listeners patronize the sponsor.  These cases also raised an interesting issue in that the promotional announcements that exceeded FCC limits were not in programming produced by the station, but instead in programs produced by outside parties who received the compensation that led to the announcement.  The FCC found that there was liability for the spots that were too promotional even though the station itself had received no compensation for the airing of that spot.

The rules for underwriting announcements on noncommercial stations (including Low Power FM stations) limit these announcements to ones that identify sponsors, but do not overtly promote their businesses.   Underwriting announcements can identify the sponsor, say what the business of the sponsor is, and give a location (seemingly including a website address).  But the announcements cannot do anything that would specifically encourage patronage of the sponsor's business.  They cannot contain a "call to action" (e.g. they cannot say "visit Joe's hardware on Main Street" or "Call Mary's Insurance Company today").  They cannot contain any qualitative statements about the sponsors products or services (e.g. they cannot say "delicious food", "the best service", or "a friendly and knowledgeable staff" ).  The underwriting announcements cannot contain price information about products sold by a sponsor.  In one of the cases decided this week, the Commission also stated that the announcements cannot be too long, as that in and of itself makes the spot seem overly promotional and was more than was necessary to identify the sponsor and the business that the sponsor was in.  The spot that was criticized was approximately 60 seconds in length. 

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The FCC's staff today issued an Order resolving 26 Groups of mutually exclusive FM applications submitted last year in the filing window for new noncommercial FM stations. We wrote about a previous order in August, processing a smaller group of such applicants.  In each of these groups, the Commission analyzed the coverage proposed by the applicants to determine if the technical service that they propose to provide was superior to that of other applicants - a "fair distribution analysis."  In these cases, the Commission found that one applicant was preferred under an analysis that looks at the populations to be served by these applicants that do not already currently receive service from more than one noncommercial station.  The "tentative selectees" of the Commission are now subject to the filing of petitions to deny and, if no petitions are filed in the 30 day filing window, these applications will be granted. 

This Order did not deal with cases where there was no dispositive preference based on coverage - cases where the FCC will have to conduct a "points system" analysis (see our summary of those factors here).  Presumably, those will come later.  For parties who had applications on the Order and who were not winners, a review of the decision is in order.  The Commission has been known to make mistakes in this kind of analysis and, as much reliance is put on information supplied by applicants, some of the information may not be correct, or may not rely on consistent assumptions applied in the same way in counting the populations served by each applicant.  We've heard that there may be some of these windows where the winning applicant ignored (or asked for a waiver of) the limitations on the power of noncommercial stations near Channel 6 TV stations, on the theory that most of these TV stations, operating adjacent to the FM band, will be going away in February after the digital television conversion.  This is a controversial issue (see our post here on the Commission's action with respect to applications to improve existing stations that relied on the same assumptions), which may well be challenged in reconsideration filings if these rumors are true.  So, as always, stay tuned to see how this process develops. 

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An FCC decision in a case involving two applicants for a construction permit to construct a new noncommercial television station in Tulsa illustrated an interesting dilemma that can arise from the application of the "point" system that is used to decide comparative cases for new noncommercial stations. We wrote about the point system, here.  In this case, neither of the applicants enjoyed a Section 307(b) preference for superior technical coverage.  And neither had any preferences for being part of a statewide network.  Instead, the only differences between the applicants was that one was a local, established non-profit organization (Oral Roberts University), while the other was not a local group, thus giving ORU 3 points under the comparative system.  The non-local applicant received 2 points as it had no other station in the market.  Thus, Oral Roberts received the grant - despite the fact that it already had another television station in the same city.

Commissioner Copps, while not specifically dissenting from this decision, did point out that the decision might not really be one that served the public.  Is it really better, he asked, that a second television station be awarded to a local group, or would the local community be better served by a new voice - even if that voice was not from a local community organization?  While Commissioner Copps did not mention it, under the comparative hearing system used to evaluate commercial applicants before the adoption of the auction system now in use, favored diversity of ownership (not having other media interests) over local ownership.  Seemingly, almost any system of selection will lead to some anomalous results that may demonstrate the need to reexamine the system from time to time to determine if it really does benefit the public, or if it is simply making arbitrary distinctions between applicants.  This may be one of those cases showing that it is time for a reexamination. 

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The FCC has begun the process of resolving the groups of mutually exclusive noncommercial FM radio applications. In an Order released today, the FCC decided 12 groups of mutually exclusive applications ("MX Groups") by analyzing only one decisional factor - the question of "fair distribution" of noncommercial service.  As we wrote when we set out the criteria for FCC decision making , when the FCC chooses between mutually exclusive groups of applications for new Noncommercial Educational ("NCE") stations, the initial level of analysis is a consideration of whether the application serves extensive areas where there is little other noncommercial radio service.  If a station covers any area that currently has fewer than 2 noncommercial radio services, and that area exceeds 10% of the proposed service area of the applicant covering more than 2000 people, a conclusive preference will be awarded over another applicant who does not meet that threshold.   All of today's decisions were made based on this criteria.

One interesting aspect of the decisions was how many cases were essentially won by default - as a number of applicants did not bother to compute the areas and the populations that they served.  Where that information was not provided in the initial application as submitted by the applicant, the Commission gave the applicant no credit for any service. So even if an applicant submitted an application that would in reality serve underserved areas, if they did not claim that service in their initial application, they got no credit for the service.  The FCC did not fill in any blanks in the applications.  So, if you are planning to claim credit for anything in an application - be sure to do it up front when the application is filed, or you'll get no credit.

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In two recent FCC decisions, one dealing with a commercial operator and that other with a noncommercial licensee, the Commission's staff addressed the issue of how large an FCC fine could be imposed on a broadcaster without that fine being subject to reduction because of the licensee's inability to pay.  In the first case, a commercial station was fined for violations of the EAS rules.  As we've written before, EAS seems to be the most common violation found at broadcast stations by FCC inspectors.  However, what is most notable about this decision is not the violation, but the Commission's discussion of the penalty for that violation.  As in many cases, the licensee argued that, as it had experienced several years of financial losses, the amount of its fine should be reduced as the payment of that fine would impose a financial burden on it.  The FCC rejected the argument, finding that as the fine was less than 2% of the licensee's gross revenues, it was not excessive.  The Commission stated that, while profits and losses may be important in determining whether a licensee can pay a fine, in most cases, if the fine is less than 2% of gross revenues, it will not be considered excessive even if the licensee has not been making a profit as it it not a significant overall expense.  Therefore, the Commission refused to reduce the fine because of financial hardship argument.

In the noncommercial case, the applicant claimed that a fine that it was issued for not having any quarterly programs issues lists in it public file should have been reduced because that fine would significantly deplete the station's budget that had been allocated to it by the School District with which it was associated.  However, the licensee only provided the FCC with information concerning the budget allotted to the radio station, and it did not provide any financial information about finances of the licensee school district.  Without that information, the Commission stated that it could not determine that the fine was excessive, so it did not reduce the fine on the basis of financial hardship.  Clearly, the Commission is not anxious to reduce a fine based on the licensees financial inability to pay, so a licensee looking for such a reduction must carefully document its request showing that the fine would impose a financial hardship.

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The processing of the applications for new noncommercial FM stations marches on.  This week, the FCC released a list of groups of Mutually Exclusive applications (commonly known by those who regularly deal with the FCC as "MX groups"), i.e. applications that are linked together in that, because of interference concerns, not all can be granted.  In some cases, all of the applications in an MX group overlap with each other so that only one can be granted.  In other cases, referred to as "daisy chains", you have a situation where Application A precludes Application B from being granted, and Application B prevents Application C from being granted.  While A and C could be granted if not for B, all three end up in a single MX group.  According to the Public Notice released with the list of MX groups, the applications on this list are all situations were there are 13 or fewer applicants in the MX group.  MX groups with a greater number of applications will appear on a subsequent public notice.  MX Groups with 4 or fewer applications were identified back in March.

The Commission has advised all applicants to review the lists to see if they were included in an MX group erroneously or omitted from an MX group in which they should have been included.  If they discover a mistake, the applicant should file, within 30 days, notice with the FCC so that its application can be processed with the group to which it belongs.  Applicants can also try to work out settlements during the 30 day comment period (or notify the FCC at the end of the period that they are still working on a settlement).  Otherwise, at the end of the 30 day period the FCC promises to begin work to resolve the MX cases through the use of the point system (which we explained, here).  So the process marches on, and we should start to see more applications from the noncommercial filing window acted on in the coming months.

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In a decision released late on Friday, the FCC upheld a $9,000 fine on a noncommercial television operator who broadcast underwriting announcements which, in the opinion of the Commission, were too much like commercials and thus were impermissible on a noncommercial station.  Under the Commission's policies governing the noncommercial nature of noncommercial stations, it is permissible to air an underwriting announcement acknowledging a commercial entity that makes a financial contribution to the station.  And it is permissible to state the nature of the business, where it is located, and to air the slogan of the company.  What is not permissible is when the underwriting announcement contains "calls to action," qualitative or comparative claims, price information, or other inducements to do business with this particular company.  In this case, the Commission felt that the announcements crossed some or all of these lines.

In the initial Notice of Apparent Liability in this case, released in late 2004, the text of the announcements at issue are set out.  In last week's order, phrases such as "planning a special occasion?" as the intro line to an announcement about an Ice cream store were deemed to be calls to action, and the description of the ice cream cakes that the store made as "tastefully decorated" were deemed to be qualitative.  Similarly, statements about a real estate company that "we're all about family" and "we love selling real estate" were deemed to be comparative in nature, trying to distinguish this particular agent from other competitors.  In only one of ten ads, one for a school supply store, did the Commission overturn its previous determination, finding that an announcement for "creative learning materials" was arguably descriptive and not qualitative.

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Channel 6 of the television band is immediately adjacent to the lower end of the FM band.  Noncommercial FM radio stations, located at the lower end of the FM band (88.1 FM to 91.9), have the potential to interfere with television stations on that channel.  Thus, FCC rules require that noncommercial FM stations protect Channel 6 stations that are in their area, often limiting their power unless they can work out interference agreements with the local TV station.  As the FCC has tried to vacate Channel 6 as part of the digital transition, some noncommercial FM applicants, including some who filed during the recent filing window for new Noncommercial FM stations, have filed applications seeking construction permits at power levels that ignore the Channel 6 station, on the theory that, by the time the noncommercial station is on the air, the TV station will have vacated Channel 6.  In a decision issued on Friday, the Commission rejected one such application, finding that the acceptance of the application premised on an event that has not yet occurred would be unfair to potential applicants who were waiting to file applications until the television stations actually changed channels.

The decision, in a footnote, noted another problematic issue raised by these applications.  As only some applicants filed their applications in the recent NCE window premised on the disappearance of the Channel 6 TV stations, those that had not take that tact would be at a comparative disadvantage in assessing their applications under the NCE selection criteria.  As the comparative position of NCE applicants was supposed to have been frozen at the time the window applications were filed, those relying on a future event would seem to get an unfair advantage.  Thus, it appears that, in time, similar actions will be taken with respect to other similarly situated applicants, clearing up a source of concern or consternation for many who filed during that window.

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On Friday, the FCC released a Public Notice setting out several groups of applications for new noncommercial FM stations which are mutually exclusive with each other.  These applications were filed in the October window for new noncommercial FM stations (information about which can be found here).  According to the Public Notice, the identified groups are those where there are 4 or fewer applications which are mutually exclusive with each other.  The list can be found here.   The Commission is asking that applicants named on this list advise the Commission within 30 days whether the FCC's determination of mutual exclusivity is correct, and also whether the named applicants anticipate reaching a settlement or share time agreement. If nothing is filed within that 30 day period, the Commission's staff will start applying the point system to determine which of these applicants should be preferred and granted.

The Public Notice also makes clear that there are other applications which are part of larger mutually exclusive groups.  These applications will be dealt with at a later date.  The Commission has already processed over 800 other applications which were either granted as "singletons", not mutually-exclusive with other applications, or which were dismissed because the applicant exceeded the 5 station filing cap.  Thus, the FCC is moving quickly to process these applications for new noncommercial stations.  Applicants should carefully review their options in light of this new public notice. 

 

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This afternoon, FCC today released a Public Notice regarding the recent NCE FM filing window during which the FCC accepted applications for new noncommercial FM radio stations.  By this Public Notice, the Commission has opened a 60-day settlement period for parties to resolve any technical conflicts between their applications, either by making technical amendments or by reaching a settlement with the other parties.  Instead of providing lists indicating the applications filed in response to the window that are Singletons (i.e., don't have any conflicts and can go straight to processing), dismissed outright,  or mutually exclusive with other applications as it has done in the past, the FCC instead leaves it to the applicants to figure out which category they are in and to identify any other mutually exclusive proposals that might be blocking their proposal.

This, of course, can only be accomplished if the FCC makes the applications available in their databases, which it started to do this afternoon.  Thus, the next step is for applicants to check the FCC's CDBS database and see if their application is either:  1.) Dismissed, 2.) Accepted for Filing, or 3.) Tendered for Filing.  Dismissed is self-explanatory.  Accepted for Filing means that there were no initial conflicts and that the application will progress through the normal processing procedures, hopefully to be granted in due course.  These applications will appear as accepted for filing in the FCC's daily public notices some time next week and move on from there. 

In the event that the database reflects that an application is Tendered for Filing, this indicates that there is a conflict with at least one other application that was filed during the NCE FM window.  The next step in that case is to have your consulting engineer study the situation and see what the conflict is.  Once you have a sense of the conflicts you are facing, you can start to assess whether there is an engineering solution that might allow your application  to be granted, whether you could settle with the other applicants, or if your application could win on the basis of preferential service or a comparative point analysis.  The 60-day period for technical amendments and joint settlements starts today and will expire on January 7th.

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The FCC today issued a Public Notice extending the NCE filing window, which was to end today, until this coming Monday, October 22.  All applications must be on file by 2 PM Eastern Time on Monday.  This short extension was apparently due to downtime on the FCC's electronic filing system last night, which precluded the filing of some applications during that period.  This is the window for filing applications seeking authority to construct new noncommercial educational FM stations, or for major changes in existing noncommercial FM stations.  For more details on this window, see our post, here. 

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In an Order released today, the FCC affirmed its tentative decision limiting the number of noncommercial FM applications that can be filed by one party in the upcoming window for new reserved educational band stations.  Applications for these stations can be submitted starting on Friday.  See our post, here, for details on the filing requirements.  The Commission upheld its tentative decision to retain a limit of 10 applications, despite requests by NPR, Minnesota Public Radio, and many religious broadcasters for higher limits.  The Commission cited thousands of individual comments in support of the 10 station limit, as well as those of a number of "public interest" groups.  Apparently, the flood of thousands of almost identical individual comments helped convince the Commission that the weight of the comments (perhaps literally) supported its decision.

The Commission did recognize some exceptions to the 10 station limit, exempting major change applications and applications that were originally filed under the old rules for FM educational processing (many of which have been languishing for almost 10 years) which must be refiled in the upcoming window.  In response to concerns that there might be sham applications that are filed to evade the limits, the Commission warned applicants that it retained the ability to investigate any application to make sure that the representations are true.  See our post on a recent case where the FCC rejected an applicant's claim to credit as a local applicant.  We will see if these efforts by the FCC in fact reduce the number of applications to a manageable number that can be quickly processed by the Commission.

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With the filing window for new noncommercial FM radio stations opening this coming week (see our summary of the process, here), some potential applicants may be wondering who qualifies as an established local organization entitled to points in the comparative analysis that takes place if applications that are mutually exclusive (both cannot be granted without creating prohibited interference) are filed during the window.  In a decision released this past week, the FCC clarified the rules as to what constitutes a local applicant - holding that simply having a mailing address for a headquarters in the proposed station's service area is not sufficient.

In this case, an applicant claimed to have an established local presence necessary to qualify for points as a local applicant based on its "headquarters" which it said had been located within 25 miles of the proposed city of license for two years prior to the relevant date for evaluating the applicant's comparative attributes, as required by the FCC's rules.  However, when a competing applicant visited the office building in which this supposed headquarters was located, there was no indication in the building directory or on any signs on any door in the building that the organization was located there, and no building personnel had any familiarity with the organization.  The applicant justified its claimed local credit by claiming that the "headquarters" was an office at the specified location that housed a number of businesses and organizations with which one of its Board members was affiliated, and that all of those businesses could not be listed on signage or on the building directory.  The Commission found that the mere presence of an office was insufficient to qualify for credit, citing the Order adopting the NCE point system which said that the headquarters must be the organization's principal place of business or the principal residence of one of its members, and not just a post office box, lawyer's office, branch office or vacation home.  To qualify for points as an established local organization, the applicant must have activities and familiarity with the local service area that will permit it to "hit the ground running" in serving the public.

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The Commission's Public Notice proposing to limit the number of applications that a single party can file in the October Noncommercial ("NCE") FM filing window to ten applications has been published in the Federal Register.  The deadline for submitting Comments is September 6th, and the deadline for submitting Reply Comments is September 17th.  A copy of the Commission's Public Notice can be found here. By proposing to limit the number of applications that a single entity may file in the window, the FCC seeks to avoid parties filing a large number of speculative filings, which create the potential for extraordinary procedural delays.  All comments must be submitted in MM Docket No. 95-31, and can be filed either in paper or electronically through the FCC's Electronic Comment Filing System.

Further information regarding the October NCE FM filing window can be found in our earlier posts on the topic here. 

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In its Public Notice setting out the rules governing the upcoming filing window for applicants seeking new noncommercial FM stations or major changes in existing stations, which we wrote about here, the FCC has put applicants on notice of the many requirements that must be met in order to have an application considered in the upcoming process.  This is the first opportunity in this century for the filing of applications for new noncommercial FM stations. In order to participate, all applicants must make sure that they follow the rules set out by the Commission.  Applications will be due in a filing window that will open on October 12 and close on October 19.

Fundamentally, the FCC's Public Notice reminds interested parties that, to be eligible, an applicant must be a noncommercial entity – a nonprofit corporation or a governmental organization.  Individual applicants or profit-making entities cannot participate.  As eligibility to participate and the comparative qualifications of all applicants are assessed at the time of filing, applicants need to assure their nonprofit status is in order before the upcoming filing window.

The Commission also sets out a number of other requirement for the applications that may be filed during the window. Applications submitted during the window will be filed electronically on FCC Form 340, and must contain very specific technical descriptions of the service they plan. The proposal must specify facilities that don’t interfere with other existing stations or pending “cut-off” noncommercial applications. The applicant must have received reasonable assurance of the availability of its proposed transmitter site (i.e. a legally binding contract is not necessary, but a commitment from the site owner that the site will be available and an idea of the terms on which that availability is premised must be obtained). 

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The Commission yesterday released two further Public Notices regarding the upcoming window for new noncommercial (NCE) FM radio stations.  As was previously announced, a filing window will be open from October 12 until October 19 during which time interested parties may submit applications for new NCE stations or for major changes to existing NCE stations.  This window is significant, because it marks the first time in seven years that parties have been able to file for a new NCE FM station.

The first of the public notices released yesterday, which is available here, contains further details about how to submit an application in the window.  Parties interested in learning more about filing an NCE FM application will find useful, step-by-step information about the application and licensing process here.  In addition, the notice announces a filing freeze prior to the opening of the window.  Beginning September 8, 2007 and continuing through the close of the window on October 19, there will be  freeze on the filing of minor change applications for all reserved band channels, and, due to their potential impact on the window filings, on Channel 221, 222, and 223 non-reserved band minor change applications and amendments.  This freeze will stabilize the database and allow applicants filing in the window to know what they need to protect. 

The second public notice released yesterday proposes to restrict the number of applications that a single party can file in the NCE window to ten, and seeks input from interest parties regarding that proposal.  A copy of the notice can be found here, and the deadline for comments is 15 days after the Notice has been published in the Federal Register, with reply comments due ten days after that.  By proposing to limit the number of applications that a single entity may file in  the window, the FCC seeks to avoid parties filing a large number of speculative filings, which create the potential for extraordinary procedural delays.  All filings must be submitted in MM Docket No. 95-31, and can be filed either in paper or electronically through the FCC's Electronic Comment Filing System. 

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The past few days have been eventful ones in the battle over Internet radio royalties.  Appeals from the decision of the Copyright Royalty Board decision (see our memo explaining that decision, as well as our coverage of the history of this case) were submitted by virtually all of the parties to the case.  In addition, the National Association of Broadcasters, which had not previously been a party to the case, filed a request to intervene in the appeal to argue that the CRB decision adversely affects its members.  Also in Court, a Motion for Stay of the decision was submitted, asking that the CRB decision be held in abeyance while the appeal progresses.  The "appeals" that were filed last week are simply notices that parties dispute the legal basis for the decision, and that they are asking that the Court review that decision.  These filings don't contain any substantive arguments.  Those come later, once the Court sets up a briefing schedule and a date for oral arguments - all of which will occur much later in the year.  As the CRB decision goes into effect on July 15, absent a Stay, the appeal would have no effect on the obligations to begin to pay royalties at the new rates.

The Stay was filed by the large webcasters represented by DiMA, the smaller independent webcasters that I have represented in this case, and NPR.  To be granted a stay, the Court must look at a number of factors.  These include the likelihood that the party seeking the stay will be successful on appeal, the fact that irreparable harm will occur if the stay is not granted, the harm that would be caused by the grant of a stay, and the public interest benefits that would be advanced by the stay.  The Motion filed last week addressed these points.  It raised a number of substantive issues including the minimum per channel fee  set by the CRB decision, the lack of a percentage of revenue fee for smaller webcasters, and issues about the ability of NPR stations to track the metrics necessary to comply with the CRB decision.  The Motion raised the prospect of immediate and irreparable harm that would occur if the decision was not stayed, as several webcasters stated that enforcement of the new rates could put them out of business.

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The FCC today issued the long-awaited text of its decision on Digital Audio radio - the so-called IBOC system.  As we have written, while adopted at its March meeting, the text of the decision has been missing in action.  With the release of the decision, which is available here, the effective date of the new rules can be set in the near future - 30 days after its publication in the Federal Register.  With the Order, the Commission also released its Second Further Notice of Proposed Rulemaking, addressing a host of new issues - some not confined to digital radio, but instead affecting the obligations of all radio operations.

The text provides the details for many of the actions that were announced at the March meeting, including authorizing the operation of AM stations in a digital mode at night, and the elimination of the requirements that stations ask permission for experimental operations before commencing multicast operations.  The Order also permits the use of dual antennas - one to be used solely for digital use - upon notification to the FCC.  In addition, the order addresses several other matters not discussed at the meeting, as set forth below. 

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The FCC announced that it will open a window for new noncommercial FM stations and major changes in noncommercial stations - with all applications to be filed between October 12 and October 19.  This is the first filing window to be opened for new noncommercial stations in almost 7 years, so the demand for these channels will no doubt be high.  The FCC's Public Notice just announces that the window will open, but does not provide any specifics - which are promised in a later public notice.

There are many issues that will need to be discussed in any subsequent notice.  First, the Notice released today indicates that the window will cover applications for stations in the noncommercial reserved band  - between 88.1 and 91.9 on the FM band.  However, since the last noncommercial window, the FCC has also reserved a number of allotted channels in the commercial band for noncommercial use - and these do not appear to be covered by the window notice.

Also, there have been discussions of the possibility of limiting applicants to a certain number of applications, or taking other actions to restrict the number of applications for these channels.  With the new point system adopted by the FCC since the last filing window, local applicants are favored over national groups that may file applications - so if applications are limited, these national groups may well be effectively foreclosed from obtaining any channels in the window, as the choice of  a limited number of channels may end up forcing these applicants to pick channels where there are local applicants who will prevail in any point system analysis.

We will see how this window develops in the coming months. 

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The FCC yesterday released a Public Notice announcing that the new Form 340 - Application for Construction Permit for Noncommercial Station - has been approved and is now effective.  This is the revised form that allows noncommercial FM stations operating in the educational reserved band to file for city of license changes as minor changes, rather than having to wait for major change filing windows - which historically have been rare for noncommercial operators.  So, noncommercial FM licensees who have been contemplating city of license changes - or commercial licensees looking at noncommercial city of license changes to "back fill" for their own proposed city of license change applications - are now free to file. 

Commercial FM operators have been free to file city of license changes as minor changes since January 19.  Many such applications have been filed, and they are being quickly processed by the FCC. For details about the new city-of-license-change procedure, see our posts here and here. 

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