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Rural communities – do their radio stations need government protection? The FCC seems to think so, proposing a series of new rules and policies that restrict the ability of the owners of rural radio stations to move their stations into Urban areas. These rules would make it harder for entrepreneurs to do “move in” applications – taking stations from less populated areas and moving them to communities where they can serve larger populations in nearby cities. The Commission states that it is making these proposals to attempt to live up to its obligations under Section 307(b) of the Communications Act to ensure a “fair, efficient and equitable” distribution of radio services to the various states and communities in the country. While this may be a noble goal, one wonders if it is a solution in search of a problem. Are there really rural communities that have an unmet demand for missing radio services – and which can economically support such services? And do these proposals conflict with other goals of the new Commission, by effectively decreasing the opportunities for minorities and other new entrants from acquiring stations in major markets – by taking away move-in stations that are often the only stations that these broadcast station owners can afford in urban markets?  These are questions that the FCC will need to resolve as part of this proceeding. 

A Section 307(b) analysis is done by the FCC when it faces conflicting proposals, specifying different communities of license, for new AM stations or requests for new FM allotments. It is also required when an applicant proposes to move a station from one community to another, as the applicant must demonstrate that the move to the new community would better serve the objectives of Section 307(b) than would the current location of the station. In the past, the 307(b)  analysis looks at several factors, or “Priorities.” These include:

 

1. Service to white areas – when a proposed station will serve “white area,” an area where residents currently receive no predicted radio service (no “reception service” in FCC parlance). 
2. Service to gray areas – when a proposed station will serve areas that currently receive only a single reception service
3. Provision of a first local “transmission” service – where the proposed station will be the first station licensed to a particular community, and thus the first station that has the primary responsibility to serve the needs of that community
4. Other public interest factors – usually meaning which proposal will provide the service to the most people (with service to “underserved areas,” i.e. those that receive 5 or fewer “reception services,” getting somewhat more weight).

Service to white areas is the most important of the criteria, with the Second and Third Priorities having equal weight. Where there is a tie among the various criteria, the Fourth Priority is used to decide the case. The Commission’s concern is that service to Urban areas will, in most cases, win out in this analysis. Given the number of radio stations around the country, few proposals for new stations will propose coverage to white and gray areas. Applicants for new stations routinely propose to serve communities that have no other stations, even finding suburban communities without a local transmission service near to Urban centers so as to balance out any first transmission service that may be proposed outside of those areas. As a suburban station proposal that serves an Urban area will almost always, by definition, serve greater populations than a proposal for a more rural area, the proposals for an Urban station will almost always win in a 307(b) analysis under the Fourth Priority.

 

To combat this perceived loss of service to rural areas, the Commission has advanced a number of proposals and asked a number of questions. These include:

 

• Eliminating the Priority 4 preference in cases where there are mutually exclusive proposals for AM stations, meaning that more cases would end up tied under Priorities 1-3, and would have their cases decided by auction
• If the Priority 4 preference is used in AM cases, what exceptional circumstances would justify its use?
• A Proposal to consider all applications that cover more than 50% of an Urbanized area, or which could, by a change in facilities, could cover more than 50% of an Urbanized area,  as proposals for service to the Urbanized area as a whole – meaning that they would get no credit for a first local transmission service credit under Priority 3, and lose any 307(b) evaluation to a proposed first local transmission service in a rural area
• If an exception is made to adopt the rule set out above, when would such an exception apply to a community in or near an Urban area so that an applicant could show that the community needed a radio service? Would the “Tuck” factors that are currently being used to show the independence of a suburban community from the Urban area in which it is located have any continuing validity?
• Should there be a “service value index” developed to consider the weight to be accorded to proposals that involve third, forth and fifth reception services?
• A proposal to ban any move of a station’s city of license that would create white or gray areas
• Should policies be adopted that would prohibit the abandonment of service to areas getting less than 5 services?
• Should a new priority be adopted for stations proposing to serve Native American tribal lands?
• A proposal to prohibit the change in the facilities of a new AM station in such a way as to decrease service to underserved areas when it received a 307(b) preference for service to those areas
• Create a new review standard for auction applications that would reject applications that are technically flawed before the auction, rather than waiting to see if the applicant is the tentative selectee
• A proposal to cap the number of AM applications that can be filed in any Auction window - similar to the caps that have been adopted in many other FCC auction windows in other services

These and a number of other technical proposals are designed to make it harder to move stations into metropolitan areas.  But is this really an issue that the FCC needed to address?  How often are there rural communities that have real unmet needs when a station moves into a metropolitan area?  In most cases, if there is a real need for a station in the rural area, and there are the economics to support it, a new station can be located to fill that need - as it is much easier to put a new station in a rural area than in a metropolitan one.  The Commission cannot force stations to operate in rural areas - if there is no demand and no economic benefit in doing so, a station will go out of business or stop local programming.  If there is a need and an economic benefit to operating the station in the rural area, someone will do it.

The move-in stations that the FCC is attempting to ban are often those that promote diversity in the metropolitan markets.  Minority owners, noncommercial operators, and other new entrants have financing as their biggest obstacle to acquiring a station in a major market.  The few stations that do become available in major markets are often priced far too high for new entrants.  But move-in stations, with no cash flow or established business, are often priced so as to be attractive to new buyers (and as most big group owners are close to their ownership limits in many markets, and preserving cash in these economic times, there is often little competition for the purchase of such stations from the established market operators).  Cutting off the supply of move-in stations in the manner suggested by the Commission may well conflict with the Commission's stated goal of increasing minority ownership (see our post here on the Commission's recent attempts to promote minority ownership).

These issues will no doubt be addressed when the Commission receives comments on this proceeding - 60 days after it is published in the Federal Register.  Reply Comments are due 30 days after that.  Interested parties should be now considering their filings in this important new proceeding. 

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When we first started this blog over two years ago, one of our first posts to receive a comment (proving that at least someone was actually reading what we wrote) dealt with the FCC's proposal to allow AM stations to be rebroadcast on FM translators, a change of the Commission's long-standing prohibition on using FM translators for anything other than rebroadcasting FM stations.  While some commenters expected this proposal to be rushed through the FCC, we cautioned that the process might not be so fast, as there were parties who would be opposed to more uses of FM translators, including LPFM advocates who fear that more use of FM translators will preclude opportunities for new LPFM stations.  Well, it looks like the long wait for a decision to allow the use of translators for AM stations may soon be over, as the matter is listed as a possible topic for consideration at the FCC's September 25 meeting.  This is only a list of possible agenda items, and even were it to make it to the agenda, it can always be removed.  But even being listed as a possible item for consideration does seem to be a positive development indicating that the FCC's analysis of the matter has neared completion. 

As we have written, the FCC has already allowed some AM stations to begin broadcasts on FM translators pursuant to Special Temporary Authority.  But any STA is by its nature temporary, and can be revoked at any time.  AM broadcasters would welcome the certainty that any permanent decision will bring.  Of course, applications for new FM translators can only be filed during a window for such filings, and as the last translator window is still tied up in questions about how many applications by each party should be processed, AM licensees looking for FM translators must find existing translators (or construction permits from the last window) in order to take advantage of any rule change that the Commission may make.  Nevertheless, any change will immediately provide an important benefit to at least some AM broadcasters.

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The FCC's proposal to allow FM translators to rebroadcast the signals of AM stations as a fill-in service has been published in the Federal Register setting the dates for comment.  Comments in the proceeding will be due by January 7, 2008, with Reply Comments due on or before February 4, 2008.  As we wrote back in August (available here), the Commission's rule making proposes to allow FM translators to rebroadcast the signal of AM stations - and potentially to originate programming during those nighttime hours when a daytime-only AM station is not permitted to operate.  The proposal is to permit AM stations to operate FM translators in an area that is the lesser of a circle 25 miles from their transmitter site or within their 2 mv/m daytime service contour.  In proposing the changes in its rules, the Commission raised a number of questions on which it seeks public comment, including whether the proposal is in the public interest, whether there should be a cap on the number of translators an AM station can employ, and whether an extension beyond the AM station's 2 mv/m contour should be permitted.  Please see the FCC's Notice of Proposed Rule Making or our earlier blog entry for further information.  Comments can be filed with the Commission in paper or electronically via ECFS, and should refer to MB Docket No. 07-172.

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In a very unusual process - one that is probably unprecedented - the FCC last week announced that it is opening a window for parties to file applications for a new AM station to serve Rockland County, New York.  AM stations are traditionally made available for filing on an on-demand basis - when the FCC accepts applications for new stations, parties can file in any location in the country, specifying any city of license that they select, as long as the station that they propose will not create interference to existing stations.  This is unlike FM and TV, where there is a two step process - new channels are first allotted at specific locations based on a party's request, but that party gets no rights to the channel.  Instead, after the allotment has been made, anyone can file for in a specified window seeking a construction permit to build the new station.  In this window, the FCC has adopted a unique process for an AM stations, a process much more like that used in FM and TV.  The Commission had been asked by a party for permission to operate a new station in Rockland County.  Instead of simply permitting that party to build a station without competition, the FCC decided that a new station was necessary to provide emergency information about the nuclear power plant in the Rockland area, but determined that anyone could file for that channel.  Applications for the channel (1700 AM - on the expanded band, for which there have been no applications for almost 10 years since the first set of expressions of interest were taken), will be accepted from October 1 through October 5.

In order to give parties the ability to prepare applications, the FCC is imposing a freeze on the filing of minor change applications for AM stations throughout the country during the filing window.  Any minor change application that is filed during the window will be returned.  So if you are planning an application for a technical change to your AM station, you need to plan to avoid that filing window.

Applications that are submitted in the window not only have to specify a community of license in Rockland County, but also must propose a coverage area serving the majority of the Rockland County portions of the evacuation area around the nuclear plant.  Also, as a station operating in the expanded band, power is limited to 10 kw daytime and 1 kw nighttime.  The initial application will be an auction "short form," filed pursuant to instructions that can be found here.  If there are not differences between applicants that result in a decision under Section 307(b) of the Communications Act (evaluating the need for new radio service by the cities of license and coverage areas that will be served by the competing applicants), then the winning applicant will be selected by auction.

While certainly the Rockland County area has needs for local service, it would seem that this ad hoc AM window could set some dangerous precedents.  Unlike FM stations that can be spaced as little as 65 miles apart on the same channel, AM stations can preclude operations on the same channel for hundreds of miles.  By making a special decision to place a channel in Rockland County, the FCC may have precluded use of the channel in other communities around the country, without any evaluation of the needs for service in any of those other communities.  These communities could be coastal communities that need to get alerts about hurricanes or other coastal storms, or communities under dams or near chemical factories or train tracks where dangerous conditions can arise.  Will the Commission make channels available in each of these communities, or is there something so unique about this county that this special action is warranted?  We will see whether this is a one-of-a-kind action, or the start of a new process of allotting new radio stations to dangerous communities.

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We've recently written much about Internet radio, digital radio, digital television and all sorts of new technologies to electronically deliver media content.  But the grandfather of all electronic media - AM radio - still provides significant service.  A recent Petition for Rulemaking suggests certain technical changes to increase the service provided by these stations. In particular, the proposed changes would allow longer, higher powered operations by stations that are forced to reduce power or cease operating at local sunset.  A summary of the petition prepared by the engineer who drafted it can be found here.  It proposes that AM stations who are forced to reduce power at sunset be allowed to operate with higher Post-Sunset Authority.  It also suggests that the power allotted AM stations for Post Sunset and Pre-Sunrise Authority  be computed based on the location and time of sunset and sunrise at the location of the stations which the local station could interfere with, rather than requiring reduced power when during the hours of darkness at the location of the station that has to reduce power.  These changes are particularly important in the shorter daylight hours in the upcoming winter months.  The FCC recently gave public notice of the filing of this petition, and comments can be filed at the FCC until August 20, 2007.  The Commission will evaluate these comments and determine if a formal Notice of Proposed Rulemaking is warranted, at which time further public comment would be taken.

This proposal is but one of a host of current proposals pending for the AM service.  A few months ago, we wrote about a proposal for easing proofs of performance for AM stations, and before that, we wrote several posts, here and here, about the long-pending proposal filed by the NAB seeking to allow AM stations to use FM translators.  While initial comments have been filed on the Petitions for Rulemaking in these matters, neither of these proposals has yet reached a formal Notice of Proposed Rulemaking.  Much further advanced is the FCC's Order allowing AM stations to operate digitally at all hours - which, as we wrote in May, was released two months ago after being originally adopted at the FCC's March meeting.  However, the digital order does not become effective until 30 days after publication in the Federal Register which, for some unexplained reason, has not yet occurred.  And many AM stations are waiting for this publication so that they can begin full-time digital operations, and others wait for these other actions to help this oldest of electronic media outlets. 

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