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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. 

These specific technical parameters are necessary so that the Commission can judge whether or not an application is mutually exclusive with other applications filed during the window. In other words, the FCC will review an application to determine if the technical facilities that it proposes can be granted immediately, or if the application and other applications filed during the same window cannot all be granted without creating prohibited interference. If an application is mutually exclusive with another application, and the applicants cannot submit to the FCC a settlement agreement providing a technical solution to resolve the mutual exclusivity, the Commission will review the applications using a system it has adopted to determine which application should be granted

The first level of review to determine which mutually exclusive application should be granted is what the Commission calls a “Fair Distribution Analysis” of the coverage of the proposed stations as specified in the applications submitted during the window. 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. The Public Notice makes clear that the coverage of the proposed stations, and the other services that exist within the service area, will be assessed at the close of the upcoming filing window. In preparing an analysis of the other noncommercial stations that currently provide service to a specific area, an applicant should take into account both existing stations and construction permits for new noncommercial stations that have not yet commenced operations.

If there is no preference under the Fair Distribution Analysis, then the FCC will look to its “point system” to determine who will receive a construction permit to build the new station. The point system looks at several factors. First, the Commission will look to determine if the applicant is an established local organization – meaning that for two years its headquarters or campus or the residence of 75% of its Board of Directors, is within 25 miles of the reference coordinates of the city of license of the proposed station. Local applicants receive 3 points. Second, the FCC looks to see if the proposal is for a station that will be part of a statewide network operated by an entity with multiple educational institutions throughout a state (the specifics set out in the rules). If an application is part of such a statewide network, then 2 points will be awarded to the applicant.  Third, applicants that have no other local media interests will be given 2 points in the Commission's diversity analysis (though an applicant cannot get credit both for diversity and for being a state-wide network). A media interest for purposes of this analysis is an interest in a full power radio or television station, an FM radio translator (not a fill-in translator) or a Class A TV station. Finally, points will be given to the applicant with the largest coverage area - one point if an applicant covers 10% more area and population than its competitor, two points if it covers 25% more area and population.  If applicants are tied after the points analysis, tiebreakers looking at the applicant's total number of media interests will be used. 

Each element of the point system is evaluated as of the date for the close of the filing window. The Public Notice makes clear that, after that date, the comparative position of the applicant will not get better, but can get worse. In other words, the post-filing receipt of another broadcast interest will count against the applicant, but the divestiture of an interest will not improve the applicant’s position. However, the FCC indicates that it may entertain waivers of this requirement, and allow applicants to keep non fill-in translators (i.e. translators that extend the converge area of a noncommercial station) if the applicant proposes a station that will serve the same area as the translator and promises to turn in the license upon grant of a full power station sought in this window.  The Notice makes the same statement with respect to LPFM (low power FM) stations, although the rules do not specifically state that an LPFM counts against an applicant in a diversity analysis.  In any event, the LPFM would have to be divested before a full-power station commences operations, as an LPFM licensee cannot own a full power station.

By a separate Public Notice, the FCC also asks for comments on whether it should limit the number of applications that one party can file in the noncommercial window. The Commission tentatively concludes that, to avoid huge numbers of application that could clog its processing ability and could lead to “daisy chains” of competing applicants that could take years to process (a daisy chain being a situation where applicant A prevents that grant of applicant B, which in turn blocks the grant of applicant C, which in turn blocks the grant of applicant D. Even though A and D could be both be granted, because of the intervening applications, all four must be comparatively considered. These daisy chains, in other services, have involved hundreds of applicants stretching over many states). The ten station limit would not include major change applications, nor would it include those applications that were filed under old noncommercial processing rules (some over 10 years old) that could not be processed until the Commission opened this window (such applicants have to file amendments to their old applications to request processing in the new window, and to submit their old applications in electronic form).  Comments on this proposed limit will be due 15 days after the proposal is published in the Federal Register.

With so many considerations to weigh, applicants that have not yet started their consideration of filing noncommercial applications during the upcoming window need to do so now, as there is much to accomplish before the filing deadline. Engineering counsel and legal assistance should be sought immediately because as the window approaches, lawyers and engineers may well not have time to assist last-minute potential applicants finish the necessary preparations for filing.  So act now - as who knows when the next filing window will open.