Last week, the FCC released a Public Notice asking for comments on whether it should begin a Section 403 investigation into the use of Arbitron’s Portable People Meter ("PPM").  A coalition of broadcast groups, the "PPM Coalition," principally comprised of broadcasters providing service to minority communities, sought the investigation as a way of delaying the implementation of the PPM technology next month in a number of large broadcast markets.  In their request, which can be found on the Minority Media and Telecommunications Council website, the PPM Coalition argues that the investigation is justified based on the Commission’s objectives (and various administrative and legislative mandates) to improve minority ownership in broadcasting.  The PPM Coalition contends that methodology problems in PPM implementation result in artificially low ratings for minority owned stations.  These parties argue that, if the system is implemented, a number of minority-programmed stations will disappear.  Arbitron has argued that the Commission does not have the jurisdiction to regulate ratings services (who are obviously not FCC licensees) or the methodology that they use.  Comments on the request for an investigatory hearing are due on September 24, and replies on October 6 (two days before the PPM system is to be implemented in eight markets).

Section 403 of the Communications Act gives the Federal Communications Commission the power to conduct investigations of any complaint of any violation of its rules or of provisions of the Communications Act, or to explore any other matter relating to the provisions of the Act.  Such investigations are often conducted before an Administrative Law Judge, but can be conducted before the Commission itself, and allow the FCC to use full discovery techniques (e.g. document production requests and depositions) and to conduct an evidenciary hearing.  In the past, the process was used much more frequently.  It has been used both to investigate specific complaints of possible misconduct by individual licensees, and to conduct broader inquiries into business practices in a regulated industry to decide if FCC regulation was necessary.  For instance, in the 1960s, there was an investigation into network practices to determine if those practices required FCC action to regulate the network-affiliate relationship.  In recent years, the power has been rarely used, and when used has tended to relate to specific allegations of misconduct to determine if the FCC should bring some sort of enforcement action against a regulated entity.

The parties to the PPM Coalition have been pushing the FCC for many months to do something about the implementation of the PPM, while Arbitron has been opposing such efforts as outside the FCC’s jurisdiction.  Thus, one of the real questions in reviewing the request for the Section 403 inquiry is to determine if the hearing is related to the purposes and provisions of the Communications Act.  The proponents of the hearing have suggested that the interests of the Commission in promoting minority ownership (which have been reflected in various legislative authorizations and budget bills for the FCC, being specifically cited as  one of the reasons that the FCC’s 2003 Ownership Rule relaxations were thrown out by the Third Circuit in the Prometheus case because the FCC had not provided sufficient consideration of this issue) justify the inquiry.  Courts have, in recent years, been very careful to evaluate whether FCC actions were within the FCC’s power, and that question is now being considered in other FCC proceedings (e.g. in the localism proceeding where some have questioned the FCC’s no jurisdiction to take certain actions including the regulation of music selection, in the recent case on Comcast’s alleged discrimination between types of Internet traffic, and in the recent proceeding to consider requiring XM Sirius receivers to pick up HD radio).  Those opposing this investigation will no doubt argue that the Commission is not authorized to regulate the contractual relationship between Arbitron and broadcast licensees.  We will need to watch how the parties present their arguments, and what the FCC decides to do once those arguments have been presented.