The FCC today announced a brief extension, until the end of the day tomorrow, for the submission of annual regulatory fees.  No explanation for the extension is provided. So you now have until 11:59 Eastern time tomorrow to get those fees submitted without facing late fees and penalties.  The FCC Public Notice announcing the extension is here.  Our previous post on these fees, setting out the procedures for filing and other details, is available here.

The FCC today announced the public testing of a new TV White Spaces database system.  Starting on September 19, 2011, the FCC’s Office of Engineering and Technology will open a 45-day window to allow the public to try out the TV Band Database developed by one of the potential TV White Spaces database managers.  If approved, the Database will be used by white space devices to find available frequencies and avoid interfering with authorized services and registered facilities.  As we have written about previously (here) the Commission has adopted new rules to allow unlicensed devices to operate in the television spectrum, but such operations must protect incumbent users.  Accordingly, as part of those rules, the Commission has required the development and use of a database, which TV band devices will be required to access periodically in order to determine available frequencies and adjust their operation.  As we discussed here, the Commission has tentatively selected a number of parties to serve as database managers to develop and maintain such TV white spaces databases.  With this upcoming public trial, interested parties will now have a chance to test the database system developed by one such potential database manager.  As part of its authorization process, each interested database manager will be subject to a similar trial period of no less than 45 days.

During this trial period, interested parties are encouraged to test the database, including the basic functionality, including the following elements:  The channel availability calculator; cable headend and broadcast auxiliary receive site registration; and wireless microphone registration.  Starting on Sept. 19th, the TV band database can be accessed here.  The test site will provide a description of the trial, details on use of the system, and a link for feedback.  Following the conclusion of the test, the potential database manager will submit a report to the Commission, which will also be available for public review and comment.  At the end of the process, the FCC will determine whether this particular system complies with the rules and requirements and whether this database manager will be authorized to operate one of the official databases.  In addition to giving feedback to the database manager through the test site, parties can also submit comments directly to the FCC in the open docketed proceeding ET Docket No. 04-186 regarding the TV bands database systems through the FCC’s Electronic Comment Filing System.  A full copy of today’s Public Notice can be found here. 

In addition, perhaps coincidentally, today it was announced in the Federal Register that the rules involving the collection of information for these white spaces database have received OMB approval and those data collection rules are now in effect.  So once the first database managers gain FCC approval and bring their databases online, the government has the green light to instruct parties to populate the databases by registering their services and facilities for protection.  

Looking for opportunities for a new FM station?  The FCC has just released a list of new FM channels to be auctioned in the next FM auction, scheduled to begin on March 27, 2012, along with the proposed rules for that auction.  On the list of channels, the proposed minimum bid for each channel is also set out.  If the Commission follows the schedule used in prior auctions, we should expect that the deadline for the "short-form" application to participate in the auction (which basically contains information about the ownership of the applicant and a list of the channels in which they are interested) will be due in early 2012, likely sometime between January 1 and January 15, 2012.  The upfront payment of the necessary minimum bids would then likely be due around February 20, 2012 or so.  In another Notice of Proposed Rulemaking released late last week, the FCC also proposed to delete a number of FM channels that have gone unsold in previous auctions.

The construction permits for the new stations that will be available in the auction are spread all across the country.  Many are located in large western states including multiple channels in California, Colorado, Oklahoma and Texas, among other states.  But there are even opportunities in eastern states like Florida, Vermont and Virginia.  So, if you are interested in starting a station from scratch, look through this list of channels to see if there are opportunities for a construction permit for a new station in which you might be interested.  If you find something that might be interesting, you need to start your due diligence on each channel now, as the bidder is responsible for insuring that the channel for which they are bidding can be built and will serve the audience that the applicant expects.  If you win the auction and decide that you can’t really find a transmitter site, then you may well be on the hook for the full amount of the bid even if you don’t build the station.  And, if you are successful in the auction, you will have to have an available transmitter site to specify in your "long-form" application about a month after the end of the auction – an application which will specify all of the technical details of the new station.  So look at zoning issues, FAA considerations, coverage questions, and even whether technical details like the rural radio order limiting move-ins of FM stations from rural to more urban areas, may limit the potential economic value of the channel in which you are interested. 

Continue Reading Auction for New FM Stations Scheduled for March – Look for Filing Deadline Late This Year – FCC Also Proposes Deletion of Channels for Which No Bids Were Received

A fine issued to a low power FM station today makes one wonder "what were they thinking?"  The decision cites a situation where interference was reported by an FAA Control center.  That interference was tracked down by the FCC, though radio direction finding equipment, to an LPFM station. When the FCC inspectors arrived at the station to inspect the transmitter, the person on duty at the station, and then the "owner", both refused to allow the inspection and refused to turn off the transmitter – even when told that the interference was a threat to aircraft safety.  Both said that the FCC would have to wait until their engineer arrived, delaying the shut-down for about half an hour.  The inspection discovered a transmitter that was not certified by the FCC which, when finally shut down, remedied the interference to the FAA frequencies.  Based on these facts, the FCC fined the station $7000 for the transmitter that was not certified (the base amount for such a fine), and increased the fine by another $5000 because of the failure to cooperate with the FCC inspector, especially in light of the threat to health and safety from the interference to the FAA frequencies.

Beyond the obvious failure to use equipment that had been certified for broadcast use, this case highlights the duty of a broadcast licensee to cooperate with FCC inspectors when they visit a station.  FCC rules (Section 73.1225(a)) provides that stations must be available for inspection by FCC the FCC at any time that the station is in operation.  If there are issues that could cause a risk to health and safety, including the kind of spurious emissions from a transmitter that were interfering with the FAA frequencies, the station must shut down within 3 minutes if requested by the FCC (Section 73.1350(b)(2)).  These days, in some quarters, there is an unwarranted suspicion of government intrusion.  Perhaps that somehow explains the actions of the licensee here.  But that suspicion is totally unwarranted when you are dealing with an FCC inspection.  Broadcasters operate their stations because of a license issued by the FCC.  If you are going to hold a license, you need to be ready to deal with the requirements of that license.  Ignoring  attempts by the FCC to enforce those requirements is to ask for trouble. And, when you add in the issue of safety that was before the Commission in this case, a licensee is risking not only FCC penalties, but potentially civil ones too, should there have been any sort of accident caused by the interference that his station produced.  If the FCC comes knocking – pay attention to what they say, and cooperate with them!

When an FCC licensee goes bankrupt, the question of how to treat the interests of secured lenders is the one that, from time to time, comes up for debate. Two recent cases deal with this issue – one appearing to be an aberration that would make lending to a broadcast licensee difficult if not impossible, while the second providing a more lender-friendly interpretation after a detailed analysis of the history of FCC and court precedent on this issue, affirming what most in the broadcast community have assumed, for most of the last two decades, is settled law. We wrote last week about how the FCC’s prohibition on taking a security interest in an FCC license can make enforcement of liens difficult in a normal debtor-creditor context. Today, we’ll look at how the FCC’s prohibition on taking liens in a license has significance in the bankruptcy context.

Due to the FCC’s prohibition on taking a security interest in an FCC license, if the FCC reviews any security agreement with a licensee company, it will insist that lenders need to make clear in such agreement that the lender has no security interest directly in the FCC license.  In most agreements, lenders now have that language, with a caveat that such an interest is renounced only for so long as FCC policy remains in its current state – though, as set forth below, that policy does not look like it will change anytime soon. As the FCC license is usually the most valuable asset of a licensee, to preserve its ability to get at the value of that license in the event of a default on the loan, even though it cannot take a lien in the license itself, the lender will include a provision in its security agreement that gives it a secured position in the proceeds from any sale of that license and in all other intangible assets of the licensee. Having a secured interest is important to lenders as it gives the lender priority over unsecured creditors in the event of a bankruptcy. Thus, if the lender goes into bankruptcy and there are insufficient funds to pay all creditors (as is usually the case), the secured party will get first crack at the assets that are available to pay debts.  The question of whether such priority should attach to the proceeds from the sale of an FCC license, when that sale may not occur until after the bankruptcy has been declared, was the heart of the controversy in the recent cases.

Continue Reading Securing a Loan to a Broadcaster, Part 2 – Bankruptcy Cases and Liens on Licenses

The FCC today made it easier to move an FM translator from one location to another, but at the same time adopted new policies that seemingly restrict how far a translator can be moved.  Today’s decision  uses a waiver process to relax the rules so as to permit a move of a translator a greater distance in a single application, but the decision also labels multi-hop moves as an abuse of the Commission’s processes.  As translators have become more important to broadcasters as a way to bring AM and HD-2 signals to a wider audience, this decision will have an immediate and significant impact on many broadcasters, once it becomes clear exactly what are the parameters set by the Commission.

Under Section 74.1233(a) of the FCC rules, a minor change for an FM translator requires that the facilities proposed in an application have a 60 dbu contour that overlaps with the translator’s current licensed 60 dbu.  In effect, this is saying that part of the protected service area of the proposed new facility must overlap with the current protected service area served by the station from its licensed facility.  As major change applications can only be filed during designated translator windows (and there has been no FM translator major change window since 2003), to make any move in a translator, it must be a minor change.  The decision today allows, through a waiver of the rules, a minor change application to be used if the licensed facilities preclude construction of the new facilities, i.e. if the interfering contour of the licensed facilities of the translator overlap with the protected contour specified by the application for new facilities.  A the interfering contour goes much further than the protected contour, this allows the FCC to approve in a single application a move of a greater distance than would be allowed under a strict reading of the rule.  However, there were significant conditions imposed on the application of this new waiver policy that may preclude longer moves that have been common in the last few years. 

Continue Reading New Policy on FM Translator Moves – Bigger Moves Permitted In One Hop, But Multiple Hops are an Abuse of FCC Processes

Broadcasters, along with virtually every other business, are supposed to have a bulletin board someplace in their place of business, accessible to employees, where all sorts of notices, many required by Federal law, are posted.  Sometimes the posting requirement has been expanded to include posting on a company intranet, if that is a common way of communicating with employees.  As set out in detail in an Advisory from our Davis Wright Tremaine Labor and Employment Group, the National Labor Relations Board (NLRB) has just gotten into the act, requiring that all employers subject to the NLRA (the National Labor Relations Act), by November 14 of this year, post a notice alerting employees about their rights under the NLRA.  I’m told that included in NLRA coverage is virtually every company but for those with less than $100,000 in revenue or those who are public-sector employers.  The requirement covers employers who are unionized at the present time, as well as those that are not.  So any way that you look at it, most broadcasters will have the obligation to post this notice.  For more information about this requirement and the controversy that surrounds it, read our firm’s Advisory here.  Broadcasters, be ready to comply! 

The FCC just issued a Report to Congress concerning the access of television viewers to in-state television stations.  This report was requested by Congress as part of STELA (the Satellite Television Extension and Localism Act), which extended the compulsory license for direct to home satellite television operators (DISH and DirecTV) – a license which gives them copyright clearances to retransmit all the programming transmitted by the broadcast television stations that they make available as part of their service packages.  Congress also requested a Report from the Copyright Office on the need for the compulsory license – a report also issued this week, which we will write about in another article.  The issue of access to in-state television stations has been a controversial issue, as several Congressmen have sought (and in a few cases actually received) legislative authority for cable providers to carry out-of-market television stations on cable systems serving areas in one state that are part of television markets where the television stations come from a different state.  The report refers to these areas as "orphan counties."  Once legislative authority was granted in one state, many other bills popped up in Congress trying for the same relief in their state – causing concern that the existing television markets (or Designated Market Areas or "DMAs", designated by the Nielsen Company) might be undermined.  To see what impact such changes would have, Congress requested this report from the FCC.

The report for the most part does not make recommendations, but instead simply provides information about the service provided to US television viewers, the potential options for bringing an in-state service to all viewers, and the issues that such proposals would raise. Perhaps the most interesting fact revealed by the report is that 99.98% of all US television households already have access to an in-state television station, either over-the-air or through a Multichannel Video Programming Distributor (e.g. cable or satellite TV system), so this is a very isolated issue.  However,when the FCC sought comments on the issues discussed in the report, a number of individuals in particular DMAs responded about situations where they could not get access to in-state television stations and asked that something be done.  The report assesses the implications of any action that could be taken.

Continue Reading FCC Issues Report to Congress on Access to In-State Television Programming

The Commission’s recent Order establishing the rules and time line for low power television stations to convert to DTV has now been published in the Federal Register, meaning that most of the new rules regarding the conversion of low power television stations to digital television are now in effect.  As we wrote about extensively here,on July 15, 2011, the FCC adopted a Report and Order regarding the transition of low power television stations (LPTV), TV translator, and Class A low power stations to digital.  As set forth in that Order, September 1, 2015 will be the hard date for the conversion of all remaining analog LPTV stations to digital. The Order adopts the specific procedures, rules, and timing of the digital conversion for those stations, and with Friday’s publication in the Federal Register, those rules are now in effect, with two exceptions.  The extension of the "ancillary and supplementary" rules to LPTV permittees operating pursuant to an STA is still awaiting OMB approval, as is the requirement that stations that have not yet taken steps to convert to digital must notify the FCC of their digital transition plans.  This second requirement will force stations to consider their digital future and share their transition plans with the Commission.  Once the OMB approves the collection of information inherent in that requirement, that part of the new rules will go into effect, and the FCC will announce the timing and requirements by a further public notice.

The FCC’s DTV LPTV Order also established December 31, 2011 as the deadline for all LPTV and TV translator stations operating on out-of-core channels — that is Channels 52 to 69 — to cease operation. Any station that operates outside the core that does not already have a construction permit for a core band operation must file for a construction permit for the core band by September 1, 2011. Given that today is August 30th, hopefully out-of-core stations have their ducks in a row and are already on file, or preparing to file displacement applications to move into the core.  The FCC states that there will be no hardship extensions of the December 31 deadline – meaning that such stations must terminate operations no later than December 31 of this year no matter what. 

Changing the city of license of a broadcast station was made more difficult by the FCC’s rural radio order.  That order, about which we wrote here, imposed substantial obstacles on broadcasters attempting to move their stations from rural areas into urbanized areas – making such moves difficult if not impossible in many cases.  However, in two recent cases, the FCC clarified that decision so as to permit some changes to be made without the substantial new showings. Specifically, these cases permit the move of stations from one city within a market to another in the same market, or from one urbanized area to another, without doing the complex showing that might otherwise be required.

The rural radio decision had changed the an FCC policy that had favored, in allocations decisions, a first transmission service (i.e. the first station licensed to a community) to a large community within an urbanized area over a service to a less populous community, even if that community was outside an urbanized area.  After the rural radio decision, there was a presumption that service to any community within an urbanized area was service to the entire urbanized area – so a first service to a suburban community, instead of being treated as the first transmission service to that community, was treated as if it were the 20th (or 30th or 40th,depending on the number of stations in the entire market) service to the urban area.  Thus, the proposal would routinely not be entitled to a preference over a new service to a community outside of the urban area in the absence of a complex and convincing "Tuck showing" that analyzed a number of factors to show that the suburban community was independent of the central city in the urban area and that the proposed station would really meet the needs of this independent community, not of the whole urbanized area.  In one decision released last month, the FCC made clear that a move from one city within an urbanized are to another within the same urbanized area did not need this Tuck showing, as both were considered part of the same community for allocations purposes.  In a variation on that theme in a case released last week, the FCC’s staff held that a move of a station from one urban area to an adjacent urban area did not require the showing.  Presumably this was because each urban area would have dozens of services, so that loss of one service in one market and the gain in another would be inconsequential.  Seemingly simple decisions, but ones that can save applicants significant time and trouble when filing city of license change applications for stations that are already located within urbanized areas.