After the election, it was clear that we would be seeing a much different FCC in 2017. Such transitions typically take time, as a president’s nomination of new candidates to fill the Chairman’s or commissioners’ seats, along with the delay typically associated with obtaining Senate confirmation, means that a new fully-staffed FCC won’t typically be ready for action until May or June following the January change in administrations. By that time, the actions of the prior FCC have often become final and unappealable, or at least the regulated industries have already begun to adapt their operations to comply with those rules, making subsequent changes more complicated.
As we previously reported, the FCC last year adopted a number of changes to its rules and policies aimed at revitalizing the AM radio service, which for many years has lived in the shadow of the more robust FM service. One of these changes was to expand the ability of AM broadcasters to use FM translators to rebroadcast their AM signals, thereby improving coverage, particularly at night. To accomplish this, the FCC gave each AM station the right to file one, and only one, application to move an FM translator up to 250 miles and change the translator’s frequency, provided that it is used to rebroadcast the designated AM station for the next four years. If that application does not make it through the FCC process for any reason, the broadcaster is barred from filing another.
The FCC gave smaller Class C and D AM stations first crack at its new policy by opening a window on January 29, 2016, during which Class C and D licensees could file modification applications on a first-come, first-served basis. In other words, if you filed your application on January 29, you trumped anyone who filed a conflicting application after that date. If parties file mutually exclusive applications on the same day, the applicants need to resolve the mutual exclusivity through settlement negotiations and/or technical amendments (e.g., one or both parties move to a different frequency).
The first window, limited to Class C and D AM stations, closes on July 28, 2016. On the next day, July 29, a second window opens during which Class A and B AM stations (as well as Class C and D stations that did not file in the first window) may file modification applications to relocate FM translators to be used for AM station rebroadcasts.
AM stations that have not yet filed should keep in mind that:
- If you have a Class A or B AM station and plan to relocate an FM translator for AM rebroadcast purposes, you should get your modification application filed on July 29 in order to give yourself the maximum protection against being bumped by an earlier-filed mutually exclusive application. If you are planning to buy a translator but haven’t actually acquired it yet, there are still ways to get the modification application on file before closing the acquisition.
- If you have a Class C or D AM station and plan to relocate an FM translator for rebroadcasts (and haven’t filed a modification application yet), file by July 28. While Class C and D stations will not be precluded from filing in the second window, July 29 is sure to bring a wave of new modification applications that will change the translator landscape significantly.
But even having these deadlines circled on your calendar won’t help if your modification application is dismissed. When it comes to modification applications filed in either of these windows, the FCC has made clear that its policy is one and done. A dismissed application means that you not only lose your place in the processing line, but cannot file again in the windows. Such a dismissal could occur due not only to deficiencies in the application itself, but also if your deal to acquire the translator falls through. AM broadcasters buying a translator are therefore well advised to pay careful attention to the due diligence process, the closing conditions in the acquisition agreement, the compliance of the proposed move with FCC technical rules, and their financing for the acquisition. If a deal falls through, the reason is irrelevant. You’ll be sitting out the filing window watching your competitors get their FM translators.
The FCC today announced the application procedures to be used for broadcast stations wishing to participate in the spectrum auction, as well as application procedures for those wishing to purchase that spectrum in the forward auction. Of particular interest to broadcast stations wishing to participate in the reverse auction is the announcement that the window for filing those auction applications will run from 12 noon Eastern Time on December 1, 2015 to 6pm Eastern Time on December 18, 2015.
As we reported here, the FCC released its proposals regarding 2015 regulatory fees last May. As August turned into September, licensees were getting anxious as to when the FCC would get around to issuing an order setting the fees and opening the “Fee Filer” online payment system. That happened today with the release of this Public Notice and this Report and Order and Further Notice of Proposed Rulemaking (note that for the reasons discussed below, these FCC website links will not function correctly until the FCC’s website resumes normal operation on September 8th).
The FCC has released a Notice of Proposed Rulemaking, Report and Order, and Order (really, that’s the title of it) (“NPRM/R&O”) proposing regulatory fees for Fiscal Year 2015 and making other changes to its regulatory fee structure. Comments on the FCC’s proposals are due June 22, 2015, with reply comments due July 6, 2015.
For the fourth consecutive year, the FCC proposed $339,844,000 in regulatory fee payments. The proposed fee tables are attached to the NPRM/R&O as Appendix C and can be used to estimate your likely 2015 regulatory fee burden. Note that effective this year, regulatory fees on Broadcast Auxiliary licenses and Satellite TV construction permits have been eliminated from the fee schedule.
In the NPRM, the FCC requested comment on whether the apportionment of regulatory fees between TV and radio broadcasters should be changed, noting that it expects to collect approximately $28.4 million from radio broadcasters and $23.6 million from TV broadcasters, but that commercial radio stations outnumber commercial TV stations by 10,226 to 4,754. Because the FCC generally allocates regulatory fees based upon the number of FCC employees employed in regulating a particular service, the FCC appears to be suggesting that radio broadcasters may have to shoulder a larger share of the broadcast regulatory fee burden
The FCC also noted that while TV regulatory fees are based upon the size of the DMA in which the TV station is located, radio fees are based upon the population actually served and the class of the station. The NPRM seeks comment on whether changes should be made to this structure, but indicated that any changes made would be unlikely to impact fees this year.
In addition, the FCC requested comment on a petition filed by the Puerto Rico Broadcasters Association requesting regulatory fee relief for broadcasters in Puerto Rico due to economic hardships and population declines specific to Puerto Rico.
Finally, the FCC adopted some changes to its regulatory fee structure. The most significant of these is a new regulatory fee, proposed to be set at $0.12 per subscriber annually, imposed upon direct broadcast satellite (“DBS”) providers (i.e., DISH and DIRECTV). The FCC pointed out that while DBS providers historically have paid regulatory fees with respect to regulation by the International Bureau, they have not paid fees with respect to the Media Bureau which also regulates the service. The payment of fees by DBS providers to recover costs associated with Media Bureau regulation of DBS was teed up in a notice of proposed rulemaking last year and was adopted in the NPRM/R&O.
After comments and reply comments are received, the FCC will release an order setting forth the final 2015 regulatory fee amounts. This order is usually released in August but sometimes isn’t available until September. The order will also establish the precise filing window for submitting regulatory fees, which is typically in the latter part of September.
Those wishing to oppose the proposed regulatory fee changes will need to file their comments and reply comments with the FCC by the respective June 22, 2015 and July 6, 2015 deadlines.
The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ public inspection files by April 10, 2015, reflecting information for the months of January, February and March 2015.
Content of the Quarterly List
The FCC requires each broadcast station to air a reasonable amount of programming responsive to significant community needs, issues, and problems as determined by the station. The FCC gives each station the discretion to determine which issues facing the community served by the station are the most significant and how best to respond to them in the station’s overall programming.
To demonstrate a station’s compliance with this public interest obligation, the FCC requires the station to maintain and place in the public inspection file a Quarterly List reflecting the “station’s most significant programming treatment of community issues during the preceding three month period.” By its use of the term “most significant,” the FCC has noted that stations are not required to list all responsive programming, but only that programming which provided the most significant treatment of the issues identified.
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In a post today on the FCC’s Blog, Diane Cornell, Special Counsel to Chairman Wheeler, described the FCC’s efforts to reduce backlogs of applications, complaints, and other proceedings pending at the FCC. The post announces that the Consumer and Governmental Affairs Bureau has closed 760 docketed proceedings, and is on track to close another 750 by the end of the year. The post also indicates that the FCC’s Wireless Bureau resolved 2046 applications older than six months, reducing the backlog of applications by 26%.
Of particular interest to broadcasters, however, is the news that the “Enforcement Bureau has largely completed its review of pending complaints, clearing the way for the Media Bureau to grant almost 700 license renewals this week.” Many of these pending complaints were presumably based on indecency claims, which have in recent years created such a backlog of license renewal applications (particularly for TV stations) that it has not been unusual for a station to have multiple license renewal applications pending at the FCC, even though such applications are only filed every eight years.
For those unable to buy or sell a broadcast station, or to refinance its debt, because that station’s license renewal application was hung up at the FCC, this will be welcome news. Just two years ago, the number of indecency complaints pending at the FCC exceeded 1,500,000, dropping to around 500,000 in April of 2013, when the FCC proposed to “focus its indecency enforcement resources on egregious cases and to reduce the backlog of pending broadcast indecency complaints.”
While indecency and other complaints will certainly continue to arrive at the FCC in large numbers given the ease of filing them in the Internet age, today’s news brings hope that most of them will be addressed quickly, and that long-pending license renewal applications will become a rarity at the FCC. That would be welcome news for broadcasters, who frequently found that the application delays caused by such complaints were far worse than any fine the FCC might levy. Such delays were particularly galling in the many cases where the focus of the complaint was content wildly outside the FCC’s definition of indecency (“language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities“).
For a number of years, complaints that merely used the word “indecent” were put in the “indecency complaint” stack, resulting in multi-year holds on that station’s FCC applications. I once worked on a case where a politician who had been criticized in a TV’s newscast for his performance in office filed an FCC complaint stating that the station’s comments about him were “indecent”. You guessed it; this exercise of a station’s First Amendment right to criticize a public official resulted in a hold being placed on the station’s FCC applications for years while the complaint sat at the FCC.
The FCC’s efforts to eliminate these delays, and the inordinate leverage such delays gave to even the most frivolous complaints, are an excellent example of the FCC staff working to accomplish the Commission’s public interest mandate. While broadcasters may feel they have not have had many reasons to cheer the FCC in recent years, today’s announcement certainly merits some applause.
With the heat of Summer now upon us, the FCC is gearing up for its annual regulatory fee filing window, which usually occurs in mid-September. Like other federal agencies, the FCC must raise funds to pay for its operations (“to recover the costs of… enforcement activities, policy and rulemaking activities, user information services, and international activities.”). For Fiscal Year 2014, Congress has, for the third year in a row, mandated that the FCC collect $339,844,000.00 from its regulatees.
Accordingly, the FCC is now tasked with determining how to meet the Congressional mandate. At its most basic level, the FCC employs a formula that breaks down the cost of its employees by “core” bureaus, taking into consideration which employees are considered “direct” (working for one of the four core bureaus), or “indirect” (working for other divisions, including but not limited to, the Enforcement Bureau and the Chairman’s and Commissioners’ offices). The FCC factors in the number of regulatees serviced by each division, and then determines how much each regulatee is obligated to pay so that the FCC can collect the $339M total.
In its quest to meet the annual congressional mandate, the FCC evaluates and, for various reasons, tweaks the definitions or qualifications of its regulatee categories to, most often, increase certain regulatory fee obligations. FY 2014 is just such an occasion. In FY 2013, the FCC, which historically has imposed drastically different fees for VHF and UHF television licensees, decided that, effective this year, FY 2014, VHF and UHF stations would be required to pay the same regulatory fees. In addition, a new class of contributing regulatees, providers of Internet Protocol TV (“IPTV”), was established and is now subject to the same regulatory fees levied upon cable television providers. Prior to FY 2014, IPTV providers were not subject to regulatory fees.
The FCC’s proposals for FY 2014 regulatory fees can be found in its Order and Second NPRM (“Order”). In that Order, the FCC proposes the following FY 2014 commercial VHF/UHF digital TV regulatory fees:
- Markets 1-10 – $44,875
- Markets 11-25 – $42,300
- Markets 26-50 – $27,100
- Markets 51-100 – $15,675
- Remaining Markets – $4,775
- Construction Permits – $4,775
Other proposed TV regulatory fees include:
- Satellite Television Stations (All Markets) – $1,550
- Construction Permits for Satellite Television Stations – $1,325
- Low Power TV, Class A TV, TV Translators & Boosters – $410
- Broadcast Auxiliaries – $10
- Earth Stations – $245
The proposed radio fees depend on both the class of station and size of population served. For AM Class A stations:
- With a population less than or equal to 25,000 – $775
- With a population from 25,001-75,000 – $1,550
- With a population from 75,001-150,000 – $2,325
- With a population from 150,001-500,000 – $3,475
- With a population from 500,001-1,200,000 – $5,025
- With a population from 1,200,001-3,000,000 – $7,750
- With a population greater than 3,000,000 – $9,300
For AM Class B stations:
- With a population less than or equal to 25,000 – $645
- With a population from 25,001-75,000 – $1,300
- With a population from 75,001-150,000 – $1,625
- With a population from 150,001-500,000 – $2,750
- With a population from 500,001-1,200,000 – $4,225
- With a population from 1,200,001-3,000,000 – $6,500
- With a population greater than 3,000,000 – $7,800
For AM Class C stations:
- With a population less than or equal to 25,000 – $590
- With a population from 25,001-75,000 – $900
- With a population from 75,001-150,000 – $1,200
- With a population from 150,001-500,000 – $1,800
- With a population from 500,001-1,200,000 – $3,000
- With a population from 1,200,001-3,000,000 – $4,500
- With a population greater than 3,000,000 – $5,700
For AM Class D stations:
- With a population less than or equal to 25,000 – $670
- With a population from 25,001-75,000 – $1,000
- With a population from 75,001-150,000 – $1,675
- With a population from 150,001-500,000 – $2,025
- With a population from 500,001-1,200,000 – $3,375
- With a population from 1,200,001-3,000,000 – $5,400
- With a population greater than 3,000,000 – $6,750
For FM Classes A, B1 &C3 stations:
- With a population less than or equal to 25,000 – $750
- With a population from 25,001-75,000 – $1,500
- With a population from 75,001-150,000 – $2,050
- With a population from 150,001-500,000 – $3,175
- With a population from 500,001-1,200,000 – $5,050
- With a population from 1,200,001-3,000,000 – $8,250
- With a population greater than 3,000,000 – $10,500
For FM Classes B, C, C0, C1 & C2 stations:
- With a population less than or equal to 25,000 – $925
- With a population from 25,001-75,000 – $1,625
- With a population from 75,001-150,000 – $3,000
- With a population from 150,001-500,000 – $3,925
- With a population from 500,001-1,200,000 – $5,775
- With a population from 1,200,001-3,000,000 – $9,250
- With a population greater than 3,000,000 – $12,025
In addition to seeking comment on the proposed fee amounts, the Order seeks comment on proposed changes to the FCC’s basic fee formula (i.e., changes in how it determines the allocation of direct and indirect employees and thus establishes its categorical fees), and on the creation of new, and the combination of existing, fee categories. The Order also seeks comment on previously proposed core bureau allocations, the FCC’s intention to levy regulatory fees on AM Expanded Band Radio Station licensees (which have historically been exempt from regulatory fees), and whether the FCC should implement a cap on 2014 fee increases for each category of regulatee at, for example, 7.5% or 10% above last year’s fees. Comments are due by July 7, 2014 and Reply Comments are due by July 14, 2014.
Surprise, surprise, the FCC has instituted yet another application filing freeze! The FCC effectively said “enough is enough” and stopped accepting applications for LPTV channel displacements and new digital replacement translators.
Yesterday, the FCC released a Public Notice indicating that, effective June 11, 2014, the Media Bureau would cease to accept applications seeking new digital replacement translator stations and LPTV, TV translator, and Class A TV channel displacements. The FCC did provide that in certain “rare cases”, a waiver of the freeze may be sought on a case-by-case basis, and that the Media Bureau will continue to process minor change, digital flash cut, and digital companion channel applications filed by existing LPTV and TV translator stations.
According to industry sources, there have been grumblings at the FCC that low power television broadcasters have been using the digital replacement translator and LPTV displacement processes to better position themselves from the fallout of the upcoming spectrum auction and subsequent channel repacking. That appears to be confirmed by the Public Notice, as it states that the freeze is necessary to “to protect the opportunity for stations displaced by the repacking of the television bands to obtain a new channel from the limited number of channels likely to be available for application after repacking….” Setting aside the freeze itself for a moment, it seems clear from this statement that the FCC has no illusions that there will be room in the repacked spectrum for all existing low power television stations.
While there have been myriad FCC application freezes over the years, they have been occurring with increasing frequency. From the radio perspective, absent a waiver, extraordinary circumstances, or an FCC-announced “filing window”, all opportunities to seek a new radio license (full-power, low power FM or translator) have been quashed for some time now.
The first notable television freeze occurred in 1948 and lasted four years. The FCC instituted a freeze on all new analog television stations applications in 1996. In furtherance of the transition to digital television, the FCC instituted a freeze on changes to television channel allotments which lasted from 2004 to 2008. In 2010, the FCC froze LPTV and TV translator applications for major changes and new stations; a freeze which remains in effect today.
Yet another freeze on TV channel changes was imposed in 2011 in order to, among other things, “consider methodologies for repacking television channels to increase the efficiency of channel use.” And as Scott Flick wrote here last year, still another television application freeze on full power and Class A modifications was launched on April 5, 2013. That freeze remains in effect and effectively cuts off all opportunities for existing full-power or Class A television stations to expand their signal contours to increase service to the public. The volume of application freezes has grown to such an extent that it is difficult to keep track of them all.
In terms of reasoning, yesterday’s Public Notice indicated that since the DTV transition occurred five years ago, the impact of the instant freeze would be “minimal” since transmission and contour issues should have been addressed as part of, or generally following, that transition. The Notice proceeded to say that LPTV displacement and digital replacement applications were necessary after the DTV transition, and up to the FCC’s April 2013 filing freeze, for purposes of resolving “technical problems” associated with the build-out of full-power DTV stations, but that since there have been no “changes” to those service areas because of the last freeze, there should be no need for LPTV channel displacements or digital replacement translators.
Left out in the cold by these cascading freezes are broadcast equipment manufacturers and tower crews. As previously noted by numerous broadcasters and the NAB, the FCC’s frosty view of just about every form of station modification is effectively driving out of business the very vendors and equipment installers that are critical to implementing the FCC’s planned channel repacking after the spectrum auction. As we learned during the DTV transition, the size and number of vendors and qualified installers of transmission and tower equipment is very limited and, given the skills required, can’t be increased quickly. Driving these businesses to shrink for lack of modification projects in their now-frozen pipelines threatens to also leave the channel repacking out in the cold.
Following a firestorm of media attention regarding the FCC’s efforts to examine newsroom decision making as part of a Critical Information Needs (CIN) Study, the FCC had announced a week ago that it would modify the study to eliminate the questions directed at media entities regarding their newsroom decisions.
That announcement, however, did not calm the furor, with calls from Congress for hearings and legislation to prevent the FCC from proceeding with the study. Late today, the FCC sought to put an end to this certainly unwelcome attention. It released a terse statement, the entirety of which is: “The FCC will not move forward with the Critical Information Needs study. The Commission will reassess the best way to fulfil [sic] its obligation to Congress to identify barriers to entry into the communications marketplace faced by entrepreneurs and other small businesses.”
Whatever else it may represent, this past week’s activities demonstrate the challenges for a government agency forced to operate on “Internet Time” and facing a continuous news cycle. In prior eras, FCC dramas like this would have played out over months or years. In this case, once it became clear that the study was turning into political fodder, the FCC moved with surprising speed to back away from it, and then abandon it entirely, rather than continue to be the subject of news reports and late night monologues. The typo in today’s one sentence announcement (which was subsequently fixed in later versions) presumably indicates the haste with which it was issued, likely in an effort to put the issue to bed before the weekend and avoid a fresh round of media commentary regarding the Study next week.
While the speed with which the FCC moved is impressive, perhaps the most interesting aspect of this week’s events is that, without even conducting the study, the FCC learned a lot about how newsrooms operate, and probably wishes it hadn’t.