[Senate Hearing 110-1124]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1124
OVERSIGHT OF THE
FEDERAL COMMUNICATIONS COMMISSION
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
DECEMBER 13, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Christine D. Kurth, Republican Staff Director and General Counsel
Paul Nagle, Republican Chief Counsel
C O N T E N T S
----------
Page
Hearing held on December 13, 2007................................ 1
Statement of Senator Boxer....................................... 61
Statement of Senator Cantwell.................................... 70
Statement of Senator Dorgan...................................... 2
Prepared statement........................................... 3
Statement of Senator Inouye...................................... 1
Prepared statement........................................... 1
Statement of Senator Kerry....................................... 54
Statement of Senator Klobuchar................................... 65
Statement of Senator Lautenberg.................................. 62
Statement of Senator Lott........................................ 42
Statement of Senator McCaskill................................... 79
Statement of Senator Nelson...................................... 74
Statement of Senator Rockefeller................................. 51
Statement of Senator Stevens..................................... 1
Prepared statement........................................... 1
Witnesses
Adelstein, Hon. Jonathan S., Commissioner, Federal Communications
Commission..................................................... 21
Prepared statement........................................... 23
Copps, Hon. Michael J., Commissioner, Federal Communications
Commission..................................................... 15
Prepared statement........................................... 17
Martin, Hon. Kevin J., Chairman, Federal Communications
Commission..................................................... 5
Prepared statement........................................... 8
McDowell, Hon. Robert M., Commissioner, Federal Communications
Commission..................................................... 34
Prepared statement........................................... 36
Tate, Hon. Deborah Taylor, Commissioner, Federal Communications
Commission..................................................... 30
Prepared statement........................................... 32
Appendix
DeMint, Hon. Jim, U.S. Senator from South Carolina, prepared
statement...................................................... 85
Letter dated, December 11, 2007, from John Altamura; Richard N.
Massey; Ron Smith; Victor (Hu) Meena; Michael J. Small;
Jonathan D. Foxman; Bryan Corr; Dan Rule; Laura Phipps; Larry
Lueck; Frank DiRico; Jerry Whisenhunt; Richard Watkins; Robert
G. Dawson; and John E. Rooney to Hon. Daniel K. Inouye and Hon.
Ted Stevens.................................................... 89
Letter dated, December 12, 2007, to Hon. Daniel K. Inouye and
Hon. Ted Stevens from Gene Kimmelman, Vice President for
Federal and International Policy, Consumers Union; Mark Cooper,
Research Director, Consumer Federaton of America; and Ben
Scott, Policy Director, Free Press............................. 87
Response to written questions submitted by Hon. Maria Cantwell
to:
Hon. Jonathan S. Adelstein................................... 146
Hon. Michael J. Copps........................................ 132
Hon. Kevin J. Martin......................................... 100
Hon. Robert M. McDowell...................................... 167
Hon. Deborah Taylor Tate..................................... 152
Response to written question submitted by Hon. Thomas R. Carper
to:
Hon. Jonathan S. Adelstein................................... 149
Hon. Michael J. Copps........................................ 134
Hon. Kevin J. Martin......................................... 110
Hon. Robert M. McDowell...................................... 168
Hon. Deborah Taylor Tate..................................... 154
Response to written questions submitted by Hon. Byron L. Dorgan
to:
Hon. Jonathan S. Adelstein................................... 143
Hon. Kevin J. Martin......................................... 92
Hon. Robert M. McDowell...................................... 163
Hon. Deborah Taylor Tate..................................... 150
Response to written questions submitted by Hon. Daniel K. Inouye
to:
Hon. Jonathan S. Adelstein................................... 142
Hon. Michael J. Copps........................................ 131
Hon. Kevin J. Martin......................................... 91
Hon. Robert M. McDowell...................................... 162
Hon. Deborah Taylor Tate..................................... 149
Response to written questions submitted by Hon. John F. Kerry to:
Hon. Kevin J. Martin......................................... 91
Response to written questions submitted by Hon. Frank R.
Lautenberg to:
Hon. Jonathan S. Adelstein................................... 148
Hon. Michael J. Copps........................................ 133
Hon. Kevin J. Martin......................................... 110
Hon. Robert M. McDowell...................................... 168
Hon. Deborah Taylor Tate..................................... 154
Response to written questions submitted by Hon. Bill Nelson to:
Hon. Jonathan S. Adelstein................................... 145
Hon. Michael J. Copps........................................ 132
Hon. Kevin J. Martin......................................... 98
Hon. Robert M. McDowell...................................... 166
Hon. Deborah Taylor Tate..................................... 152
Response to written questions submitted by Hon. Gordon H. Smith
to:
Hon. Michael J. Copps........................................ 140
Hon. Kevin J. Martin......................................... 131
Hon. Robert M. McDowell...................................... 169
Hon. Deborah Taylor Tate..................................... 159
Response to written questions submitted by Hon. Olympia J. Snowe
to:
Hon. Michael J. Copps........................................ 135
Hon. Kevin J. Martin......................................... 117
Response to written question submitted by Hon. Ted Stevens to:
Hon. Michael J. Copps........................................ 135
Hon. Kevin J. Martin......................................... 111
Hon. Robert M. McDowell...................................... 168
Hon. Deborah Taylor Tate..................................... 155
Response to written questions submitted by Hon. John Thune to:
Hon. Michael J. Copps........................................ 140
Hon. Kevin J. Martin......................................... 127
Hon. Robert M. McDowell...................................... 170
Hon. Deborah Taylor Tate..................................... 160
Response to written questions submitted by Hon. David Vitter to:
Hon. Kevin J. Martin......................................... 126
Snowe, Hon. Olympia J., U.S. Senator from Maine, prepared
statement...................................................... 86
OVERSIGHT OF THE
FEDERAL COMMUNICATIONS COMMISSION
----------
THURSDAY, DECEMBER 13, 2007
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 10:45 a.m. in
room SR-253, Russell Senate Office Building, Hon. Daniel K.
Inouye, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. DANIEL K. INOUYE,
U.S. SENATOR FROM HAWAII
The Chairman. Since time is of the essence, I will request
that all Members refrain from giving their opening statements,
but place them in the record so we can spend time listening to
the Commissioners.
Is there any objection?
[The prepared statement of Senator Inouye follows:]
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
It's an exciting time for communications. We are seeing dramatic
changes in the way we communicate, conduct business, educate, and
entertain ourselves in this country. The future of communications holds
tremendous promise, but this promise does not come without risk. As
public servants, both here in Congress and on the Commission, we are
challenged to ensure that our communications markets evolve in a manner
that serves the public interest. We must foster an environment where
consumers have choices, where businesses have opportunities, and where
the rules of the regulatory road are clear.
A transparent regulatory process is essential. When agencies short-
circuit the decisionmaking process, public trust in their authority
erodes. With the Commission poised to make historic decisions on media
ownership, universal service, broadband, and the digital television
transition, public confidence in the process is not a luxury, it's a
necessity.
I look forward to hearing from our witnesses and thank you for
joining us for this oversight hearing.
STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens. No objection.
[The prepared statement of Senator Stevens follows:]
Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska
It has been 10 months since all five of you last appeared together
before the Committee. There have been a number of regulatory proposals
that have drawn national attention. Some of those issues have been
resolved, but other issues important to consumers remain.
As February 17, 2009 approaches, much remains to be done to assure
a smooth digital television transition. Plans are in place to achieve
the goal, but coordination, outreach and execution are needed on the
local level to make sure that all consumers are informed. What
broadcast TV means to parts of Alaska is different from what it means
to Manhattan. How to get a converter box to remote Alaskan villages is
also different. Because of unique needs rural America should be a top
priority for the digital transition.
The 700 MHz spectrum auction for the DTV transition takes place
next year. This spectrum represents great opportunities to bring new
consumer services, including additional broadband. And the auction will
fund a number of public safety programs that have already been put into
place.
Deployment of broadband is also an important priority. The
Commission has indicated that steps to provide a more accurate picture
of the marketplace will be taken, and it is my hope that these actions
will be taken soon. Universal Service is the most important element for
the communications infrastructure our country needs in rural areas. I
was glad to see that the Joint Board has outlined proposals for
comprehensive reform. While Alaska is unique, it is not alone in
needing Universal Service programs to deliver the benefits of
broadband, telemedicine and distance learning. Universal Service has a
central role in the continued development of this country's resources
in rural America and any reform efforts should reflect this important
role.
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman?
The Chairman. Yes?
Senator Dorgan. Mr. Chairman, I've been called over to the
Majority Leader's office at 11 o'clock. I have been so looking
forward to this hearing. I would like to say 2 minutes' worth,
at some point, after you have given your opening statement.
The Chairman. I will not make any statement.
Senator Dorgan. All right. Well, then, after Senator
Stevens gives an opening statement?
Senator Stevens. We'd be happy to yield to you. Be happy to
yield to you.
Senator Dorgan. All right.
Senator Stevens. Yes. Happy to yield to you, yes.
Senator Dorgan. And I regret the inconvenience, but I have
been looking forward, for some while, to talk especially to
Chairman Martin and other members of the board.
Apparently, there's a move underway to finalize a rule on
cross-ownership by December 18, a rule that was just announced
in November--in my judgment, abrogating all of the standards
that you would normally have that would give the American
people a chance to comment on a rule after a period of 60 or 90
days. This Committee passed a piece of legislation, co-authored
by Senator Lott, myself, and many others, that indicated that
there ought to be at least 90 days given for a comment period
for the American people. If the FCC proceeds ahead with a
December 18 date, I think it is a serious mistake and, I think,
flies in the face of what this Committee has already said to
the FCC it ought to be doing.
There are 1,400 pages that have been requested under a FOIA
request that have not yet been released. The pages that have
been released of information from inside the FCC tells us, at
this point, that the FCC started--and I'm talking now about one
of the top officials of the FCC--started with the proposition
they wanted to do research to find out how they could justify
the cross-ownership elimination.
And so, I think there are a lot of questions here that need
to be asked. I wish very much I could stay, but the Majority
Leader has asked that I come to a meeting on the appropriations
bills. I'm going to do that. But, if I--I expect that's going
to last some while--but, I hope this Committee will ask tough
questions of this Commission.
This Commission should not, on December 18, drive home a
final rule without giving the American people the 90 days, at
least, to make comments. And this Commission should not take
action before it finishes its proceeding on localism, which has
been shortchanged for years. And I feel very strongly about
this, as do many of my colleagues, and I hope the Commission
will take heed of what this Committee has done and what I
believe their obligations are to the American people, to this
Committee, and to this Congress.
Senator Stevens. Since you feel so strongly, I'll be glad
to yield my seat to you and take your seat at that table.
[Laughter.]
Senator Dorgan. Mr. Chairman, I'm sure you----
Senator Kerry. I think you've got a seat at that table,
anyway.
Senator Dorgan. Senator Stevens, I'm sure you would, but I
think I will defer on that request.
But, I hope you will take my place during the question
period in asking the questions I've just propounded, because I
think they need to be asked in a very assertive way.
Mr. Chairman, thank you for your courtesy.
The Chairman. I thank you very much. And, with that----
Senator Stevens. All statements will go in the record, Mr.
Chairman?
The Chairman. Yes, without objection, so ordered.
[The prepared statement of Senator Dorgan follows:]
Prepared Statement of Hon. Byron L. Dorgan,
U.S. Senator from North Dakota
Thank you, Chairman Inouye for holding this hearing. Before I get
to the issue of media ownership, which is what I intend to focus on,
let me mention just a few separate points.
First, the FCC is considering Liberty Corp's intention to purchase
DIRECTV. On May 7, 2007, I sent a letter with Senator Conrad in support
of the North Dakota broadcasters' petition asking the FCC to require as
a condition of this transaction that DIRECTV offer local into local
broadcasting in all 210 markets by the end of 2008. This is a crucial
issue. You all know that I am concerned about the issue of localism. In
Minot/Bismarck, only the NBC, ABC and PBS local stations are offered by
EchoStar, and DIRECTV does not offer any local stations. Almost a third
of the households in Western North Dakota do not have satellite access
to emergency alerts, AMBER alerts, local news and local advertising. A
good number of these households are watching affiliates from New York,
Los Angeles and Denver. This is very troubling to me and I want to know
what the FCC is doing about it. The Commission isn't hesitant to put
conditions on transactions--this is a case that clearly deserves a
condition of local into local carriage.
Second, the Joint Board has issued its recommendations. I want to
know what the FCC is doing to move forward with comprehensive reform of
Universal Service. It is crucial to the State of North Dakota.
Third, the Chairman of the FCC is aware of the recent activities by
broadband and wireless carriers that raised network neutrality
questions. I sent the Commission a letter on the issue of
discrimination in text messaging and have not had a response. I want to
know what the FCC is doing on that issue.
And fourth, I understand that the FCC still owes 1,400 pages to the
Georgetown Institute for Public Representation from an August 2006 FOIA
request. These documents should be turned over immediately.
Now, on to media ownership . . . The FCC has taken a series of
destructive actions in the past two decades that, I believe, have
undermined the public interest. Now they are preparing to do it again.
They are now working toward a December 18 vote on a change to our
media ownership rules. They have rushed to finish the localism and
ownership hearings with as little as 5 business days of notice for the
last hearings.
Chairman Martin put out his proposed rule changes on November 13--
after the comment period had closed. He didn't consult his fellow
commissioners and didn't issue the rules in the Federal Register, but
put out the rule changes in a New York Times op-ed and in an FCC press
release.
He hasn't given the public the opportunity to comment on the actual
rule changes he plans to move on December 18.
Now this seems like a massive rush to me and a big mistake. How
will the public interest be served by attempting to rush through a plan
to relax ownership rules?
Chairman Martin is proposing for the top 20 markets, cross-
ownership of newspapers and broadcast stations that are not ranked in
the top 4. In addition, he has opened a gaping loophole for mergers
outside of the top 20 markets.
Chairman Martin has framed his proposal as a modest compromise. But
make no mistake, this is a big deal. When nearly half of the people in
this country are told that in their cities and towns the media will get
the green light to consolidate, they will not be happy. The proposal
also goes beyond the top 20--it would also create a greatly relaxed
approval process for cross-ownership in any U.S. media market and spur
a new wave of media consolidation in both large and small media
markets.
Frankly I find this further concentration to be an affront to
common sense. This will undercut localism and diversity of ownership
around the country. Studies show that removing the ban on newspaper/
broadcast cross-ownership results in a net loss in the amount of local
news produced in the market as a whole.
In addition, while the FCC suggests that cross-ownership is
necessary to save failing newspapers, the publicly traded newspapers
earn annual rates of return between 16 and 18 percent. Let's put that
in context. Major oil companies earn 16 percent. Why do we need a
bailout for an industry that earns at least three times the rate you
and I can get at our local bank? And the FCC neglects to mention that
there is already a ``failing entity'' waiver process for entities that
do encounter financial hardships.
I have received an FCC produced draft study obtained through a FOIA
request by the Georgetown Institute for Public Representation. The FCC
study is called ``Financial Health of the Newspaper Industry'' and is
dated June 2006. It shows that: (a) the newspaper industry is not doing
all it can to increase its online revenues and therefore, its profit
margins; (b) for the 12 largest publicly traded companies, average
profit margins went down and up in consistently (for example there was
an increase in profit margins for these companies from 2001 to 2004 of
6.5 percent to 12.7 percent); (c) the report explicitly states that
``the industry overall is still profitable.''
Finally, the Commission fails to argue why the FCC needs to be in
the newspaper business. The FCC regulates the broadcast airwaves. The
FCC has no authority over newspapers, except that in the way broadcast
transactions include them. The FCC need not be considering the growth
and changes of the newspaper business. It is not in the Commission's
purview to just make broadcast cross-ownership rule changes based on
estimations of the condition of companies they aren't even overseeing.
Yet Chairman Martin is committed to moving on the cross-ownership
rule. The Georgetown Institute for Public Representation FOIA request
produced another interesting document. It shows evidence that the FCC's
Chief Economist at the time, Leslie Marx, when planning for a series of
media ownership studies started from the results the agency wanted and
worked backward. According to a July 2006 research plan, Marx began the
research process with ``thoughts and ideas'' about ``how the FCC can
approach relaxing newspaper/broadcast cross-ownership restriction.''
She then identified ``some studies that might provide valuable inputs
to support a relaxation of newspaper/broadcast ownership limits.'' The
studies outlined in the document were then implemented by the FCC, and
at least one researcher identified as being on the ``A-list'' was
chosen to carry them out.
There are a number of reasons that consolidation is harmful to our
democracy. But even if I disagree with the rules the FCC issues, and
even if I think the FCC should break up the big media companies rather
than allow them to consolidate, the FCC must go through an honest and
thorough process. They must study the questions that affect a decision
of whether to adjust ownership limits. They have not done this and they
will not have done this prior to a December or January or even February
vote.
Bipartisan Members of this Committee have told the FCC numerous
times that they need to first consider the impact of ownership on
localism. They have not done this. Folding in a localism report into
this rule does not do it justice and fails to answer questions about
the effect of ownership on local content. The FCC should complete
studies and allow for a substantial comment period on the rulemaking.
On December 4, this Committee reported out the bipartisan ``Media
Ownership Act of 2007,'' S. 2332. This bill is co-sponsored by Senators
Lott, Obama, Snowe, Kerry, Collins, Bill Nelson, Craig, Boxer,
Cantwell, Biden, Clinton, Feinstein, Tester, Durbin, Dodd, Feingold,
Sanders, Murray, McCaskill and Casey. We and many others in Congress
feel that the FCC must go through a thorough process evaluating
localism and diversity, which they have not done, and then must give
the public enough time to comment on the proposed rules.
We call for 90 days of comment on the actual rules. We've had a
long comment period, but without any specific proposal. We also require
the FCC to finish a separate proceeding on localism, with a study of
the impact of consolidation on localism at the market level, and 90
days of comment on the recommendations for improving localism. This
must be done before the rule changes are issued for comment. Finally,
we require an independent panel on female and minority ownership to be
established, and the FCC to provide this panel with accurate data on
female and minority ownership. This panel must issue recommendations
and the FCC must act on them prior to voting on ownership rules.
But the FCC is choosing to ignore us. And they are choosing to
ignore the thousands of people from around the country that came out
and testified against further media concentration. If they had told
them what the Chairman's proposed rule was, they would have come out
and specifically addressed it. But unfortunately, Kevin Martin only
allowed them to speak vaguely against rule changes.
The last time the FCC tried to do this, the U.S. Senate voted to
block it. On September 16, 2003, the Senate voted 55-40 to support a
``resolution of disapproval'' of the FCC's previous decision to further
consolidate media. If we have to do this again we will. Members of this
Committee have sent numerous letters to the FCC stating what needs to
be done prior to a vote on media ownership limits and yet they are on
track to move this proceeding to a vote. The FCC is clearly not
listening and I'm happy they are here today so we can discuss this with
them once again.
The Chairman. First witness, Chairman of the Federal
Communications Commission, The Honorable Kevin J. Martin.
Chairman Martin?
STATEMENT OF HON. KEVIN J. MARTIN, CHAIRMAN,
FEDERAL COMMUNICATIONS COMMISSION
Mr. Martin. Thank you. Thank you, Chairman Inouye and Vice
Chairman Stevens and all the Members of the Committee, for the
opportunity to be here with you today.
I have a brief opening statement, and look forward to
answering the questions you might have.
This hearing comes at a particularly appropriate time, as
we on the Commission, with the guidance of Members of Congress,
are grappling with some of the most important and difficult
issues that we may face; namely, the review of the media
ownership rules and reforming the Universal Service Program.
In both instances, the Commission is faced with striking a
balance between preserving the values that make up the
foundation of our media and telecommunications regulations,
while ensuring that those regulations keep pace with the
technology and marketplace of today.
It is not an exaggeration to say that media ownership is
the most contentious and political--and potentially divisive
issue to come before the Commission. It certainly was in 2003,
and many of the same concerns about consolidation and its
impact on diversity and local news coverage are being voiced
today. And it's no wonder; the media touches almost every
aspect of our lives, we're dependent upon it for our news, our
information, and our entertainment. Indeed, the opportunity to
express diverse viewpoints lies at the heart of our democracy.
In Section 202(h) of the 1996 Telecommunications Act,
Congress required the Commission to periodically review its
broadcast ownership rules to determine, ``whether any of such
rules are necessary in the public interest as a result of
competition.'' It then goes on to read, ``The Commission shall
repeal or modify any regulation it determines to be no longer
in the public interest.''
In 2003, the Commission significantly reduced the
restrictions on owning television stations, radio stations, and
newspapers in the same market and nationally. Congress and the
courts overturned almost all of those changes. There was one
exception. The court specifically upheld the Commission's
determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that,
``reasoned analysis supports the Commission's determination
that the blanket ban on newspaper/broadcast cross-ownership was
no longer in the public interest.'' It is against this backdrop
that the FCC undertook a lengthy, spirited, and careful
reconsideration of our media ownership rules.
In 2003, when we last conducted a review of the media
ownership rules, many expressed concern about the process.
Specifically, people complained that there were not enough
hearings, not enough studies, and not enough opportunity for
public comment.
When we began, 18 months ago, the Commission committed to
conducting this proceeding in a manner that was more open and
allowed for more public participation. We provided a lengthy
comment period, of 120 days, which we ultimately extended to
167 days. We held six hearings across the country, at a cost of
more than $200,000. We spent hundreds of thousands on
independent studies. Each of those I solicited incorporated
input from all of the other commissioners and all of my
colleagues on the Commission about the topics, authors, and
peer-reviewers of these studies. We put those studies out for
public comment and made all the data available to the public.
I also held the two remaining hearings on localism, a
proceeding that had been initiated under Chairman Powell, and I
circulated a final report containing specific recommendations
and proposed rule changes on localism.
I also circulated a proposal to adopt rules that are
designed to promote diversity by increasing and expanding
broadcast ownership opportunities for small businesses,
including minority- and women-owned businesses.
The media marketplace is considerably different than it was
when the newspaper/broadcast cross-ownership rule was put in
place, more than 30 years ago. Back then, cable was a nascent
service, satellite television did not exist, and there was no
Internet. But, according to almost every measure, newspapers
are struggling. Across the industry, circulation is down and
their advertising revenue is shrinking.
As the first chart that I have indicates, 16 of the 19
major newspapers in the top 20 markets saw a drop in
circulation just in the last 6 months, ending in September of
2007. The Atlanta Journal Constitution lost nearly one in ten
subscribers during that period. Newspapers in financial
difficulty oftentimes have little choice but to scale back
local news-gathering to cut costs. In 2007 alone, 24 newsroom
staff at The Boston Globe were fired, including two Pulitzer
Prize-winning reporters; the Minneapolis Star Tribune fired 145
employees, including 50 reporters from their newsroom; 20 were
fired by the Rocky Mountain News; the Detroit Free Press and
Detroit News announced cuts totaling 110 employees in that
market. Allowing limited cross-ownership may help to forestall
the erosion in local news coverage by enabling companies to
share these local news-gathering costs across multiple media
platforms.
I, therefore, propose that we allow a newspaper to purchase
a broadcast station, but not one of the top four television
stations, and only in the largest 20 cities in the Nation, and
only as long as eight independent voices still remain.
In contrast to the FCC's actions 4 years ago, I propose not
to loosen any other ownership rule. Indeed, this proposed rule
change is notably more conservative an approach than the
remanded newspaper/broadcast cross-ownership rule that the
Commission adopted in 2003. That rule would have allowed
transactions in the top 170 markets. The rule I propose will
only allow a subset of transactions in the top 20 markets,
which would still be subject to an individualized determination
that the transaction is in the public interest.
The revised rule would balance the need to support the
availability and sustainability of local news while not
significantly increasing local concentration or significantly
decreasing or harming diversity.
The Commission also needs to ensure that communities are
served by local broadcasters who are responsive to their needs.
Last month, the Commission adopted an order requiring
television broadcasters to better inform the community about
how the programming they air serves them.
Additionally, I presented my colleagues a final report
containing specific recommendations and proposed rule changes
reflecting the comments and record produced in the localism
proceeding.
I have also circulated an order that proposes to adopt
rules that are designed to promote diversity by increasing and
expanding broadcast ownership opportunities for small
businesses, including minority- and women-owned businesses.
It's my belief that all of these proposals together will
serve the public interest, providing for competition, localism,
and diversity in the media.
The United States and the Commission also have a long
history and tradition of making sure that rural areas of the
country are connected and have similar opportunities for
communications as other areas. One of the core principles of
the Universal Service Fund is to enhance access to advanced
services for healthcare providers throughout the Nation.
Deploying broadband for the delivery of telemedicine can enable
patients to receive medical care without leaving their homes or
their communities.
This may not seem like a big deal to those of us who need
to only drive a mile or two to visit our local doctor or
dentist, but it can mean everything to patients who have
lived--who live hundreds of miles from medical specialists, who
have limited access to healthcare in their own communities.
Last year, the Commission took action to address the lack
of broadband for healthcare providers, launching a new rural
healthcare pilot program. We recently awarded more than $417
million for the construction of 69 statewide and regional
broadband healthcare networks in 42 states and three U.S.
territories. The network is going to connect over 6,000
healthcare clinics, hospitals, and medical facilities and
providers across the country.
On this chart you can see each green dot represents one of
the 6,000 healthcare facilities that'll now be connected, along
with the Internet backbone connections that they'll end up
having.
Senator Stevens. We can't see Alaska and Hawaii.
Mr. Martin. I have a special handout blown up for you,
providing for both Alaska and Hawaii.
The rural healthcare program illustrates the singular
importance of the Universal Service Fund and living up to our
commitment to rural Americans. Changes in technology and
increases in the number of carriers that receive Universal
Service support have placed significant pressure on the
stability of the Fund. A large and rapidly growing portion of
the high-cost support program is now devoted to supporting
multiple carriers to serve areas in which costs are
prohibitively expensive for even one carrier.
As this final chart indicates, the CETC Universal Service
Fund payments have been growing dramatically since 2002; and,
specifically in 2000, such providers only received $1 million
in support. Last year, they received almost a billion dollars
in support. I'm supportive of several proposals for fundamental
reform that could help contain the growth of the Fund in order
to preserve and advance the benefits of Universal Service and
protect the ability of people in rural America to continue to
be connected.
The United States is in the midst of a communications
revolution, and the Commission is committed to ensuring that
our values keep up with our technology. At the Commission,
we're working to ensure that no community gets left behind and
that the benefits are felt across the country, in rural and
urban areas alike. We're also committed to maintaining the
stability of both traditional and new forms of media and news-
gathering.
With that, I certainly look forward to answering your
questions and, again, appreciate the opportunity to be here
today.
[The prepared statement of Mr. Martin follows:]
Prepared Statement of Hon. Kevin J. Martin, Chairman,
Federal Communications Commission
Thank you, Chairman Inouye, Vice Chairman Stevens, and Members of
the Committee, for the opportunity to be here with you today. I have a
brief opening statement and then I look forward to answering any
questions you may have.
Now is an important time for the Commission. I am pleased to report
that since we appeared before you last, the Commission has moved
forward on a number of significant issues for the benefit of the
American people. The Commission has been working both on our own and in
coordination with industry, other governmental agencies, and consumer
groups to advance the digital transition and promote consumer
awareness. Through all of our activities, the Commission is committed
to ensuring that no American is left in the dark. In addition, our
policies continue to facilitate steady growth in broadband deployment
according to the Commission's latest high-speed data report.
Importantly, we established rules for the upcoming 700 Mhz auction
which represents the single most important opportunity for us to add
another more open broadband platform. And finally the Commission has
continued to work to remove barriers to entry by competitors in all of
the sectors we regulate such as by providing franchise relief to
incumbent cable providers, new entrants, and eliminating the use of
exclusive contracts for video service in apartment buildings.
This hearing comes at a particularly appropriate time as we on the
Commission--with the guidance of Members of Congress--are grappling
with some of the most important and difficult issues that we may face:
namely the review of the media ownership rules and reforming the
Universal Service Program. In both instances the Commission is faced
with striking a balance between preserving the values that make up the
foundation of our media and telecommunications regulations while
ensuring those regulations keep apace with the technology and
marketplace of today.
Media Ownership Proceedings
It is not an exaggeration to say media ownership is the most
contentious and potentially divisive issue to come before the
Commission. It certainly was in 2003 and many of the same concerns
about consolidation and its impact on diversity and local news coverage
are being voiced today. And it is no wonder. The decisions we will make
about our ownership rules are as critical as they are difficult. The
media touches almost every aspect of our lives. We are dependent upon
it for our news, our information and our entertainment.
A robust marketplace of ideas is by necessity one that reflects
varied perspectives and viewpoints. Indeed, the opportunity to express
diverse viewpoints lies at the heart of our democracy. To that end, the
FCC's media ownership rules are intended to further three core goals:
competition, diversity, and localism.
Section 202(h) of the 1996 Telecommunications Act, as amended,
requires the Commission to periodically review its broadcast ownership
rules to determine ``whether any of such rules are necessary in the
public interest as a result of competition.'' It goes on to read, ``The
Commission shall repeal or modify any regulation it determines to be no
longer in the public interest.''
In 2003, the Commission conducted a comprehensive review of its
media ownership rules, significantly reducing the restrictions on
owning television stations, radio stations and newspapers in the same
market and nationally. Congress and the court overturned almost all of
those changes.
There was one exception. The court specifically upheld the
Commission's determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that ``. . .
reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.'' It has been over 4 years since the Third Circuit
stayed the Commission's previous rules and over 3 years since the Third
Circuit instructed the Commission to respond to the court with amended
rules.
It is against this backdrop that the FCC undertook a lengthy,
spirited, and careful reconsideration of our media ownership rules.
The Commission's Process
In 2003, when we last conducted a review of the media ownership
rules, many expressed concern about the process. Specifically, people
complained that there were not enough hearings, not enough studies, and
not enough opportunity for comments and public input. When we began
eighteen months ago, the Commission committed to conducting this
proceeding in a manner that was more open and allowed for more public
participation.
I believe that is what the Commission has done. First, we provided
for a long public comment period of 120 days, which we subsequently
extended. We held six hearings across the country at a cost of more
than $200,000: one each in Los Angeles, California; Nashville,
Tennessee; Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago,
Illinois; and Seattle, Washington. And, we held two additional hearings
specifically focused on localism in Portland, Maine and in Washington,
D.C. The goal of these hearings was to more fully and directly involve
the American people in the process.
We listened to and recorded thousands of oral comments, and allowed
for extensions of time to file written comments on several occasions.
To date, we've received over 166,000 written comments in this
proceeding.
We spent almost $700,000 on ten independent studies. I solicited
and incorporated input from all of my colleagues on the Commission
about the topics and authors of those studies. We have put those
studies out for peer review and for public comment and made all the
underlying data available to the public.
I also committed to completing the Notice of Inquiry on localism,
something that was initiated but stopped under the previous Chairman.
This included holding the two remaining hearings. All told, the
Commission devoted more than $160,000 to hear from expert witnesses and
members of the public on broadcasters' service to their local
communities. In addition, the Commission hired Professor Simon Anderson
of the University of Virginia to produce an academic paper on
``Localism and Welfare'', which was made available on our website last
December. I have presented to my colleagues a final report containing
specific recommendations and proposed rule changes reflective of the
comments and record produced by the inquiry.
Finally, although not required, I took the unusual step of
publishing the actual text of the one rule I thought we should amend.
Because of the intensely controversial nature of the media ownership
proceeding and my desire for an open and transparent process, I wanted
to ensure that Members of Congress and the public had the opportunity
to review the actual rule prior to any Commission action.
The Changing Media Marketplace Today
The media marketplace is considerably different than it was when
the newspaper/broadcast cross-ownership rule was put in place more than
thirty years ago. Back then, cable was a nascent service, satellite
television did not exist and there was no Internet. Consumers have
benefited from the explosion of new sources of news and information.
But according to almost every measure newspapers are struggling. At
least 300 daily papers have stopped publishing over the past thirty
years. Their circulation is down and their advertising revenue is
shrinking.
At The Boston Globe, revenue declined 9 percent in 2006. The
Minneapolis Star Tribune announced an ad and circulation revenue
decline of $64 million from 2004 to 2007. The Denver Post saw a revenue
decline of 15 percent. Tribune, owner of the Los Angeles Times, saw ad
revenues decline 6 percent in the last year--a total loss of $47
million. At USA Today, the most-read paper in the Nation, revenue
declined 6.6 percent over the past year as the total number of paid
advertising pages fell from 929 to 803. And the San Francisco Chronicle
reported in 2006 that the paper was losing $1 million dollars--a day.
Newspapers in financial difficulty oftentimes have little choice
but to scale back local news gathering to cut costs. USA Today recently
announced it would be cutting 45 newsroom positions--nearly 10 percent
of its total staff. In 2007 alone, 24 newsroom staff at The Boston
Globe were fired, including 2 Pulitzer Prize-winning reporters; the
Minneapolis Star Tribune fired 145 employees, including 50 from their
newsroom; 20 were fired by the Rocky Mountain News; the Detroit Free
Press and The Detroit News announced cuts totaling 110 employees; and
the San Francisco Chronicle planned to cut 25 percent of its newsroom
staff.
Without newspapers and their local news gathering efforts, we would
be worse off. We would be less informed about our communities and have
fewer outlets for the expression of independent thinking and a
diversity of viewpoints. I believe a vibrant print press is one of the
institutional pillars upon which our free society is built. In their
role as watchdog and informer of the citizenry, newspapers often act as
a check on the power of other institutions and are the voice of the
people.
If we believe that newspaper journalism plays a unique role in the
functioning of our democracy, we cannot turn a blind eye to the
financial condition in which these companies find themselves. Our
challenge is to address the viability of newspapers and their local
news gathering efforts while preserving our core values of a diversity
of voices and a commitment to localism in the media marketplace. Given
the many concerns about the impact of consolidation, I recognize this
is not an easy task. But I believe it is one that we can achieve.
Allowing cross-ownership may help to forestall the erosion in local
news coverage by enabling companies to share these local news gathering
costs across multiple media platforms. Indeed the newspaper/broadcast
cross-ownership rule is the only rule not to have been updated in 3
decades, despite that fact that FCC Chairmen--both Democrat and
Republican--have advocated doing so. In fact, Chairman Reed Hundt
argued for relaxation in 1996 noting, ``the newspaper/broadcast cross-
ownership rule is right now impairing the future prospects of an
important source of education and information: the newspaper
industry.'' Application of Capital Cities/ABC, Inc., Memorandum Op. &
Order, 11 FCC Rcd 5841, 5906 (1996). And as I mentioned, in 2003 the
Third Circuit recognized this fact when it upheld the Commission's
elimination of the newspaper/broadcast cross-ownership ban, saying that
it was ``no longer in the public interest.''
As a result, I proposed the Commission amend the 32-year-old
absolute ban on newspaper/broadcast cross-ownership. This proposal
would allow a newspaper to purchase a broadcast station--but not one of
the top four television stations--in the largest 20 cities in the
country as long as 8 independent voices remain. This relatively minor
loosening of the ban on newspaper/broadcast cross-ownership in markets
where there are many voices and sufficient competition would help
strike a balance between ensuring the quality of local news gathering
while guarding against too much concentration.
In contrast to the FCC's actions 4 years ago, we would not loosen
any other ownership rule. We would not permit companies to own any more
radio or television stations either in a single market or nationally.
Indeed this proposed rule change is notably more conservative in
approach than the remanded newspaper/broadcast cross-ownership rule
that the Commission adopted in 2003. That rule would have allowed
transactions in the top 170 markets. The rule I propose would allow
only a subset of transactions in only the top 20 markets, which would
still be subject to an individualized determination that the
transaction is in the public interest.
The revised rule would balance the need to support the availability
and sustainability of local news while not significantly increasing
local concentration or harming diversity.
Proposed Newspaper/Broadcast Cross-Ownership Rule
Under the new approach, the Commission would presume a proposed
newspaper/broadcast transaction is in the public interest if it meets
the following test:
1. The market at issue is one of the 20 largest Nielsen
Designated Market Areas (``DMAs'');
2. The transaction involves the combination of a major daily
newspaper and one television or radio station;
3. If the transaction involves a television station, at least 8
independently owned and operating major media voices (defined
to include major newspapers and full-power commercial TV
stations) would remain in the DMA following the transaction;
and
4. If the transaction involves a television station, that
station is not among the top four ranked stations in the DMA.
All other proposed newspaper/broadcast transactions would continue
to be presumed not in the public interest. Moreover, notwithstanding
the presumption under the new approach, the Commission would consider
the following factors in evaluating whether a particular transaction
was in the public interest:
1. The level of concentration in the DMA;
2. A showing that the combined entity will increase the amount
of local news in the market;
3. A commitment that both the newspaper and the broadcast
outlet will continue to exercise its own independent news
judgment; and
4. The financial condition of the newspaper, and if the
newspaper is in financial distress, the owner's commitment to
invest significantly in newsroom operations.
Ensuring Localism
The Commission also needs to ensure that communities are served by
local broadcasters who are responsive to their needs. Establishing and
maintaining a system of local broadcasting that is responsive to the
unique interests and needs of individual communities is an extremely
important goal for the Commission.
Last month, the Commission adopted an order requiring television
broadcasters to better inform their communities about how the
programming they air serves them. Specifically, television stations
will file a standardized form on a quarterly basis that details the
type of programming that they air and the manner in which they do it.
This form will describe a host of programming information including the
local civic affairs, local electoral affairs, public service
announcements (whether sponsored or aired for free) and independently
produced programming. With a standardized form and public Internet
access to it, the public and government officials will now be able to
engage them directly in a discussion about exactly what local
commitments broadcasters are and/or should be fulfilling.
In addition, I have circulated a Localism Report and NPRM that
addresses other actions the Commission can take to ensure that
broadcasters are serving the interests and needs of their local
communities. The rule changes that I propose are intended to promote
localism by providing viewers and listeners greater access to locally
responsive programming including, but not limited to, local news and
other civic affairs programming. Among other actions, the item
tentatively concludes that:
Qualified LPTV stations should be granted Class A status,
which requires them to provide 3 hours of locally-produced
programming;
Licensees should establish permanent advisory boards in each
community (including representatives of underserved community
segments) with which to consult periodically on community needs
and issues; and
The Commission should adopt processing guidelines that will
ensure that all broadcasters provide a significant amount of
locally-oriented programming.
Increasing Diversity
In order to ensure that the American people have the benefit of a
competitive and diverse media marketplace, we need to create more
opportunities for different, new and independent voices to be heard.
The Commission has recently taken steps to address the concern that
there are too few local outlets available to minorities and new
entrants.
Last month, we significantly reformed our Low Power FM rules in
order to facilitate LPFM stations' access to limited radio spectrum.
The new order streamlines and clarifies the process by which LPFM
stations can resolve potential interference issues with full-power
stations and establishes a going-forward processing policy to help
those LPFMs that have regularly provided 8 hours of locally originated
programming daily in order to preserve this local service. The new
rules are designed to better promote entry and ensure local
responsiveness without harming the interests of full-power FM stations
or other Commission licensees.
I believe it is important for the Commission to foster the
development of independent channels and voices. Again, last month, the
Commission took significant action adopting an order that will
facilitate the use of leased access channels. Specifically, the order
made leasing channels more affordable and expedited the complaint
process. These steps will make it easier for independent programmers to
reach local audiences.
I have also circulated an order that proposes to adopt rules that
are designed to promote diversity by increasing and expanding broadcast
ownership opportunities for small businesses, including minority and
women-owned businesses. This item proposes to give small businesses and
new entrants that acquire expiring construction permits additional time
to build out their broadcast facilities. It also proposes to revise the
Commission's equity/debt attribution standard to facilitate investment
in small businesses in order to promote diversity of ownership in
broadcast facilities.
In addition, among other things, the item would adopt a rule
barring race or gender discrimination in broadcast transactions, adopt
a ``zero-tolerance'' policy for ownership fraud, and commits to the
Commission convening an ``Access-to Capital'' conference in the first
half of 2008 in New York City. As with the localism item, I am hopeful
that my colleagues will move forward on these proposals quickly.
The Commission is also working to ensure that new entrants are
aware of emerging ownership opportunities in the communications
industry. Recently, I sent a letter to our Advisory Committee on
Diversity. I suggested that they help create educational conferences
that will encourage communications companies that engage in
transactions and license transfers to include small businesses,
minorities, and women entrepreneurs, and other designated entities
during negotiations on assets and properties identified for
divestiture.
It is my sincere belief that all of these proposals together will
serve the public interest, providing for competition, localism, and
diversity in the media. My proposed change to the newspaper/broadcast
cross-ownership rule addresses the needs of the newspaper industry and
helps preserve their local news gathering, while at the same time
preserving our commitment to localism, diversity, and competition.
The Commission must strike the right balance between ensuring our
rules recognize the opportunities and challenges of today's media
marketplace and prioritizing the commitment to diversity and localism.
I look forward to working with my fellow Commissioners to adopt rules
consistent with these goals.
Broadband and Universal Service
Continued Broadband Deployment
Broadband technology is a key driver of economic growth. The
ability to share increasing amounts of information at greater and
greater speeds, increases productivity, facilitates interstate
commerce, and helps drive innovation. But perhaps most important,
broadband has the potential to affect almost every aspect of our
lives--from where and when we work to how we educate our children and
deliver healthcare.
The Commission has continued to make significant progress
facilitating broadband deployment. The United States is the largest
broadband market in the world, and our newest report finds continued
dramatic growth. In 2006, high-speed lines increased 61 percent
compared to 37 percent in 2005. Today, more than 99 percent of the U.S.
population lives in Zip Codes having at least one broadband subscriber.
Since I became Chairman, the Commission has taken a number of
actions to help spur broadband deployment. We removed regulatory
obstacles that discouraged infrastructure investment and slowed
deployment. We classified cable modem, DSL, BPL, and wireless broadband
as ``information services'' not subject to legacy regulations. We
streamlined the franchise process for new entrants and incumbent cable
providers and banned exclusive contracts in MDU's to spur competition
in the video market--competition which is essential to further
investment in underlying infrastructure.
There is however, more work to be done. I have proposed the
Commission take additional steps to better our broadband deployment
efforts. We need to gain a better understanding of who has broadband
and the nature of the broadband services being deployed in the
marketplace. Last fall I circulated a number of proposals to my
colleagues that would revise how we collect broadband information.
These proposals would:
Ask how many people have broadband per Zip Code, instead of
only asking whether there is one person with broadband service
per Zip Code.
Revise our current definition of ``high-speed'' from 200k
and above to 1.5 mbps to 3.0 mbps to account for changes in
technology, consumer demand, and the evolving marketplace.
Collect information about different tiers of broadband
service being offered in the marketplace.
First Generation data: 200k up to 768k
Basic: 768k to 1.5 mbps
High Speed: 1.5 mbps to 3.0 mbps
Robust: 3.0 mbps to 6.0 mbps
Premium: 6.0 mbps and above
Adopt a national broadband availability mapping program,
with the objective of creating a highly detailed map of
broadband availability nationwide. This program will facilitate
activities of other broadband initiatives by Federal and state
agencies and public-private partnerships.
Collect more accurate data on wireless broadband by
separating out data ``capable'' handsets and counting the
number of consumers with data (broadband) service plans.
Finally, I have recommended that the Census Bureau include a
question about household broadband in its American community
survey.
Reforming Universal Service
The United States and the Commission have a long history and
tradition of making sure that rural areas of the country are connected
and have similar opportunities for communications as other areas. I
believe our Universal Service Program must continue to promote
investment in rural America's infrastructure and ensure access to
telecommunications services that are comparable to those available in
urban areas today, as well as provide a platform for delivery of
advanced services tomorrow.
With each passing day, more Americans interact and participate in
the technological advances of our digital information economy. A modern
and high quality communications infrastructure is essential to ensure
that all Americans, including those residing in rural communities, have
access to the same economic, educational, and healthcare opportunities.
Thus the Commission has a responsibility to preserve and advance the
benefits of Universal Service.
Extending Telemedicine and Rural Healthcare
One of the core principles of the Universal Service Fund is to
enhance access to advanced services for healthcare providers throughout
the Nation. Deploying broadband for the delivery of telemedicine can
enable patients to receive medical care without leaving their homes or
communities. This may not seem like a big deal to those of us who need
only drive a mile or two to visit our local doctor or dentist. But, it
can mean everything to patients who live hundreds of miles from medical
specialists or have limited access to healthcare in their own
communities.
Last year, the Commission took action to address the lack of
broadband for health care providers launching the Rural Health Care
Pilot program. This program will provide funding for up to 85 percent
of an applicant's costs of deploying a dedicated broadband network
connecting health care providers in rural and urban areas within a
state or region. It also provides funding for up to 85 percent of
applicant's costs of connecting the state or regional networks to
Internet2 and/or National Lamda Rail--dedicated nationwide backbones--
as well as the public Internet. The Commission received an overwhelming
response to this initiative. Regional and state health networks across
the country submitted applications.
The Commission recently awarded more than $417 million dollars for
the construction of 69 state-wide and regional broadband healthcare
networks in 42 states and 3 U.S. territories. The networks will connect
over 6,000 healthcare providers across the country, including
hospitals, clinics, public health agencies, universities and research
facilities, behavioral health sites, community health care centers, and
others.
All of the networks will construct innovative and highly efficient
regional broadband networks, either by building new, comprehensive
networks or upgrading existing ones. All of these networks will be able
to connect to the public Internet as well as to one of the Nation's
dedicated Internet backbones: Internet2, or National Lambda Rail.
The projects include large, multi-state networks connecting
hundreds of facilities, as well as smaller networks, providing critical
links to connect clinics in insular and isolated areas with health care
specialists hundreds of miles away. These networks will enable
everything from basic clinical care to the deployment of electronic
medical records. By providing access to these telehealth networks,
public health officials will be able to share critical information when
responding to public health emergencies such as pandemics or
bioterrorism.
The Rural Health Care program illustrates the singular importance
of the USF and living up to our commitment to rural Americans.
Telehealth and telemedicine services provide patients in rural areas
with access to critically needed medical specialists in a variety of
practices, including cardiology, pediatrics, and radiology, in some
instances without leaving their homes or communities. Intensive care
doctors and nurses can monitor critically-ill patients around the clock
and video conferencing allows specialists and mental health
professionals to care for patients in different rural locations, often
hundreds of miles away.
Stabilizing Universal Service
Changes in technology and increases in the number of carriers that
receive Universal Service support have placed significant pressure on
the stability of the Fund. A large and rapidly growing portion of the
high cost support program is now devoted to supporting multiple
carriers to serve areas in which costs are prohibitively expensive for
even one carrier. These additional networks in high cost areas don't
receive support based on their own costs, but rather on the costs of
the incumbent provider, even if their costs of providing service are
lower. In 2000, such providers received $1 million in support. Last
year, they received almost $1 billion in support.
I'm supportive of several proposals for fundamental reform that
could help contain the growth of the Fund in order to preserve and
advance the benefits of Universal Service and protect the ability of
people in rural areas to continue to be connected. I have circulated
among my colleagues at the Commission an Order that adopts the
recommendation of the Joint Board to place an interim cap on the amount
of high-cost support available to competitive ETCs. I have also
circulated a Notice of Proposed Rulemaking that would require that
high-cost support be based on a carrier's costs in the same way that
rural phone companies' support is based. I continue to believe the
long-term answer for reform of high-cost Universal Service support is
to move to a reverse auction methodology. I believe that reverse
auctions could provide a technologically and competitively neutral
means of controlling the current growth in the Fund and ensuring a move
to most efficient technologies over time. I also believe that reverse
auctions could enable us to begin providing support for next generation
services as well. Accordingly, I have also circulated among my
colleagues a Notice of Proposed Rulemaking to establish reverse
auctions.
Similarly, maintaining the stability of the Universal Service
contribution system is an important responsibility. That is why we took
several interim steps to ensure the stability of the Fund by raising
the wireless safe harbor and broadening the contribution base to
include interconnected VoIP providers. The actions helped ensure that
the contribution base reflects the current market realities and that
contributions remain equitable and nondiscriminatory. I also remain
committed to adopting and implementing a numbers-based contribution
system.
Wireless Broadband
The upcoming spectrum auction is perhaps the most critical step in
bringing broadband to the widest range of Americans.
The Commission's rules for the 700 MHz auction are designed to
facilitate a national wireless broadband service. A coalition of
companies that support a national wireless broadband alternative--
Intel, Skype, Yahoo!, Google, DIRECTV, and EchoStar--urged the
Commission adopt rules that would maximize the opportunity for a
national wireless broadband service to emerge. They urged the
Commission to make available at least one 11 MHz paired block, offered
over large geographic areas, with combinatorial bidding so that a
national service could be established. The Commission's rules meet
these requirements while providing significant opportunities for small
and rural carriers to obtain spectrum at auction as well.
The license winner for about one-third of the spectrum will be
required to provide a platform that is more open to devices and
applications. A network more open to devices and applications will
benefit consumers nationwide by giving them greater choice and control
over their wireless experience. Consumers using this new open platform
will be able to use the wireless device of their choice and download
whatever software they want. Currently, American consumers are too
often asked to throw away their old phones and buy new ones if they
want to switch cell phone carriers. And when they buy that new phone,
it is the wireless provider, not the consumer, who chooses what
applications the consumer will be allowed to use on that new handset.
Wireless consumers in many other countries face fewer restraints: for
example, they can take their cell phones with them when they change
carriers; and they can use widely available Wi-Fi networks--available
in their homes, at the airport or at other hotspots--to access the
Internet. An open platform will ensure that that the fruits of
innovation on the edges of the network more swiftly pass into the hands
of consumers.
I believe our efforts may already be having an impact. Recently,
Verizon Wireless announced its plans to introduce a new option for
customers throughout the country--an option that will allow customers
to use any device and to use any applications that they choose on the
Verizon Wireless network. That announcement, along with the Open
Handset Alliance's previous announcement of an open platform capable of
working on multiple networks, is a significant step toward fulfilling
the goal of a more open wireless environment.
Meeting the needs of public safety is also critically important.
During a crisis, public safety officials need to be able to communicate
with one another. We are all aware of problems caused by the lack of
interoperability for public safety during recent crises like 9/11 and
Hurricane Katrina. To that end, the upcoming auction will help create a
truly national interoperable broadband network for public safety
agencies to use during times of emergency.
Conclusion
The United States is in the midst of a communications revolution,
and the Commission is committed to ensuring that our values keep up
with our technology. At the Commission, we are working to ensure that
no community gets left behind, and that the benefits are felt across
the country in rural and urban areas alike. We are also committed to
maintaining the stability of both traditional and new forms of media
and newsgathering.
I look forward to answering any questions you may have.
The Chairman. Thank you very much, Chairman Martin.
Now Commissioner Michael J. Copps.
STATEMENT OF HON. MICHAEL J. COPPS, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner Copps. Good morning, Chairman Inouye, Vice
Chairman Stevens, Members of the Committee.
This oversight hearing could not be timelier. The FCC is
poised to make some bad decisions, and, seems to me, at this
point, only Congressional oversight can get us back on track.
My good friend Chairman Martin, in what I consider a
regrettable lapse in good judgment, proposes, in just 3
business days from now, to throw open the doors to newspaper/
broadcast combinations in every market in the country. To make
matters worse, he would do so before the Commission does
anything meaningful and systematic to revive some of the
localism that has been lost in our broadcast media, and before
we develop a workable strategy to reverse the sad and
embarrassing state of minority and female ownership of U.S.
broadcast media.
Our attention should be on fixing these problems, that
media consolidation has caused, before we feed another frenzy
of big media sales and swaps. Our attention should be on the
upcoming DTV transition that threatens television outages and a
consumer backlash the likes of which you and I may have never
seen. Our attention should be on comprehensive reform of
Universal Service to bring the tools of 21st century
opportunity to every citizen in the land.
The media ownership proposal in front of the Commission is
presented to us as a ``moderate relaxation'' of the newspaper/
broadcast ownership ban in the 20 largest markets. But a look
at the fine print shows that the proposal would actually apply
the same test in every market in the country. That's right. Any
station can merge with any newspaper in just about any market.
The only difference is that in the top 20 markets you start
with the presumption that you meet the test, while in the other
markets you must overcome the presumption. But we make that
about as easy as taking your next breath. Four embarrassingly
meaningless factors are provided to help applicants overcome
the presumption. And you don't even have to meet all of them;
it's just a list of the things that the FCC will ``consider.''
And given how the FCC has ``considered'' media regulation in
recent years, you can write your cross-ownership deal up today
and it's pretty close to a slam-dunk you're not going to get
much pushback from us.
The process here has been no better than the proposed
outcome. The Commission conducted hearings, reluctantly, on
ownership and localism, yet I cannot find, anywhere in the
pending item, the citation of a single citizen's testimony.
Were people's comments without value? Is public comment now
extraneous to our decisionmaking? And why were some hearings
called with such little notice that people often could not
attend? There are other process breakdowns attending this
proceeding which time precludes my discussing: inadequate
studies, items written and circulated before the comment period
closes, and so on. The point is, we need processes at the FCC
that allay distrust rather than short circuits that create
distrust.
To me, this is just plain nuts. We rush in to encourage
more consolidation without addressing the damage consolidation
has already caused. Is our response to the decline of localism
really going to be to encourage more one media company towns
often controlled from afar, rather than instituting a real,
honest-to-God license renewal system where the presence of
localism and diversity determine whether or not you get your
license renewed? And please don't tell me that, ``A little
localism tweak here or there can fix the problem, so, don't
worry, go ahead and vote ownership consolidation next week, and
we'll come back and do a better job on localism later.'' We
should all want a comprehensive localism package now. That's
what we were told was coming when the localism proceeding was
launched, not that we would rush ahead to encourage more of the
consolidation that did so much to diminish localism in the
first place.
Why can't we systematically address the fact that, in a
Nation that is almost one-third minority, people of color own
only a scant 3 percent of all full-power commercial television
stations? Is it any wonder that minority issues and minority
contributions to our culture get such short shrift in an
environment like that, and why minorities are so often depicted
in caricature? Is our response to this really going to be to
take the smaller stations where the few lucky minority and
female owners exist, and put those stations into a new media
bazaar?
What we have here is a stubborn insistence to finish the
proceeding by December 18, disregarding both public and
Congressional opinion. There is a way out, however. The Media
Ownership Act of 2007 has been approved by this Committee. Our
FCC conversations on media ownership should be guided by this
bill's provisions. The legislation provides a simple and an
eminently workable roadmap. I've had conversations with my
colleagues about the need for a credible process along these
lines. I am deeply disappointed that the decision has,
nonetheless, been made to plunge ahead on December 18. We
should have been able to reach agreement. I hope we still reach
agreement. I hope we still can.
But when overwhelming majorities of citizens oppose further
media consolidation, when Members of Congress write to us
almost daily to caution us, and when legislation to avoid a
nine-car train wreck is moving through Congress, I think the
FCC has a responsibility to stop, look, and listen.
I worked here in the Senate for 15 years, and I feel a keen
responsibility to listen to its members, and especially to this
Committee. And I don't think the Commission is listening very
well right now.
The stakes in this debate over the future of the media are
so enormous. This has been my number-one priority at the
Commission, as most of you members know. I've studied the
history of this country, and I know how precious media is. The
diversity and creativity of our culture can be enhanced or it
can be diminished by the media environment. Media can reflect
and nourish these things, or it can shove them aside. And there
has been too much shoving aside in recent years.
Our civic dialogue can be either expanded or dumbed down by
media. Lately, our policies have encouraged an erosion of the
civic dialogue upon which the future of our democracy depends.
I hope this Committee can yet save the Commission from itself.
Thank you for the opportunity to testify, and I look
forward to your comments, your guidance, and your questions.
[The prepared statement of Commissioner Copps follows:]
Prepared Statement of Hon. Michael J. Copps, Commissioner,
Federal Communications Commission
Good morning, Chairman Inouye, Vice Chairman Stevens and members of
the Committee.
This oversight hearing could not be timelier. The Commission's
priorities are dangerously out-of-whack, and we urgently need this
Committee's help to save us from ourselves. We have a proposal before
us at the Commission to open the door to newspaper/broadcast
combinations in every market in the country and the drive is on to rush
this to a vote next week. Meanwhile we have given short shrift to
pressing problems like the sad state of minority ownership of U.S.
media properties and the obvious decline of localism in our broadcast
programming. We have also neglected the DTV transition, and have not
done nearly enough to prepare consumers and broadcast stations for the
rapidly approaching deadline. If we don't turn this around quickly, the
DTV transition will result in widespread television outages and a
consumer backlash the likes of which you and I haven't seen for a long,
long time. On Universal Service, the Commission has before it a choice:
down one road is action on a holistic set of recommendations that for
the first time includes broadband deployment essential to the mission
of Universal Service; down the other is approval of a cap on high-cost
support to competitive eligible telecommunications carriers (CETCs)
that has the very real potential of being the only action the FCC takes
to reform the system. What a lost opportunity that would be. I fear the
Commission is not going to choose wisely.
Let me begin with media ownership. The proposal in front of the
Commission has been portrayed as a ``moderate'' relaxation of the
newspaper/broadcast cross-ownership ban in the 20 largest markets. But
look carefully at the fine print. The proposal would actually apply the
same test in every market in the country. That's right--any station can
merge with any newspaper in any market in the country. The only
difference is that in the top 20 markets you start with a presumption
that you meet the test, while in the other markets you don't.
And there's the rub. The four factors proposed by the Chairman are
so riddled with holes that they are essentially meaningless. You don't
even have to meet them all--it's just a list of things the FCC will
``consider.'' Given how the FCC has ``considered'' media regulation in
recent years, I don't have much confidence that any proposed
combination will be turned down. In fact, I can predict the boilerplate
language that will accompany such approvals: ``Although applicants
starting with a negative presumption face a high hurdle, in this case
we find the applicant has met its burden by [fill in the blanks].''
This is not the only example of media regulation that seems like a
chapter out of Alice in Wonderland. Just 2 weeks ago, an FCC majority
ostensibly ``denied'' Tribune a waiver before turning around and
granting a two-year waiver were Tribune to file an appeal. The majority
turned these unprecedented legal summersaults to push Tribune to
challenge the newspaper/broadcast cross-ownership ban in a court they
think may be more sympathetic to their cause than the Third Circuit. To
no one's surprise, Tribune filed an appeal the very next business day.
There's still more evidence of the real agenda at play. I've given
Chairman Martin credit for holding six media hearings around the
country, although I would have preferred more. No one knows better than
the American people whether they are being served by their local media.
And at each stop, all of the Commissioners seemed to agree--the public
needs to be heard before the FCC acts on a subject as important as the
American media.
Thousands of citizens came out at great inconvenience to
themselves--and often waited for hours--to provide their testimony.
Throughout the process, many openly questioned whether the hearings
were real or just cover for a pre-determined outcome. This skepticism
gained credence last month when our last media ownership meeting was
announced for Seattle with only 1 week's notice. Listening to people or
checking a box? Well, we may have our answer. I went through the draft
Order to see how it handled the hundreds of public statements at these
hearings. While there is a passing reference to the public hearings,
not a single citizen's testimony is specifically cited or discussed. I
was flabbergasted. The whole point of these hearings was to gather
evidence from the American people--and the Order does not find a single
comment worthy of mention?
So then I went through the draft to look for the public input from
our six separate localism field hearings, which the further notice
stated would be considered as part of the media ownership record.
Again, not a single citizen's testimony is specifically cited or
discussed. It's hard to reach any conclusion other than public comment
is largely extraneous to the process. What else are we to think when a
draft Order is circulated 2 weeks before public comment is due on the
proposal?
I realize we are not taking a public opinion poll in this
proceeding. But surely public comment deserves more respect than this.
As anyone who attended these hearings can tell you, calls for more
media consolidation were few and far between. That's not surprising--a
recent survey finds that 70 percent of Americans view media
consolidation as a problem. And by an almost two-to-one margin, they
believe newspapers should not own TV stations in the same market and
they favor Congress passing laws to make sure that can't happen. Those
poll numbers are consistent across the political spectrum. So this is
no red state-blue state issue. It is an all-American grassroots issue.
This doesn't surprise Commissioner Adelstein or me because that's
exactly what we have seen in the scores of town meetings and forums we
have attended around the country since 2002.
I recognize that there is another possibility--that this is simply
a rush job to be completed any way possible by December 18, so there
just wasn't enough time to consider the full record. Whatever the
reason, there is only one way to do this job and that is to do it
right. The issues are too important to address in the current slapdash
manner.
No one on this Commission, even if some feel differently about the
pros and cons of changing the ownership rules, should want to
perpetuate those kinds of appearance issues about the FCC. The
Commission is in dire need of a process that allays fears rather than
one that creates them.
In the meantime--and before we vote to further loosen our rules--
there are two policy goals on which we need to make real progress--
minority and female ownership is one, localism is the other. These
issues have been languishing for years at the FCC. We always seem to be
running a fast-break when it comes to approving more media
consolidation, but it's the four-corner stall when it comes to minority
and female ownership and ensuring that broadcasters serve their local
communities.
Racial and ethnic minorities make up 33 percent of our population
but they own a scant 3 percent of all full-power commercial TV
stations. And that number is plummeting. Free Press just recently
released a study showing that during the past year the number of
minority-owned full-power commercial television stations declined by
8.5 percent, and the number of African American-owned stations
decreased by nearly 60 percent. It is almost inconceivable that this
shameful state of affairs could be getting worse; yet here we are.
There are recommendations that have been presented to address the
issue, both by outside commenters and our own Diversity Committee.
These need to be put together in a comprehensive, systematic and
prioritized response to a problem that is a national disgrace. I say
that advisedly--it is a national disgrace to have a media environment
that is so blatantly unreflective of how we look as a nation. I support
Commissioner Adelstein's call, joined by many others, for an
independent panel to review the dozens of proposals before us. We need
to fix this problem before voting on any proposals permitting big media
to get even bigger. Consolidation has made it infinitely tougher for
women and minorities to own stations, so why would we give the green
light to more consolidation before coming up with programs to give
women and minorities a chance to compete? And why should we put into
play, as Chairman Martin's proposal does, the very stations that small,
independent, minority broadcasters could have a shot at if they had the
proper incentives? Why would we even consider that?
It may be difficult for you to believe, but the Commission doesn't
even have an accurate count of how many minority and female owners
there are. Just last week, the Congressional Research Service issued a
report on the FCC's 10 media ownership studies and it paints an
anything-but-rosy picture of the record on which the Chairman proposes
to act. The report raises questions about the underlying data and
technical analyses used for several of the studies. In particular, it
points to the lack of accurate data on minority and female media
ownership. As CRS points out, the Third Circuit instructed the
Commission on remand to consider the impact of any media ownership rule
changes on minority ownership. CRS finds, however, that the FCC has
failed to collect accurate data on minority and female ownership, and
that without such data, ``it is impossible to perform'' the analysis
required by the Third Circuit. Indeed, CRS notes that all of the
researchers and peer reviewers agree that the Commission's databases on
minority and female ownership ``are inaccurate and incomplete and their
use for policy analysis would be fraught with risk.'' I agree. The
Commission is courting another unfavorable ruling from the Third
Circuit, proving once again that the impact of further media
consolidation on minority and female ownership is simply not a
priority.
It's the same story on localism. A draft Notice of Proposed
Rulemaking was recently circulated, apparently on the premise that
asking questions is sufficient to ``check the box'' so a Commission
majority can move forward to loosen the newspaper/broadcast cross-
ownership ban. But localism should never be seen as a means to an end--
it is an end in itself. It is at the heart of what the public interest
is all about. All deliberate speed in getting some localism back? By
all means. A rush to judgment to clear the way for more big media
mergers? No way.
For today, our conversation on media ownership should start and end
with the requirements of S. 2332, the ``Media Ownership Act of 2007.''
Senator Dorgan, Senator Lott and the other cosponsors, thank you for
your leadership and for your understanding that unless we have a
credible process, we cannot have a credible result. Right now, the
Chairman is ready to relax the newspaper/broadcast cross-ownership ban
without completing 90 days of public comment on the proposed rule;
before completing a separate rulemaking to promote localism that
includes a 90 day comment period; before collecting accurate data on
female and minority ownership; and before convening and acting
comprehensively upon recommendations by an independent panel on
minority and female ownership.
These fundamental procedural requirements are the heart of S. 2332.
Last week, the full Commission testified before the House
Telecommunications Subcommittee on this topic, and Chairman Dingell
passed on some advice he received from his father: if given a choice
between controlling the process and controlling the substance, his
father told him, choose the process and you'll win every time. The same
is true here. As minority Commissioners, we cannot control process.
However, your legislation would ensure that the substance is debated
fairly and transparently. Were the Commission to abide by the criteria
in the Dorgan-Lott bill, I certainly would support bringing the
Chairman's proposal to a vote. The bill should be the guiding
principles for completing the media ownership proceeding.
I also want to point out that in all this haste to give big media a
huge gift for the holidays, another critical issue is not receiving its
due--the DTV transition. We are 14 short months from a massive switch-
over that will directly affect millions of American households. We have
just one chance to get this right. Unlike many countries that are
taking a phased approach, we are turning off analog signals in every
market in the country on a single date--February 17, 2009.
I recently traveled to the United Kingdom to witness the first
stage of their DTV transition. I was concerned before going over there;
now I am thoroughly alarmed. The UK is taking the transition seriously,
and has put together the kind of well-funded and well-coordinated
public-private partnership that I, and many of you, have been calling
for over here.
There are two basic things that need to happen for a successful
transition. Number one, consumers have to be prepared. We have a
pending consumer education proceeding that could help ensure that the
message is getting out in a coordinated and effective way. But no vote
has been scheduled to get it done.
The second thing that has to happen is broadcasters need to
prepare. Hundreds of stations must take significant actions over the
next 14 months. Things like new antennas and transmitters, new tower
construction and new transmission lines--all of which can require
financing, zoning approvals, tower crews, or international
coordination. But many broadcasters need to know what the technical
rules of the road are going to be before they can move forward. Those
issues are teed up in a proceeding called the ``Third DTV Periodic
Review.'' Although the record has been closed for months, a draft Order
was just circulated to the Commission last week. Already, I fear that
many broadcasters simply aren't going to make it. If we don't start
making the DTV transition a national priority, we will almost certainly
have a 9-car train wreck on our hands. And the American people will be
looking for someone to blame. Those of us who plan to be on duty in
February 2009 are going to need some real good answers.
Finally, let me turn to Universal Service. As a member of the
Federal-State Joint Board on Universal Service, I have participated in
the Board's two recent recommendations to the FCC. In May, I dissented
from a recommendation that the FCC place an ``interim'' cap on the
high-cost support received by CETCs based on my strong belief that it
solves no enduring problem and that it will be interpreted by many as
movement enough to justify putting the larger Universal Service reform
imperative on the back-burner. As a result, it would diminish rather
than enhance the prospects for near or even mid-term reform. I continue
to believe that this is the case.
However, to its credit the Joint Board did not rest and last month
it recommended a far more comprehensive plan for overhauling the high-
cost fund. Most notable is its recommendation, for the first time, to
include broadband as a supported system within the Universal Service
system. While I would have acted more boldly on how to ensure that the
Commission makes good on this commitment, I was enormously pleased to
approve this historic finding by the Joint Board because it establishes
for the first time the right mission for Universal Service in the 21st
century. Congress concluded many years ago that a core principle of
Federal telecommunications policy is that all Americans, no matter who
they are or where they live, should have access to reasonably
comparable services at reasonably comparable rates. Congress wisely
anticipated that the definition of Universal Service would evolve and
advance over time. The Joint Board's recommendation to include
broadband in the definition of Universal Service finally puts the
program in sync with the intent of the Act.
I continue to believe there are a variety of ways to promote
Universal Service and at the same time ensure the sustainability and
integrity of the Fund. As I testified earlier this year, much would be
accomplished if the Commission were to include broadband on both the
distribution and contribution side of the ledger; eliminate the
Identical Support rule; and increase its oversight and auditing of the
high-cost fund. Additionally, Congressional authorization to permit the
assessment of Universal Service contributions on intrastate as well as
interstate revenue would be a valuable tool for supporting broadband.
That being said, the Joint Board made an assortment of recommendations
of its own. I agreed with some of them and not with others.
Nevertheless, the FCC has before it a recommendation that I believe
merits further action rather than taking an interim step that could
very well short-circuit the larger discussion.
Thank you for the opportunity to testify and I look forward to your
comments about these and other of the many issues before us.
The Chairman. I thank you very much, Mr. Commissioner.
Our next witness, Commissioner Jonathan Adelstein.
STATEMENT OF HON. JONATHAN S. ADELSTEIN, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner Adelstein. Thank you, Chairman Inouye, Vice
Chairman Stevens, Members of the Committee.
I certainly appreciate your calling this hearing. I think
it's critical that we get your guidance. We need it urgently.
Your leadership on all the pressing issues before us really
lights a productive path for us to follow. And no issue on our
agenda has more far-reaching consequences than media ownership.
As we've traveled across the country, we heard a loud and
unified chorus: Americans from all perspectives, whether from
the left or the right, and virtually everybody in between,
oppose further media consolidation. They don't want a handful
of giant companies dominating their primary sources of news,
information and entertainment.
Given the dangerous direction that this Commission is now
headed in, it's really disappointing to see us proceed without
due deference to the American public and their elected
representatives.
Mr. Chairman, you led this Committee to a unanimous
bipartisan vote to compel a more thoughtful process, and I
would have expected the Commission to redirect its course. To
do otherwise would be an unprecedented act of defiance in the
face of such a clear message from our authorizing Committee.
You've given us a path to resolve the lingering controversy
over this proceeding. I fully support the process as set forth
in your bill, the Media Ownership Act, as was introduced by
Senators Dorgan and Lott. Even if not quickly adopted by
Congress, we should, in the spirit of compromise, deference to
this Committee, and cooperation amongst the Commissioners,
follow your guidelines. I think that would restore
Congressional and public faith in our review.
The proposal now before us, though portrayed as modest, as
Commissioner Copps said, would actually open the door to
newspapers buying broadcast outlets in every market in America.
Every market in America. The standards for waiver are as loose
as a wet noodle. They're so weak that combinations could be
allowed in any city, no matter how small, or for any TV
station, no matter how dominant.
So, we need to reassess our priorities. Across the country,
people aren't clamoring for us to let newspapers buy broadcast
outlets. People are concerned about making the media more
responsive to their local communities, to the local artists,
and to their civic and cultural affairs. They're concerned that
people of color and women are stereotyped, misrepresented, or
under-represented. They're furious about the level of sexual,
violent, and degrading content that they see paraded by them
every night on their television screens. And they believe media
consolidation has something to do with it.
So, let's put first things first. Media consolidation only
takes outlets further out of the reach of women and people of
color, and further from the local communities and their values.
That's why, as this Committee has asked, we need to first
implement improvements to diversity and localism before, and
not after, we even consider loosening the media ownership
rules. That's why I've called for the creation of an
independent panel to help us raise the dismal level of media
ownership outlets by women and minorities.
I deeply appreciate the endorsement of this Committee for
that call and the wide support from leading civil rights
organizations across the country. Now it's time for the
Commission to act.
There's nothing sacrosanct about December 18. It's not too
late for us to reach an internal agreement on a reasonable
process that addresses the concerns raised by your Committee.
And I'll work with all of my colleagues to try to see if we can
make that happen.
Now, while we're rushing headlong toward media
consolidation, another more time-sensitive issue of deep
concern is where we need to show far greater leadership, and
that's the DTV--the digital television--transition. Instead of
straining to quickly, immediately, next week, make big media
even bigger, we should have already finished our DTV education
plan. We should have already provided urgently needed guidance,
technical guidance that broadcasters are asking us for. Again,
it's about priorities.
As I testified before you in October, and the GAO
reiterated just this week, with regard to the DTV transition,
nobody's in charge and we have no plan. It's high time that we
create the Interagency Task Force that we talked about at that
hearing in October, and the bipartisan leadership of this
Committee supported, to coordinate Federal efforts and to work
with the private sector. I think we still have time to turn
this around, but only if we increase the level of leadership,
planning, coordination, and resources that are dedicated to it.
I think more Federal attention is also needed to restore
America's cutting edge in telecommunications. I'm concerned
that lack of a national broadband strategy is one of the
reasons we're falling further behind our global competitors.
In my written statement, I outline the elements of a
broadband plan. I think we need greater national focus on this
than we have today. And I greatly appreciate, Chairman Inouye,
your leadership and the Committee's efforts to move a bill that
would improve our understanding of the broadband challenge.
Universal Service also plays a key role in supporting rural
networks, maintaining high telephone penetration, and
increasing access for schools and libraries. The FCC is
reexamining almost every aspect of Universal Service, and, as
we consider these changes, I think we need to protect its
strength, and preserve the vital role that it's played. As
technology evolves, we need to channel Universal Service toward
advanced services and broadband. We must conduct our management
of the funds with the highest standards.
So, on all of these key issues before us, if we follow your
leadership, we'll be in the best position to serve the public
interest. Thank you for this opportunity to testify and for
calling this hearing.
[The prepared statement of Commissioner Adelstein follows:]
Prepared Statement of Hon. Jonathan S. Adelstein, Commissioner,
Federal Communications Commission
Chairman Inouye, Vice Chairman Stevens, and Members of the
Committee, thank you for calling this oversight hearing on media and
telecommunications matters pending before the Federal Communications
Commission.
As an independent agency, the Commission's overriding statutory
obligation is to promote the public interest. But it is you--the
elected representatives of the American people--who are directly
accountable to the public. I consider it an honor to discuss with you
some of the many important issues before us. Your oversight regarding
our agenda, including media ownership, the transition to digital
television (DTV), broadband, Universal Service, spectrum and wireless
policy is an essential part of the Commission's decision-making
process. It should improve our responsiveness and service to the
American people.
Media Ownership
Perhaps no issue on the Commission's agenda has more far-reaching
consequences for the future of our democracy than the media ownership
rules. Free over-the-air broadcasting licenses are scarce, and
broadcasters have an enormous impact on the free exchange of ideas.
Despite the growth of other media delivery systems, broadcasting, in
combination with newspapers, are still the most pervasive of all
platforms.
It is clear the public grasps the gravity of our ownership rules.
As we have visited communities across the country, we have heard a
nonpartisan chorus opposing any further concentration of ownership in
the media industry. Americans from all walks of life and all political
perspectives, whether right, left and virtually everybody in between,
do not want a handful of companies dominating their primary sources of
news, information and entertainment.
The Commission's current course, if unchecked, could cause lasting
harm to American media for future generations. Without major changes,
the pending proposal before us will decidedly hurt competition,
diversity and localism. Independent voices will be silenced; women and
people of color, who already own tragically few media outlets, will
find them even further out of reach; and the public will not receive
any quantifiable measure of more local news, information or decent
family programming.
It has been disappointing to see the Commission proceed with such
little deference to the American people and their elected
representatives. In the wake of your leadership, Mr. Chairman, and the
unanimous vote of this Committee to compel a more open and transparent
process, I would have expected the Commission to redirect its course.
You have given us a path to resolve lingering controversy over how to
consider the media ownership rules. I fully support following the
process you have laid out on bipartisan basis which was approved
unanimously by this Committee. Even if it is not adopted by Congress
immediately, the Commission should, in the spirit of deference,
compromise, cooperation and responsiveness to Congress, follow the
process outlined in the Media Ownership Act of 2007 (S. 2332). This
legislation would:
require the FCC to complete a separate proceeding to
evaluate how localism is affected by media consolidation;
give the public an opportunity to comment on that proceeding
for 90 days;
require that the localism proceeding be done separately and
be completed prior to a vote on proposed media ownership rules;
and
require establishment of an independent panel on female and
minority ownership and for the FCC to provide the panel with
accurate data on female and minority ownership--this panel must
issue recommendations and the FCC must act on them prior to
voting on any proposed ownership rules.
Following these simple guidelines is a path to restoring Congressional
and public faith in the Commission's procedures in the media ownership
proceeding.
Failure to adhere to the guidance of elected leaders in Congress
and to follow open and transparent procedures undermines public
confidence. Nowhere is this more important than in our review of the
media ownership rules. Yet, the Commission's approach to our final
media ownership hearing in Seattle, Washington is emblematic of our
shortcomings. Along with many Members of Congress, Senator Maria
Cantwell and Congressman Jay Inslee requested the Commission give their
constituents an opportunity to share their views about media ownership
before we proposed to modify the rules. As the date of a rumored
Seattle hearing approached and no official announcement was made,
Senator Cantwell and Congressman Inslee again wrote the Commission to
ask that the public be afforded 1 month notice so they could plan for
the event. But their letter was ignored and the hearing was announced,
giving the public just five business days notice--the very minimum
allowed by Federal law.
The people of Seattle were rightfully outraged at the short notice,
but they showed up in large numbers anyway, over 1,100 strong on a
Friday night, in protest. Public witnesses expressed with passion and
eloquence their concern about any steps that would further media
consolidation, which they believed had gone too far already. They
openly questioned how the FCC could proceed on such a course.
The next day back at the office, the Chairman announced plans in a
New York Times op-ed and a press release on how he sought to relax the
newspaper/broadcast cross-ownership rule. That was not only the first
time the public learned of the plan. It was also the first time the
Commissioners were notified of the details. It is hard to imagine how
it was possible to review and consider hundreds of public comments made
in Seattle alone before issuing the proposal the next working day. What
could have been a meaningful opportunity for public input and
cooperation with Congress was lost.
The proposal, which is portrayed as ``modest,'' is fraught with
substantive problems that will require serious internal Commission
cooperation, consultation and negotiations. The proposal as drafted
would actually open the door to dominant local newspapers buying up
broadcast outlets in every market in America and potentially of any
size. And it would transform the current ban on newspaper/broadcast
into a nationwide bazaar that would only require buyers to meet the
loosest standards for a waiver.
Even if the proposal were limited to the top 20 markets, that would
account for 43 percent of U.S. households, or over 120 million
Americans. But the details reveal loopholes that would permit new
cross-owned combinations from the largest markets down to the smallest
markets, potentially affecting every American household. The proposal
would permit many cross-ownership combinations in markets in which none
previously existed, but as written it would not lead to more news and
information in those markets.
The waiver standards are as stiff as a wet noodle. The majority of
Commissioners would be able to bend and reshape them at will. Even
under the current stronger standards of a blanket prohibition on cross-
ownership, the Commission has been lax in permitting waivers.
The proposal suggests four factors to be considered for waiver
requests, each of which would require significant strengthening to be
meaningful. First, the draft would have the Commission consider if a
company will ``increase the local news disseminated.'' With no
definition, even an insignificant amount of news a year could qualify.
We need real, quantifiable and substantial standards. Second, each
outlet would have to maintain ``independent news judgment.'' But there
are no standards articulated for determining or enforcing what that
means. Third, the Commission would consider the ``level of
concentration'' in the market. But the proposal offers no measure by
which to judge what is too concentrated, so evidence showing
concentration can be dismissed on a whim. We need a meaningful and
quantifiable standard by which to judge what constitutes unacceptable
increases in concentration. And fourth, the Commission would consider a
newspaper's ``financial condition.'' This factor is so vague as to be
virtually meaningless. We should base the standard on the financial
distress requirements that are currently considered grounds for a
waiver.
These loopholes also undercut the assertion that the proposal would
prevent a newspaper from buying one of the top-four rated stations in
the same market. That alleged protection would disappear with the wave
of a hand in the market below the top 20 if these loose waiver
standards were invoked, so that a newspaper could buy any TV station in
any city, no matter how large.
The main public interest justification for newspaper/broadcast
cross-ownership has been the claim that relaxing the rule would create
more local news. A path-breaking study by leading consumer
organizations, using the FCC's own data, demonstrated that claim to be
wrong. They found that the data underlying an FCC-sponsored study
finding more local news by cross-owned stations actually reveals that
there is less local news in those markets as a whole, taking into
account all news outlets. It remains unclear exactly why the overall
level of local news available diminishes. Perhaps it is because other
outlets choose not to compete with the local leviathan or they lose
equal access to the newspaper's investigative and news resources. But
the fact is the Commission's own data reveals the other outlets in
those cities reduce their news coverage more than the cross-owned
outlets increase it. So not only is less news produced in the market,
but an independent voice is silenced when the dominant local newspaper
swallows up a broadcast outlet. We must find the root causes of this
problem and address them before we proceed to relax the cross-ownership
rule.
We must also study the relationship between inappropriate
programming for children, such as excessively sexual or violent
programs, and the concentration of media ownership. A 2005 report found
that 96 percent of all the indecency fines levied by the FCC in radio
from 2000 to 2003 (97 out of 101) were levied against four of the
Nation's largest radio station ownership groups. The remaining 11,000-
plus stations were responsible for just 4 percent of all FCC radio
indecency violations, a fraction of their national audience share.
While the radio report did not prove a causal link between ownership
concentration and broadcast indecency, I believe the Commission has an
obligation to study and understand the relationship between media
concentration--station ownership and program ownership--and indecency
before we permit more consolidation. A study last year by the Parents
Television Council found that, in the midst of an unprecedented wave of
media consolidation between 1998 and 2006, violence on TV during the
evening hours of 8, 9 and 10 grew by 45, 92 and 167 percent,
respectively. Commissioner Copps and I requested a full FCC field
hearing to explore the relationship between media consolidation and the
rising volume of material inappropriate for children in the media, but
none was held.
In terms of violence, the Commission released its report on violent
television programming and its impact on children last April. Since
then, the Commission has not done anything proactive to address the
many concerns we have heard. While there may be limitations on what we
can do under current law, there is no limitation upon our ability to
show leadership to confront the problem. And we have been too
complacent in the face of nothing less than a crisis facing our
children and families.
The debate about media concentration is fundamentally about
priorities. As we solicited the views of citizens across the country,
we did not hear a clamor for relaxation of the cross-ownership rules.
We only hear that from media company lobbyists inside the Beltway. The
public is concerned about the lack of responsiveness of their media
outlets to local communities, artists, civic and cultural affairs and
family programming. They are concerned that people of color and women
are stereotyped, misrepresented or underrepresented. They are furious
about the level of sexual, violent and degrading material they are
seeing and believe media consolidation has something to do with it. And
they want us to address the public interest obligations of broadcasters
first.
That is why I have insisted that we first address and implement
improvements to localism and diversity of ownership before--not after--
we address the media ownership rules. Like this Committee, I have
called for an independent, bipartisan panel to guide us on a course to
implement improvements in the level of ownership of media outlets by
women and minorities. Many Members of Congress and leading civil rights
organizations have joined that call. And I have demanded, along with
many Members of Congress, including this Committee, that we finalize
the Localism Report and implement real improvements in the
responsiveness of media outlets to local concerns first.
Rather than take this in order, address these lingering crises
first, the Commission seems to be moving forward obsessively to allow
more consolidation, notwithstanding Congressional and public concern.
That would be a mistake. It is not too late for us to achieve a
bipartisan agreement on a reasonable process to finalize the media
ownership proceeding that addresses the many concerns raised by the
public, leading consumer advocates and this Committee. I will work with
all of my colleagues to achieve that goal.
DTV Transition
As we focus today on the public's access to their media--their
airwaves--it is also critical that the FCC show far greater leadership
on a potential disaster that is the DTV transition. As the Government
Accountability Office (GAO) has noted, there is nobody in charge of the
transition and there is no plan. We still have time to turn this
around, but only if we increase the level of leadership, coordination
and resources dedicated to this undertaking. The ongoing leadership of
this Committee has been and will continue to be extremely helpful in
focusing our efforts.
The GAO reiterated this week the need for us to establish a
strategic plan. As I have testified before this Committee, I believe we
need a national DTV outreach, education and implementation plan that
coordinates the efforts and messages of all stakeholders. Here are some
next steps that I believe we need to take, immediately, to get on the
path of reaching and educating people in the more than 111 million U.S.
television households.
Create Federal DTV Transition Task Force. It is long overdue for
the FCC, NTIA and other relevant Federal agencies to formalize their
relationship and develop a Federal DTV Transition Task Force with
representation from the leadership of each agency. The GAO has said
that the FCC has the authority to establish a task force under the
Federal Advisory Committee Act. This multi-agency task force would
develop benchmarks and a timeline to achieve nationwide awareness of
the DTV transition. And, it would be accountable to Congress. The
private sector has established a coordinating mechanism through the DTV
Transition Coalition, and it is high time we do the same for the
Federal Government.
The task force would need staff. The FCC, for example, should
detail staff to the task force from Consumer and Governmental Affairs,
Media, Enforcement, and Public Safety and Homeland Security Bureaus,
and the Offices of General Counsel and Engineering and Technology. With
dedicated staff from different agencies, the task force would also
serve as the clearinghouse for all things related to the DTV transition
national campaign and for coordinating this network of networks. The
aging and disabilities communities, for example, would have access to
financial and human resources to assist these at-risk groups in making
the transition. The task force would be able to coordinate with public
and private partners, leverage existing resources and develop a single
unified Federal message, such as developing and using common
terminology to describe the Digital-to-Analog Converter Box program and
other DTV technology. In addition to coordinating government efforts at
all levels--including state, regional, local, and tribal governments--
the task force can convene joint meetings with the private sector DTV
Transition Coalition to ensure a coherent, consistent message across
all channels. And it can help coordinate the many public-private
assistance efforts needed for at-risk communities.
Launch a Targeted Grassroots Information and Technical Assistance
Campaign. The task force, working with state, local and tribal
governments, the DTV Transition Coalition partners, and community-based
service providers, could target communities with the highest
concentration of over-the-air viewers, including senior citizens, low-
income, non-English speaking, rural populations and tribal communities.
It can launch a coordinated grassroots campaign, which would include
posting signs in supermarkets, retail stores, churches, social service
organizations, all modes of public transportation and other public
places. Many at-risk citizens will need help acquiring and hooking up
their converter boxes, and it remains entirely unclear who is going to
help them. If it is to be done through volunteers, it will take a vast
effort to vet and train them.
No Federal agency currently has the mandate or resources to help
people who can't themselves hook up the boxes to their TV sets. For
example, while the FCC, the Administration on Aging and its allied
aging network--which includes state and local agencies, as well as
community based service providers like Meals on Wheels--have been in
very early discussions about various grassroots efforts, no plan is in
place. People with disabilities experience great difficulty accessing
closed captions and video descriptions. A technical assistance program
must be established soon, with timelines for training and outreach to
ensure people who need help can get it.
While these steps may require some additional funding from Congress
or a reallocation of funds already appropriated, first and foremost,
dedicated leadership and focus are required from the FCC--the expert
agency primarily responsible for the DTV transition.
Establish Much Needed Guidance for Broadcasters Soon. In addition
to these outreach and education initiatives, the Commission must take
steps to ensure that over-the-air viewers are not disenfranchised
during or after the DTV transition, and that all full-power stations
are prepared to cease analog transmission and operate in digital by the
end of the transition on February 17, 2009. Accordingly, I believe the
Commission should: (1) complete the Third DTV Periodic Review as
quickly as possible; and (2) prepare a report to Congress on the status
of the DTV transition on February 17, 2008--one year before the hard
deadline.
Because the law does not provide for any waivers or extension of
time, February 17, 2009 is indeed the last day that full-power
broadcast stations will be allowed to transmit in analog. There are a
total of 1,812 stations that will be serving the American people after
the transition but, to date, only approximately 750 are considered to
have fully completed construction of their digital facilities and are
capable to broadcast in digital only in the final position from which
they will broadcast. The remaining stations vary in levels of
transition preparedness. Some stations need to construct their
transmission facilities, change their antenna or tower location, or
modify their transmission power or antenna height, while others may
have to coordinate with other stations or resolve international
coordination issues.
In the Third DTV Periodic Review, the Commission is contemplating
rules to govern when stations may reduce or cease operation on their
analog channel and begin operation on their digital channel during the
DTV transition. The Commission also sought comment on how to ensure
that broadcasters will complete construction of digital facilities in a
timely and efficient manner that will reach viewers throughout their
authorized service areas. These and other important questions, such as
the deadlines by which stations must construct and operate their DTV
channels or lose interference protection, should have been answered
already. Broadcasters need to know the rules as they invest billions
into this transition. We have lost valuable time focused on other more
tangential aspects of the transition while not moving forward on
clarifying urgent demands on broadcasters to get a huge job done in
short order.
The Third DTV Periodic Review also proposed that every full-power
broadcaster would file a form with the Commission that details the
station's current status and future plans to meet the DTV transition
deadline. While each individual form would be posted on the
Commission's website, I believe it is just as important for the
Commission, Congress and the public to get a comprehensive sense of
where each full-power broadcast station is 12 month before the end of
the transition. A report to Congress one year before the transition
ends will provide both the broadcaster and the FCC sufficient time for
any mid-course correction.
Universal Service
Universal service has been the bedrock telecommunications policy of
the past seventy years. Indeed, Congress and the Commission recognized
early on that the economic, social, and public health benefits of the
telecommunications network are increased for all subscribers by the
addition of each new subscriber. With a decade behind us since the 1996
Act, the FCC is re-examining almost every aspect of our Federal
Universal Service policies, from the way that we conduct contributions
and distributions, to our administration and oversight of the Fund. As
we move forward on all these fronts, I will continue to work to
preserve and advance the Universal Service programs as Congress
intended.
To ensure continued success, we must remain committed to providing
specific, predictable and sufficient support mechanisms based on
equitable and non-discriminatory contributions. For that reason, I have
supported recent Commission decisions to stabilize the base of support
for Universal Service. The Commission also continues to grapple with
overarching questions about how our Universal Service contribution
policies should evolve as we move into the broadband age and an age of
bundled, flat-rated services. As we consider further changes to our
contribution rules, I look forward to working with my colleagues to
ensure that we take appropriate steps to ensure that Universal Service
remains on solid footing. We must also ensure scarce funds are
carefully targeted and the program is run in a fiscally responsible
manner.
Having a stable base of support is so critical because our
Universal Service support mechanisms play a vital role in meeting our
commitment to connectivity, helping to maintain high levels of
telephone penetration, particularly for those with low incomes and in
hard-to-serve areas, and increasing access for our Nation's schools and
libraries. Earlier this year, I was pleased to help mark the 10th
anniversary of the implementation of the Schools and Libraries program
(E-Rate). With the help of the E-Rate program, the Internet access rate
in our schools has jumped from only 14 percent in 1996 to 94 percent,
today. Senator Rockefeller and Senator Snowe showed great foresight in
anticipating the impact of the Internet on the way that our children
learn and how our communities connect. Ten years from its inception, we
must capitalize on this success and continue to improve the program.
The Commission has made a number of good decisions over the past year
that should make the program work better, but there is more that we can
do to ensure that our schools and libraries get the increased bandwidth
they need to run the most cutting edge applications and software. Our
nation's school children can not be relegated to yesterday's technology
if they are to keep getting the tools they need to succeed.
Ensuring the vitality of Universal Service will be particularly
important as technology continues to evolve. As voice, video, and data
increasingly flow to homes and businesses over broadband platforms,
voice is poised to become just one application over broadband networks.
So, in this rapidly-evolving landscape, we must ensure that Universal
Service evolves to promote advanced services, which is a priority that
Congress made clear. The economic, public health, and social
externalities associated with access to broadband networks will be far
more important than the significant effects associated with the plain-
old-telephone-service network, because broadband services will touch so
many different aspects of our lives.
I note that the Federal-State Joint Board on Universal Service
(Joint Board) recently released its recommendations on comprehensive
reform of the high cost support mechanisms. While I am still reviewing
these recommendations, I was pleased that the Joint Board encouraged
the Commission to revise its list of services supported by Federal
Universal Service to include broadband Internet access service. The
Joint Board recommended that the Commission establish a Broadband Fund,
tasked primarily with facilitating construction of facilities for new
broadband services to unserved areas. The Joint Board also recognized
the effectiveness of the current High Cost Loop Fund in supporting the
capital costs of providing broadband-capable loop facilities for rural
carriers. I look forward to carefully reviewing the Joint Board's
recommendations, and I hope that the Commission will seek comment
quickly on these proposals from a broad range of commenters.
I was also pleased to support the Commission's recent decision to
expand the Federal Universal Service Rural Health Care program to
include a pilot program to fund the construction of broadband
infrastructure to connect rural health care providers. The telemedicine
programs funded through the Rural Health Care program can have dramatic
benefits for rural communities, and I have repeatedly supported efforts
to improve the connectivity of rural health care providers. Without
Universal Service, the high cost of telemedicine services might put
them out of reach of many small communities. Yet, the Rural Health Care
program has consistently been underutilized despite widely-varying
levels of connectivity among rural health care providers. The adoption
of a broadband pilot program has promise for increasing access to
telemedicine facilities and I look forward to reviewing the results of
that effort.
Finally, I believe that it is important that the Commission conduct
its stewardship of Universal Service with the highest of standards. We
must aggressively combat any evidence of waste, fraud and abuse.
Need for a National Broadband Strategy
Americans should have the opportunity to maximize their potential
through communications, no matter where they live or what challenges
they face. To achieve that ambitious goal, we must engage in a
concerted and coordinated effort to restore our place as the world
leader in telecommunications by making available to all our citizens
affordable, true broadband, capable of carrying voice, data and video
signals. An issue of this importance to our future warrants a
comprehensive national broadband strategy that targets the needs of all
Americans.
Right now, broadband is redefining the economic opportunities
available to our communities and entrepreneurs. Broadband can connect
businesses to millions of new distant potential customers, facilitate
telecommuting, and increase productivity. Much of the economic growth
we have experienced in the last decade is attributable to productivity
increases that have arisen from advances in technology, particularly in
telecommunications. These new connections increase the efficiency of
existing business and create new jobs by allowing news businesses to
emerge, and new developments such as remote business locations and call
centers. The opportunities for rural areas that have seized the
initiative are enormous.
Even as consumers are increasingly empowered to use broadband in
newer, more creative ways, we are competing on a global stage. New
telecommunications networks let people do jobs from anywhere in the
world--whether an office in downtown Manhattan, a home on the
Mississippi Delta, or a call center in Bangalore, India. This trend
should be a wake-up call for Americans to demand the highest quality
communications systems across our Nation, so that we can harness the
full potential, productivity and efficiency of our own country. We must
give all our towns the tools they need to compete in this new
marketplace.
We have made progress, many providers are deeply committed, and
there are positive lessons to draw on. Yet, I am increasingly concerned
that we have failed to keep pace with our global competitors over the
past few years. Each year, we slip further down the regular rankings of
broadband penetration. While some have protested the international
broadband penetration rankings, the fact is the U.S. has dropped year-
after-year. This downward trend and the lack of broadband value
illustrate the sobering point that when it comes to giving our citizens
affordable access to state-of-the-art communications, the U.S. has
fallen behind its global competitors.
Some have argued that the reason we have fallen so far in the
international broadband rankings is that we are a more rural country
than many of those ahead of us. If that is the case, we should
strengthen our efforts to address any rural challenges head-on.
I am concerned that the lack of a comprehensive broadband
communications deployment plan is one of the reasons that the U.S. is
increasingly falling further behind our global competitors. This must
become a greater national priority for America than it is now. We need
a strategy to prevent outsourcing of jobs overseas by promoting the
ability of U.S. companies to ``in-source'' within our own borders.
Elements of a Strategy. A true broadband strategy should
incorporate benchmarks, deployment timetables, and measurable
thresholds to gauge our progress. We need to set ambitious goals and
shoot for affordable, truly high-bandwidth broadband. We should start
by updating our current anemic definition of high-speed of just 200
kbps in one direction to something more akin to what consumers receive
in countries with which we compete, speeds that are magnitudes higher
than our current definitions.
We must take a hard look at our successes and failures. We need
much more reliable, specific data than the FCC currently compiles so
that we can better ascertain our current problems and develop
responsive solutions. The FCC should be able to give Congress and
consumers a clear sense of the price per megabit, just as we all look
to the price per gallon of gasoline as a key indicator of consumer
welfare. Giving consumers reliable information by requiring public
reporting of actual broadband speeds by providers would spur better
service and enable the free market to function more effectively.
Another important tool is better mapping of broadband availability,
which would enable the public and private sectors to work together to
target underserved areas.
I am grateful for the Senate Commerce Committee's leadership on
these issues and recognition of the importance of developing a more
rigorous assessment of the broadband challenge. The ``Broadband Data
Improvement Act,'' introduced by Chairman Inouye, and sponsored and
supported by so many members of the Committee, would provide valuable
tools for Congress, the Commission, and consumers in our joint efforts
to increase access to truly affordable, high-speed broadband services.
By directing the Commission to improve and expand its data collection
efforts, by directing other Federal agencies to focus on this great
infrastructure priority, and by facilitating partnerships at the state
and local level, this legislation would help us make great progress on
this critical front.
We must also redouble our efforts to encourage broadband
development by increasing incentives for investment, because we will
rely on the private sector as the primary driver of growth. These
efforts must take place across technologies, so that we not only build
on the traditional telephone and cable platforms, but also create
opportunities for deployment of fiber-to-the-home, fixed and mobile
wireless, broadband-over-power-line, and satellite technologies. We
must work to promote meaningful competition, as competition is the most
effective driver of innovation, as well as lower prices. Only rational
competition policies can ensure that the U.S. broadband market does not
devolve into a stagnant duopoly, which is a serious concern given that
cable and DSL providers now control approximately 96 percent of the
residential broadband market. We must also work to preserve the open
and neutral character that has been the hallmark of the Internet, in
order to maximize its potential as a tool for economic opportunity,
innovation, and so many forms of public participation. We also need to
encourage and support the effort by the large incumbent local exchange
carriers to deploy new systems capable of delivering high-quality video
services.
One of the best opportunities for promoting broadband, and
providing competition across the country, is in maximizing the
potential of spectrum-based services. The Commission must do more to
stay on top of the latest developments in spectrum technology and
policy, working with both licensed and unlicensed spectrum. Spectrum is
the lifeblood for much of this new communications landscape. The past
several years have seen an explosion of new opportunities for
consumers, like Wi-Fi, satellite-based technologies, and more advanced
mobile services. We now have to be more creative with what I have
described as ``spectrum facilitation.'' That means looking at all types
of approaches--technical, economic or regulatory--to get spectrum into
the hands of operators ready to serve consumers at the most local
levels possible.
In January 2008, the Commission will commence its auction of the
700 MHz band, a potentially historic opportunity to facilitate the
emergence of a ``third'' broadband platform. This is the biggest and
most important auction we will see for many years to come. While the
Commission recently adopted auction rules that reflect a compromise
among many different competing interests, I am hopeful that there will
be opportunities for a diverse group of licensees in the 700 MHz
auction and that our more aggressive build-out requirements will
benefit consumers across the country. We also put in place a new
approach to spectrum management by adopting a meaningful, though not
perfect, open access environment on a significant portion of the 700
MHz spectrum. This decision represents a good faith effort to establish
an open access regime for devices and applications that will hopefully
serve consumers well and create opportunities for small providers for
many years to come.
There also is more Congress can do, outside of the purview of the
FCC, such as providing adequate funding for Rural Utilities Service
broadband loans and grants, and ensuring RUS properly targets those
funds; establishing new grant programs supporting public-private
partnerships that can identify strategies to spur deployment; providing
tax incentives for companies that invest in broadband to underserved
areas; devising better depreciation rules for capital investments in
targeted telecommunications services; promoting the deployment of high-
speed Internet access to public housing units and redevelopment
projects; investing in basic science research and development to spur
further innovation in telecommunications technology; and improving math
and science education so that we have the human resources to fuel
continued growth, innovation and usage of advanced telecommunications
services; and, of course, we need to make sure all of our children have
affordable access to their own computers to take full advantage of the
many educational opportunities offered by broadband.
What is sorely needed is real leadership at all levels of
government, working in partnership with the private sector, to restore
our leadership in telecommunications. This Committee's attention to
this issue is exactly the kind of effort that is needed. I also believe
we need a National Summit on Broadband--or a series of such summits--
mediated by the Federal Government, including Congress, the Executive
Branch and independent agencies, state and local governments, and
involving the private sector, which could focus the kind of attention
that is needed to restore our place as the world leader in
telecommunications.
Thank you for holding this critical hearing, and I look forward to
working with you to make sure that American media remain the most
vibrant in the world, that the DTV transition is a success for the
American people, and that we continue to provide opportunities for all
Americans to benefit from the most cutting edge communications tools
available.
The Chairman. I thank you very much, Commissioner.
Our next witness, Commissioner Deborah Taylor Tate.
STATEMENT OF HON. DEBORAH TAYLOR TATE, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner Tate. Thank you, Mr. Chairman, Vice Chairman
Stevens, and honorable Members of this Committee. It is an
honor always to appear before you as a member of the FCC.
As a public servant, I recognize that this is a position of
trust which requires engaging in open dialogues with you, with
Congress, and with the American people, and I welcome that
today.
A few of the issues that have been at the top of our
agenda, we will discuss today, from reviewing our media
ownership rules, of course, to coordinating with the industry
for a successful DTV transition, to managing spectrum
allocation for new and innovative services, to encouraging the
nationwide deployment of broadband, to facilitating
interoperability of our public safety services, to ensuring the
long-run viability of the Universal Service Program. These
decisions will be among the most historically significant that
this Commission will undertake and command your attention, as
well as the public's.
Following a remand, as you all know, by the D.C. Circuit
Court in 2004, media ownership has been a front-burner issue
for this Commission. Throughout this review, the focus of our
attention has been on the touchstones of competition,
diversity, and localism. Over the past 18 months, as you heard,
we have held six open public hearings all across the entire
country, in many of your states--L.A., Tampa, Harrisburg,
Chicago, Seattle. And I was glad to welcome the Commission to
my home town of Nashville. We have, indeed, heard from
thousands of American citizens in an unprecedented access to a
governmental body providing them the opportunity to voice their
opinion regarding the media and ownership of media outlets.
Over my 20-plus years as a public servant at all levels of
government, I can't remember a single time that an agency has
expended this much institutional energy and investment on a
single issue. We invited and received hundreds of thousands of
comments, not only from the general public, but assembled
expert panels of economists, TV, radio, and film producers,
musicians, directors, professors, students, small and large
broadcasters, and, of course, local community organizations.
During the year and a half of our ongoing hearings, we have
also arranged for ten media studies, subjected those to two
sets of peer review, and have made them accessible online.
Never before, of course, has so much competition existed
for the eyes and ears of American consumers of news and
information, wherever, whenever, however, and over whatever
device they choose. This competition is now cross-platform and
includes newspapers and broadcasters, and also cable,
satellite, wireline, and, increasingly, mobile networks. And,
as more platforms offer access to the Internet, then, of
course, the breadth of the sources only expand.
I grew up in small-town Tennessee, with only a handful of
radios and three TV networks. And obviously, now we have access
to more media voices than ever.
A rule shouldn't account just for the needs of our
generation, but also of the I-Generation, as they're called,
those who live in an online YouTube world with access to local,
national, and international news sources that we could have
only dreamed of at their ages. Like many of you, I'm an avid
consumer of news, trade publications, national newspapers, my
local paper, TV news clips, online news sites, and even alerts
set to my personal news preferences; yet, those sources pale in
comparison to the sources utilized by the younger generation.
Like many of you and members of our Commission, I continue
to be very troubled by the statistics regarding the
staggeringly low rate of female and minority ownership in the
industry. And I've tried, not merely just to talk about the
issues, but to actively work with others to find solutions,
whether participating in NAB's Education Foundation series that
they've done for women and minorities, or the Hispanic
Broadcasters Association Financing and Capitalization Seminar,
or events sponsored by NABOB, the National Association of
Black-Owned Broadcasters. We keep hearing, and we know, that
financing is at the top of their concern, whether already in
business or hoping to be a new owners. So, I've offered to lend
my support to an annual Wall Street Conference that would focus
on investment opportunities.
I'm pleased that the Commission is presently now
considering a number of proposals, such as allowing minority
and women broadcasters to purchase expiring construction
permits, changing our equity plus debt attribution rule, and
requiring nondiscrimination clauses in contracts. Let there be
no doubt that women, and many of whom are African American,
are, indeed, succeeding in the industry, and we need to learn
from them. Look, for example, no further than Cathy Hughes,
Founder and Chair of Radio One, the largest African American-
owned and operated broadcast company in the U.S. And I have
many other examples.
On another important issue, as co-chair of the Federal-
State Joint Board on Universal Service, I'm pleased that we
were able to deliver to the Commission a recommended decision,
and meet our promise to you all that we would do that in
November. We all agree that a modern communications
infrastructure is absolutely essential, so that all Americans,
those living in rural America, have access to the full array of
educational, economic opportunities that are delivered via
advanced communications services at comparable rates.
Finally, I remain committed to issues that are important to
many of you: fighting childhood obesity, protecting children
online, and reducing children's exposure to media violence. We
continue to partner with you all in Congress.
I look forward to your thoughts, and I'm certainly happy to
answer any questions that you have.
Senator Lott, we'll miss you.
[The prepared statement of Commissioner Tate follows:]
Prepared Statement of Hon. Deborah Taylor Tate, Commissioner,
Federal Communications Commission
Mr. Chairman, Members of the Committee, it is an honor to appear
before you today as a member of the Federal Communications Commission.
As a public servant, I realize that I hold a position of public trust
and recognize that protecting that trust requires engaging in open
dialogues, both with Congress and the American people. Accordingly, I
welcome the Committee's input and questions.
Since I arrived at the Commission in January 2006, there have been
hundreds of issues before us. Some of these affect only a single party,
while others are of national and even international significance. For
all issues, it is our duty to carefully consider the facts and approach
our analysis with the goals of fostering competition, encouraging
innovation, and helping ensure this country's global competitiveness
for years to come.
A few issues before the Commission have been at the top of our
agenda since I arrived. From reviewing our media ownership rules, to
coordinating with the industry for a successful DTV transition, to
fiscal responsibility in managing spectrum allocation for new and
innovative services, to encouraging nationwide deployment of broadband,
to facilitating the interoperability of our public safety services, to
ensuring the long-run viability of our Universal Service program, these
decisions will be among the most historically significant the
Commission will make and therefore should command your attention as
well as the public's.
Following a remand by the D.C. Circuit in 2004, media ownership has
been a front-burner issue for the Commission. Throughout this review,
the focus of our attention has been on the touchstones of competition,
localism, and diversity of voices. Over the past 18 months, we have
held open public hearings across the entire country--literally from sea
to shining sea--in Los Angeles and El Segundo, California; Tampa,
Florida; Harrisburg, Pennsylvania; Chicago, Illinois; Seattle,
Washington; and I was so glad to welcome my colleagues to Belmont
University in my hometown of Nashville. These lengthy hearings have
enabled thousands of American citizens to have unprecedented access to
a governmental body while providing them the opportunity to voice their
opinion regarding ownership of media outlets. Over my 20-plus years of
public service--at all levels of government--I cannot remember a single
time that an agency expended this much institutional energy and
investment on an issue, or was this open and thorough regarding a
matter of public interest. We invited comment not only from the general
public, but also from expert panels of economists; TV, radio, and film
producers; musicians; directors; professors; students; small and large
broadcasters; and community organizations. During the roughly year and
a half of on-going hearings, we also arranged for ten media studies,
which were completed over the summer, subjected to peer review, and
were made accessible online.
Never before has so much competition existed for the eyes and ears
of American consumers of news and information, wherever, whenever, and
however, over any device they may choose. This competition is cross-
platform, and it includes newspapers and broadcasters, of course, but
also cable, satellite and wireline networks and, increasingly, mobile
networks. And as more platforms offer access to the Internet, the
breadth of the sources only expands. I grew up in a small town in rural
Tennessee where our media choices were a handful of radio stations and
three major television networks. Today, in cities and towns across the
country, households have more access to media voices than ever.
We must structure our media ownership rules to account for the
needs not just of our generation, but of the next generation. The ``I-
Generation,'' as they are often called, lives in an online, YouTube
world, with access to local, national, and international news sources
we could only have dreamed of at their ages. Like many of you, I am an
avid consumer of news--from industry trade publications to national
newspapers to my local paper, The Tennessean, as well as CNN clips,
online news sites, and tools such as alerts that are set to my personal
news preferences. Yet my list of news sources pales in comparison to
the number of sources accessed by the younger generation.
While I share many commenters' concerns about the negative impact
media can have, from extreme violence to exceedingly coarse language,
to the impact on childhood obesity, I appreciate the many media
companies that try to have a positive impact.
I also continue to be troubled by the statistics regarding the low
rate of female and minority ownership in the industry. During my tenure
at the Commission, I have tried not merely to talk about the issues,
but to work with others to find solutions, both inside and outside the
Commission, which could have a positive impact. Over the past year, I
participated in the NAB Education Foundation series for women and
minorities; I attended the Hispanic Broadcasters Association Financing
and Capitalization Seminar; and I have also worked with the National
Association of Black Owned Broadcasters. At these events, when women
and minority broadcasters discuss challenges they face, financing is
always at the top of the list. This is true for those who are just
starting out, and those who have been in the industry for years. I am
very pleased that the Commission is presently considering a number of
proposals to assist women and minorities. In addition, I have offered
to lend my support to an annual conference that would focus on
investment opportunities. Another recommendation before the Commission
is allowing minority and women broadcasters to purchase expiring
construction permits, and giving them the duration of the permit, or 18
months, to complete construction. Finally, we continue to discuss
changing the Equity-Debt Plus (EDP) attribution rule so that investors'
concerns with ownership limits will not prevent them from making
investments they would otherwise consider.
Let there be no doubt that women--many of whom are African
American--are indeed succeeding in this industry. Look for example at
Cathy Hughes, Founder and Chairperson of Radio One/TV One, Inc., the
largest African American-owned and operated broadcast company in the
United States, or Susan Davenport Austin, Vice President and Treasurer
of Sheridan Broadcasting Corporation, which manages the only African
American-owned national radio network. And then there is Caroline
Beasley, Executive Vice President and CFO of Beasley Broadcast Group,
Inc., the 18th largest radio broadcasting company in the country, and
Susan Patrick, Co-Owner Legend Communications, who has been in the
media brokerage business for more than 20 years. I hope that we will
employ every possible avenue to have a more positive impact on the
diversity of both voices and ownership.
On another important issue, as Co-Chair of the Federal-State Joint
Board on Universal Service, I am pleased that the Board issued a
recommendation that will ensure the sustainability of Universal
Service. We all agree that a modern and high-quality communications
infrastructure is essential to ensure that all Americans, including
those living in rural communities, have access to the full array of
educational, economic, and other opportunities that are delivered via
advanced communications services. Indeed, Congress has directed that
consumers in all regions of the Nation have access to reasonably
comparable telecommunications and information services, including
advanced services, at reasonably comparable rates. The Commission's
efforts to enact sound policy with regard to our Universal Service
rules reflect a firm commitment to this Congressional directive.
Finally, apart from our many Congressionally mandated obligations,
the Commission remains involved in many public interest issues that are
important to the members of this Committee, such as fighting childhood
obesity, protecting children online, and reducing children's exposure
to media violence. We continue to partner with Congress and the private
sector to improve the lives of children and families, through our joint
Childhood Obesity Task Force and the Internet Safety Roundtable, which
Senator Stevens and I recently participated in.
I look forward to hearing your thoughts and working with you on
these and many other important issues facing the Commission, Congress,
and our Nation.
The Chairman. Thank you, Commissioner Tate.
And may I now recognize Commissioner Robert McDowell.
STATEMENT OF HON. ROBERT M. McDOWELL, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
Commissioner McDowell. Thank you, Mr. Chairman and Senator
Stevens and all the distinguished Members of the Committee.
And, Senator Lott, I guess this is the last time we'll
appear before you, and I'd like to thank you for your service
to the U.S. Senate and the U.S. House and your country. Thank
you.
Of course, the Commission has been very active since the
last time we appeared before this Committee, on February 1. My
written statement covers a panoply of issues that we've worked
on since then, but right now I'd like to focus on media
ownership, of course.
The future of our media ownership rules is the highest-
profile issue before us. By far, this proceeding elicits more
public passion than any other. The media can shape the debate
over every other issue, because it serves as a filter, or lens,
for the information the American people rely upon to make
decisions about their lives and the future of our great
country.
``Information,'' as Thomas Jefferson said, ``is the
currency of democracy.'' The founders of our country understood
the important role played by the media in American society when
they crafted the Bill of Rights. In fact, this Saturday marks
the 216th anniversary of the ratification of the Bill of
Rights. And first among them, of course, is the First
Amendment, guaranteeing free expression and freedom of the
press. In 1791, technology limited such expressions to word of
mouth or the written word printed on the medium of paper.
Today, the media marketplace has been transformed by
technological innovation into the most robust and dynamic
multimedia environment in human history. Just in the past two
decades, we have witnessed a brilliant technological explosion
that has brought consumers five national broadcast networks,
hundreds of cable channels delivering content produced by more
than 550 independent programmers, nearly 14,000 radio stations,
two vibrant satellite television companies, telephone companies
offering video, cable overbuilders, satellite radio, the
Internet and its millions of websites and bloggers, a myriad of
wireless devices operating in a wonderfully chaotic and
competitive environment (which has hatched the term
``mobisode'' for video content downloaded onto cell phones),
iPods, podcasts, and much more. And that's not counting the
countless new technologies and services that are rushing over
the horizon, such as those resulting from our Advanced Wireless
Services auction of last year or the upcoming 700 MHz auction,
which starts next month. In short, consumers have more choices
and more control over what they read, watch, and listen to than
ever.
These new media platforms do not live under the same
regulations as traditional media. As a result, it should not be
any wonder that most of the new investment, energy, and ideas
are flowing into these newer and less regulated platforms.
Contemplating this changing marketplace, in 1996 Congress
mandated that the FCC periodically review the rules governing
the ownership of traditional media platforms. Congress created
an unusual statutory presumption in favor of modifying, or even
repealing, ownership rules as more competition enters the
market. Section 202(h) states that we must, ``determine whether
any of such rules are necessary in the public interest as the
result of competition. The Commission shall repeal or modify
any regulation that it determines to be no longer in the public
interest.'' This is our mandate from the directly elected
representatives of the American people. The Commission's
longstanding public policy goals of promoting competition,
diversity and localism continue to guide our actions in media
ownership, as well.
Although the current media ownership proceeding began at my
very first open meeting as a Commissioner, almost 18 months
ago, this issue has been before the Commission in one form or
another for almost 12 years. Since a large bipartisan vote in
Congress engendered the Telecommunications Act of 1996, both
Democrat and Republican Commissions have initiated several
proceedings, the first starting later in that same year.
That action produced another proceeding in 1998 which ended
with a report in June 2000 from a Democrat-controlled FCC,
finding that the 1975 newspaper/broadcast cross-ownership ban
may no longer be necessary to protect the public interest, in
certain circumstances. That conclusion gave rise to the 2001
cross-ownership proceeding, which led to a 2002 rulemaking,
which, finally, produced an order. The order was appealed to
the Third Circuit. In the meantime, Congress overturned the
FCC's relaxation of the national television cap, while the
court remanded almost all of the remainder of the order. But, I
emphasize the word ``almost.'' The court also concluded that,
``reasoned analysis supports the Commission's determination
that a blanket ban on newspaper/broadcast cross-ownership was
no longer in the public interest.''
Since then, the Commission's work on the latest iteration
of this proceeding has been unprecedented in scope and
thoroughness. We gathered and reviewed over 130,000 initial and
reply comments, and extended the comment deadline once. We
released a Second Further Notice in response to concerns that
our initial notice was not sufficiently specific about
proposals to increase ownership of broadcast stations by people
of color and women. We traveled across our great Nation to hear
directly from the American people during eight field hearings.
During those hearings, we heard from 115 expert panelists on
the state of ownership in those markets, and we stayed late
into the night, and frequently early into the next morning, to
listen to concerned citizens who had signed up to speak. And
I've greatly valued hearing directly from the thousands of
people who have traveled to our hearings, often on very short
notice.
While we deliberate, consumers' eyeballs and corresponding
ad dollars are migrating to new media platforms. The Hollywood
writers' strike is a good example of this phenomenon. Creators
are taking their content directly to the Internet. Under this
new scenario, viewers that would usually be tuned in to
broadcast entertainment are, despite the strike, able to find,
download, and watch new and different programming choices
directly.
Also as a result of this paradigm shift, at least 300 daily
newspapers have shut their doors forever in the last 32 years,
because people are looking elsewhere for their content.
Traditional media is shrinking, and new media is growing.
But the good news is that all Americans will benefit from
this new media world, because these new technologies, with
their low barriers to entry, empower the sovereignty of the
individual, regardless of who you are. All of us should weigh
all of the arguments presented before us in the context of
these facts.
Thank you for having us here today, and I look forward to
your questions.
[The prepared statement of Commissioner McDowell follows:]
Prepared Statement of Hon. Robert M. McDowell, Commissioner,
Federal Communications Commission
Good morning, Mr. Chairman, Senator Stevens and distinguished
Members of the Committee. Thank you for inviting us to appear before
you again this morning.
The Commission has been quite active since we were last before you
on February 1. Time does not allow for me to discuss every issue before
the Commission today, but I have included some highlights in this
testimony. I will begin with a discussion of media issues. Second, I
will talk about wireline issues. Last, I will touch upon wireless
issues. As always, I look forward to answering any questions you may
have.
Media Issues
Media Ownership. Of course, the highest profile issue before us is
the future of our media ownership rules. By far, this one issue elicits
more public passion than any other issue we work on. The media can
shape the debate over every other issue because it serves as a filter
or lens for the information the American people rely upon to make
decisions about their lives and the future of our great country.
``Information,'' as Thomas Jefferson said, ``is the currency of
democracy.'' The founders of our Nation understood the important role
played by the media in American society when they crafted the Bill of
Rights. In fact, this Saturday marks the 216th anniversary of the
ratification of the Bill of Rights. First among them, of course, is the
First Amendment guaranteeing free expression and freedom of the press.
In 1791, technology limited such expressions to word of mouth or the
written word printed on the medium of paper.
Today, there is no disputing that the media marketplace has been
transformed by technological innovation into the most robust and
dynamic multimedia environment in human history--to the point where
sometimes people complain about being bombarded by ``too much
information.'' Just in the past two decades, we have witnessed a
brilliant technological explosion that has brought consumers five
national broadcast networks, hundreds of cable channels spewing diverse
cable content produced by more than 550 independent programmers, nearly
14,000 full-power radio stations, two vibrant satellite television
companies, telephone companies offering video, cable overbuilders,
satellite radio, the Internet and its millions of websites and
bloggers, a myriad of wireless devices operating in a wonderfully
chaotic and competitive environment, iPods, podcasts, and much, much
more. And that's not counting the myriad new technologies and services
that are coming over the horizon such as those resulting from our
Advanced Wireless Services auction of last year or the upcoming 700 MHz
auction, which starts next month. In short, consumers have more choices
and more control over what they read, watch and listen to than ever.
New media platforms do not live under the same regulations as
traditional media. As a result, it should not be any wonder that most
of the new investment, energy and ideas are flowing into these newer
and less-regulated platforms. Contemplating this changing marketplace,
in 1996 Congress mandated that the FCC periodically review the rules
governing the ownership of traditional media platforms. Accordingly,
Congress created a statutory presumption in favor of modifying, or even
repealing, ownership rules as more competition enters the market.
Section 202(h) states that we must ``determine whether any of such
rules are necessary in the public interest as the result of
competition. The Commission shall repeal or modify any regulation that
it determines to be no longer in the public interest.'' \1\ This is our
mandate from the directly elected representatives of the American
people. The Commission's longstanding public policy goals of promoting
competition, diversity and localism continue to guide our actions in
media ownership.\2\
---------------------------------------------------------------------------
\1\ 47 U.S.C. 303, note.
\2\ See 2002 Biennial Review Order, 18 FCC Rcd 13620, 13627 (2003).
---------------------------------------------------------------------------
Although the current media ownership proceeding began at my first
open meeting as a Commissioner, almost 18 months ago, this issue has
been before the Commission in one form or another for almost twelve
years. Since a large bipartisan vote in Congress engendered the
Telecommunications Act of 1996 containing that unusual statutory
presumption in favor of deregulation, both Democrat and Republican
commissions have initiated several proceedings. The 1996 Act sparked a
proceeding on this matter the very same year. That action produced
another proceeding in 1998 which ended with a report in June 2000 from
a Democrat-controlled FCC finding that the newspaper/broadcast cross-
ownership ban, enacted in 1975, may no longer be necessary to protect
the public interest in certain circumstances. That conclusion gave rise
to the 2001 cross-ownership rulemaking. The 2001 proceeding became the
basis for the 2002 rulemaking, which produced an order. The order was
appealed to the Third Circuit. In the meantime, Congress overturned the
FCC's relaxation of the national television cap while the court
remanded almost all of the remainder of the order. But I emphasize the
word ``almost.'' The court also concluded that, ``reasoned analysis
supports the Commission's determination that the blanket ban on
newspaper/broadcast cross-ownership was no longer in the public
interest.'' \3\
---------------------------------------------------------------------------
\3\ Prometheus Radio Project v. F.C.C., 373 F.3d 372, 398 (3d. Cir.
2004)
---------------------------------------------------------------------------
Since then, the Commission's work on the latest iteration of this
proceeding has been unprecedented in scope and thoroughness. We
gathered and reviewed over 130,000 initial and reply comments and
extended the comment deadline once. We released a Second Further Notice
in response to concerns that our initial notice was not sufficiently
specific about proposals to increase ownership of broadcast stations by
people of color and women. We gathered and reviewed even more comments
and replies in response to the Second Notice. We traveled across our
great nation to hear directly from the American people during six field
hearings on ownership in: Los Angeles and El Segundo, Nashville,
Harrisburg, Tampa-St. Pete, Chicago, and Seattle. We held two
additional hearings on localism, in Portland, Maine and here in our
Nation's capital. During those hearings, we heard from 115 expert
panelists on the state of ownership in those markets and we stayed late
into the night, and sometimes early into the next morning, to hear from
concerned citizens who signed up to speak.
We also commissioned and released for public comment ten economic
studies by respected economists from academia and elsewhere. These
studies examine ownership structure and its effect on the quantity and
quality of news and other programming on radio, TV and in newspapers;
on minority and female ownership in media enterprises; on the effects
of cross-ownership on local content and political slant; and on
vertical integration and the market for broadcast programming. We
received and reviewed scores more comments and replies in response. The
comments of those who did not like the studies are also part of the
record. I have also greatly valued hearing directly from the thousands
of people who have traveled to our hearings, often on short notice.
Almost no one has disputed the data that shows we live in a media
world that is far different from the one that existed even at the time
of the 1996 Act. Consumers' eyeballs and corresponding ad dollars are
migrating to new media platforms. The Hollywood writers' strike is a
good example of this phenomenon. The strike is all about following the
audience and ad revenue. Creators are taking their content directly to
the Internet. Under this new scenario, viewers that would usually be
tuned in to broadcast entertainment are, despite the strike, able to
find, download and watch new and different programming choices
directly.
Moreover, as a result of this paradigm shift, at least 300 daily
newspapers have shut their doors forever in the last 32 years because
people are looking elsewhere for their news, information and
entertainment. During the third quarter of this year, ad revenue for
newspapers dropped by 9 percent and circulation for a similar period
dropped by almost 3 percent. In view of these developments we must ask:
has this new era of competition been helpful or harmful to localism and
diversity? On the one hand, some argue that combinations that may have
been dangerous to diversity in 1975 are no longer any threat due to the
existence of an unlimited number of delivery platforms and content
producers. The record demonstrates that not only are there more hoses
to deliver the information, there are more spigots to produce the
information. On the other hand, most people still rely primarily on
television broadcasts and newspapers for their local news and
information. With local broadcasters and newspapers still producing a
large share of local online content as well, are there really more
diverse sources of local journalism than before? All of us must handle
this question with great care.
Another vexing question is: what can the FCC do to promote
ownership among people of color and women? Many positive and
constructive ideas before the Commission may be constrained by Supreme
Court prohibitions against race-specific help on one side, and a lack
of statutory authority for doing much more on the other side. Whatever
the FCC or Congress does must withstand Constitutional muster. So let's
focus on the possible--and the legally sustainable. I am hopeful that
many of the ideas before us for a vote on December 18 can be adopted so
America can start back on the path of increased ownership of
traditional media properties by women and people of color.
As we debate and deliberate these important matters, traditional
media is shrinking and new media is growing. But the good news is that
all Americans will benefit from this new paradigm because new
technology empowers the sovereignty of the individual, regardless of
who you are. All of us should weigh all of the arguments presented
before us in the context of these facts.
Digital Transition. One of the biggest challenges the Commission
faces over the next fifteen months is moving our Nation from analog to
digital television with minimal consumer disruption. The Commission,
particularly our Media Bureau and Office of Engineering, is working
diligently on digital transition issues to make the February 17, 2009,
transition date a reality. Much more work remains to be done, but we
are all striving to make the transition as smooth as possible for the
industry and for consumers so that the benefits of digital television
technology can be enjoyed by the public.
Since Congress established the transition deadline, the Commission
has moved beyond simply ensuring that stations were capable of
operating in digital to focus on facilitating broadcasters'
construction of their final, post-transition channel facilities. In
early August, the Commission issued the final table of allotments,
which provides over 1,800 television stations across the country with
their final channel assignments for broadcasting following the DTV
transition on February 17, 2009. Last week, Chairman Martin circulated
to the Commissioners an order that proposes procedures and rule changes
to ensure that broadcasters can begin digital operations on time. I
look forward to working with my colleagues to provide broadcasters the
certainty they need to move ahead with the transitions for their
individual stations.
The natural next step for the Commission is to review how cable
multichannel video programming distributors (MVPDs) will carry the
broadcasters' digital signals after the conclusion of the digital
transition. At our October meeting, we adopted an order regarding the
obligations of cable operators to ensure that the digital signals of
``must carry'' stations are not materially degraded and are viewable by
all cable subscribers, as required by law. The order requires cable
systems that are not ``all-digital'' to provide must-carry signals in
analog format to their analog subscribers. This requirement will sunset
3 years after the broadcast digital transition hard date, with review
by the Commission of the rule within the final year. Our decision
strikes the appropriate balance between ensuring that broadcast signals
are not materially degraded and permitting cable operators to use their
technology efficiently to produce both high quality video and high-
speed broadband offerings for consumers. We must now consider the
appropriate requirements for DBS and other MVPD competitors. I thank
key players in the private sector for their efforts to find workable
solutions for the benefit of all the parties, especially consumers. I
look forward to working with my colleagues on these issues in the near
future.
DTV Consumer Education. Both government and industry have begun
consumer education campaigns about the transition to DTV. At the FCC,
we have a consumer education website about the transition, www.dtv.gov,
with helpful consumer and product information. This fall, we have held
three consumer education workshops to address the transition generally
and to ensure that senior citizens, minorities and non-English speakers
are prepared for the transition.
We are also considering an order regarding what types of consumer
education efforts the Commission should require of broadcasters, MVPDs,
manufacturers, retailers and others, including winners of the 700 MHz
spectrum auction and participants in the Low Income Universal Service
Program. The order proposes to implement rules suggested by Congressmen
Dingell and Markey in a letter to the Chairman dated May 24, 2007. I
have some concerns regarding whether the Commission should regulate
heavily in this area, given that the industries involved--particularly
broadcasters, MVPDs and retailers--have an overwhelming economic
incentive to ensure that the transition goes smoothly, and given the
enormity of their voluntary consumer education campaign commitments. I
also have questions regarding whether we can adopt some of the proposed
regulations consistently with the First Amendment and the Commission's
limited jurisdiction over some of these entities. Nonetheless, the
Commission should do all that it can to work with all stakeholders to
ensure a seamless digital transition.
Video Franchising and MDU Access. I am pleased by recent actions
the Commission has taken to promote additional competition among video
competitors in an already competitive environment. To help create an
environment where investment, innovation and competition can flourish,
it is imperative that government treat like services alike, preferably
with a light regulatory touch. This is especially true given the advent
of the ``triple play'' of video, voice and high-speed Internet access
services being offered by cable, telephone and other companies. The
Commission has recently taken action to achieve regulatory parity
between incumbent cable companies and new entrants into the video
markets.
At our October agenda meeting, we adopted an order that helps give
many consumers who live in apartment buildings and other multiple
dwelling units (MDUs) the hope of having more choices among video
service providers. The order could affect up to 30 percent of the U.S.
population. The Commission found that contractual agreements granting
cable operators exclusive access to MDUs are harmful to competition.
Accordingly, we now prohibit the enforcement of existing exclusivity
clauses, and the execution of new ones, as an unfair method of
competition. Although I have some legal reservations about abrogating
existing exclusive agreements only 4 years after permitting them, I
agree that increased competition among video providers in MDUs will
result in better service, innovative offerings to consumers, and lower
prices.
Also, at our October meeting, we adopted a video franchising order
that levels the playing field by extending to incumbent providers many
of the de-regulatory benefits we provided to new entrants in our first
order on that issue last December. No governmental entities, including
those of us at the FCC, should have any thumb on the scale to give a
regulatory advantage to any competitor. Our latest order will provide
regulatory certainty to market players, enhance video competition,
accelerate broadband deployment and produce lower rates for consumers.
Furthermore, as with our earlier action, I am confident that our recent
action is fully supported by substantial legal authority.
Wireline Issues
Universal Service Reform. As I have consistently stated, the
Universal Service system has been instrumental in keeping Americans
connected and improving their quality of life. However, it is in dire
need of comprehensive reform. To reform the system, we must:
1. slow the growth of the Fund;
2. permanently broaden the base of contributors;
3. reduce the contribution burden for all, if possible;
4. ensure competitive neutrality; and
5. eliminate waste, fraud and abuse.
The Commission now has several options squarely before us. We have
received two Recommended Decisions from the Federal-State Joint Board:
one, on May 1, 2007, to adopt an interim, emergency cap on the amount
of high-cost support that competitive eligible telecommunications
carriers (CETCs) receive for each state based on average level of CETC
support distributed in that state in 2006; and another on November 19,
2007, which proposes more comprehensive permanent reform. We sought
comments on the interim cap recommendation on May 14, 2007, and the
comment cycle closed on June 21, 2007. I advocate seeking comment on
the permanent reform recommendation quickly so that we can consider all
the options to reform the system.
Furthermore, we have a proposed order that would adopt an interim
cap on CETCs at 2007 levels. Already this year, the Commission adopted
a condition in both the Alltel order of October 26 and the AT&T-Dobson
order of November 15, which subjects these wireless carriers to an
interim cap. Potentially, 60 percent of the funds allocated to CETCs
have been capped through these transaction reviews. Accordingly, it may
make sense to work on permanent reform now in light of the fact that
Fund expenditures will continue to slow down. Other proposals before
the Commission are elimination of the identical support rule and
adoption of reverse auctions. If we complete the comment cycle on the
Joint Board's recommendation for permanent reform soon, we will be in a
terrific position to consider the panoply of options during the first
half of 2008.
On November 19, 2007, the Commission announced the award of $417
million for Rural Health Care Pilot Program projects. The purpose of
these awards is to facilitate the construction of 69 statewide or
regional broadband telehealth networks throughout the Nation. This will
not only bring advanced telehealth care to rural areas, but it will
also facilitate broadband deployment throughout rural America. I am
pleased to have supported this pilot project and look forward to
learning from the experience of this program how we can utilize the
Rural Health Care fund in the future.
Special Access. On July 9, 2007, the Commission issued a Public
Notice seeking further comment in the Special Access proceeding. While
the record contains some data, such as the GAO Study and carrier
specific examples on a localized basis, we need a more complete record
of exactly where special access facilities are located on a more
granular basis before we can determine the appropriate level of long-
term regulation--or deregulation--for special access services. I look
forward to continuing to work with my colleagues on this important
matter.
Forbearance. Closely related to special access is our recent action
on several forbearance petitions that have required findings on the
extent of competition in specific special access markets. The
Commission has tried to strike a thoughtful balance. In the AT&T and
Embarq/Frontier orders, we found that the number of competitors in the
broadband services provided by the petitioners warranted limited relief
from tariffing and discontinuance of facilities requirements.
Specifically, we granted limited Title II and Computer Inquiry relief
for existing packet-switched broadband telecommunications services and
existing optical transmission services. In the ACS of Anchorage order,
we partially granted relief from dominant carrier regulation of
interstate switched access services in the Anchorage, Alaska study area
and granted Title II and Computer Inquiry relief for specified
enterprise broadband access services in the Anchorage study area. On
the other hand, we have determined that certain requests for
forbearance have exceeded the parameters of our authority to grant
relief in Section 10. We have denied or excluded relief to ACS, AT&T,
Embarq, Frontier and Verizon for their TDM-based service offerings,
such as DS-0, DS-1 and DS-3 services.
On December 10, the Commission unanimously denied Verizon's
forbearance petitions seeking wholesale unbundling relief in six East
Coast cities. The petitions were denied due to a lack of evidence
demonstrating sufficient competition under the Qwest Omaha standard to
warrant relief from Section 251(c)(3).
While we're focused on forbearance, on November 27, 2007 the
Commission took an important step to bring clarity to the uncertainty
surrounding the forbearance petition process by initiating a rulemaking
proceeding. Only Congress can amend Section 10, which is simple and
clear in its mandate; but the Commission can take steps to improve its
implementation. And that is what we are attempting to do by initiating
this rulemaking. Among the important issues raised for public comment
in the Notice are: the specificity required for relief requested by the
petitioner; the level of justification required for grant of relief;
and the necessity for affirmative Commission action granting or denying
a petition. It is also appropriate to examine the effect that
forbearance petitions have on our broader rulemaking responsibilities.
I am hopeful that we will evaluate our forbearance regulations in a
timely manner and implement rules that we find are necessary to improve
the forbearance process.
Dominant Carrier Relief for Long Distance Services. In August 2007,
the Commission granted relief from dominant carrier regulation of the
Bell Operating Companies' (BOCs') in-region, interstate, long distance
services. Until this relief was granted, the BOCs were required to
comply with structural, transactional and accounting requirements in
Section 272 of the Act. This is a classic instance where regulation had
been appropriate to protect emerging competitors and consumers, but
where the relevant long distance market has become sufficiently
competitive to warrant less onerous regulation, while continuing to
protect consumers.
Broadband deployment. In April, we adopted two items that signaled
the Commission is taking important steps to update and refine our
efforts to determine the current state of broadband deployment in the
U. S., including the market, investment and technological trends of
advanced telecommunications capabilities. In the Data Collection Notice
of Proposed Rulemaking, we sought comment on how we can further refine
our information collection on broadband deployment to more accurately
reflect service to rural areas and to include advanced wireless
technologies. In the Section 706 Notice of Inquiry, our focus is on how
to define advanced telecommunications capability, the status of
deployment of broadband capability to all Americans, the reasonableness
and timeliness of the current level of deployment, and what actions can
or should be taken to accelerate deployment. We are in the process of
reviewing the comments in both of these proceedings as part of the
Commission's ongoing effort to continue to increase the rate of
broadband penetration and foster more choices for all types of
consumers. We should continue to seize every opportunity to move
America forward in this important area.
In the meantime, in October, the Commission released its latest
report on High-Speed Services for Internet Access. This report, which
reflects the status of broadband deployment in the U.S. as of December
31, 2006, demonstrates continued acceleration of broadband penetration.
Specifically, the number of high-speed lines (those that deliver
services at speeds exceeding 200 kbps in at least one direction)
increased by 27 percent during the second half of 2006 and by 61
percent during all of 2006, for a total of 82.5 million lines. The
number of advanced services lines (those that deliver services at
speeds exceeding 200 kbps in both directions) increased by 17 percent
during the second half of 2006 and by 36 percent during the entire
year, for a total of 59.5 million lines. As for geographic coverage,
the Report estimates that high-speed DSL connections were available to
79 percent of the households where incumbent LECs could provide local
exchange service at the end of 2006, and that high-speed cable modem
service was available to 96 percent of the households where cable
operators could provide cable television service. While these figures
are encouraging, we can and will do more to strengthen America's
progress in broadband deployment by maximizing competition and
encouraging investment.
Wireless Issues
White spaces. I am delighted that the Commission is taking the
additional time necessary to analyze and field test numerous additional
prototype devices to operate in the ``white spaces'' of the TV
broadcast spectrum. I have long advocated use of the white spaces,
provided such use does not cause harmful interference to others. I am
hopeful that a flexible, deregulatory, unlicensed approach will provide
opportunities for American entrepreneurs to construct new delivery
platforms that will provide an open home for a broad array of consumer
equipment.
At the same time, the Commission has a duty to ensure that new
consumer equipment designed for use in this spectrum does not cause
harmful interference to the current operators in the white spaces. I
have enjoyed learning from various parties who are engaged in the
healthy technical debate surrounding the best use of this spectrum.
Assuredly, the discussions will become ever more intense as we move
forward. But, at the end of the day, we will have a resolution.
Inventors will continue to invent, and a workable technical solution
will develop. We should let science, and science alone, drive our
decisions. If we don't pollute science with politics, powerful new
technologies will emerge, and American consumers will benefit as a
result. And, who knows? This may spark a new wave of economic growth
that we can't even imagine right now.
700 MHz auction. 2008 will soon be here, and the Commission is on
track to meet Congress' mandate to commence the 700 MHz auction no
later than January 28. In fact, the auction is scheduled to start on
January 24, 2008. The Commission spent a great deal of time this spring
and summer hammering out new service and auction rules for this
valuable spectrum. After careful deliberation, I respectfully disagreed
with my colleagues regarding the best path to achieve wireless device
and application portability.
My original vision for the 700 MHz auction was for our rules to
maximize investment, innovation, and consumer choice by promoting
competition through the crafting of a wide variety of unencumbered
market and spectrum block sizes. I am concerned that the open access
requirements set forth in the new rules trade the benefits of rural
deployment by small and regional licensees, and their strong record of
providing service to their customers, for--at best--speculative gains.
Let me be clear: I am not opposed to a winning bidder employing an open
network voluntarily. I am pleased to learn that several possible new
entrants plan to participate in the upcoming auction. Like every other
market, the wireless marketplace will be energized by the positive
disruption only new blood can bring.
In the meantime, the wireless marketplace has continued to respond
to consumer demand by delivering device and application portability. A
broad array of wireless carriers offers numerous devices that are
compatible with any Wi-Fi network. This capability allows consumers to
wirelessly navigate the Internet just as they can on their home
computer, and download software such as Voice over Internet Protocol
applications, or popular search engines.
In early November, the Open Handset Alliance introduced Android, a
Linux-based software stack that consists of an operating system,
middleware, a user interface and applications. The Android kit, which
has been in development since 2006 and is expected to be released early
next year, will allow software entrepreneurs to freely access the
source code and customize applications for their individual purposes.
Most recently, and after almost a year in the making, Verizon Wireless
and AT&T Mobility each announced initiatives to allow customers to use
any wireless device and to employ elective applications on their
respective networks. Sprint Nextel has long operated with an open
network as evinced by the carrier's supporting ``Java'' applications
and Amazon's ``Kindle,'' for instance.
Currently, the Commission's staff is busy analyzing auction
applications, which were filed on December 3. I applaud and appreciate
the work of the incredibly hard working Wireless Bureau team, and
eagerly anticipate watching the auction process unfold.
Early Termination Fees. In addition to wireless carriers, DBS
providers, traditional phone companies, and cable providers all
allegedly assess early termination fees. Earlier this year, Chairman
Martin indicated his intention to tackle this thorny issue. I am
pleased that, since that time, the market has responded. For example,
four wireless companies (Verizon Wireless, and more recently AT&T
Wireless, T-Mobile and Sprint) have individually announced consumer-
friendly policy changes. I would strongly encourage the stakeholders to
continue their efforts. The private sector is better at solving such
issues than the government.
Conclusion
Thank you for having us here today, and I look forward to answering
your questions.
The Chairman. I thank you very much, Commissioner McDowell.
Today's hearing may be the last opportunity for Senator
Lott to participate in a Senate hearing as a Senator. And
therefore, with the gratitude of this Committee for his
leadership and his counsel, I recognize you, sir.
STATEMENT OF HON. TRENT LOTT,
U.S. SENATOR FROM MISSISSIPPI
Senator Lott. Thank you very much, Mr. Chairman, for your
many kindnesses over the years, and for being who you are. You
are one of our heroes. We all admire you. It's been a pleasure
serving with you. Your word is your bond, and your courtesies
are endless. And I appreciate you allowing me to go first
today. And I appreciate you having the Committee picture taken
when I could be here, because I've really enjoyed this
Committee. A lot of people think a lot of the different
committees in the Congress, the House or Senate, are the most
important Committee, but I don't believe there's a more
enjoyable Committee with a wider degree of jurisdiction than
this Committee, and I have only fond memories of all of my
experiences here, especially those occasions when I couldn't
win a vote on the Republican side, so I meandered over to the
Democratic side----
[Laughter.]
Senator Lott.--and was trying to herd cats. It's been a lot
of fun.
And I do think that, for me at least, it's very poignant
that on my last Commerce Committee hearing, we're having a
hearing in the telecommunications area. It's an area I've
really enjoyed working in over the years, and was involved in
reform, and have had opportunity to work with each one of these
Commissioners in their roles now, and previously, including the
Democratic members of this Commission.
I really think this is one of the best Commissions we've
ever had. Do you disagree? Sure. Do you defend your positions
vigorously? Of course. But you're all capable, thoughtful, and
sometimes even listen to us.
[Laughter.]
Senator Lott. And so, I admire you all.
And I'm--I want to say a bit on a personal note, too. A few
years ago, I guess I was in a position of occasionally blocking
nominations and messing up nominations, but I also had occasion
to work with Tom Daschle to get a lot of nominations done. I
remember, one day we did 81. One day. And one of the ones that
I turned and supported was Commissioner Adelstein, and he's
just done a magnificent job. I've been very proud of supporting
him. He's up for renomination. The White House has sent his
nomination up here. I don't know if I can influence it now, but
I hope that, before I leave, our leaders on both sides will get
together and do a nomination package, and it will include this
very capable Commissioner, who will continue, I'm sure, to do
an excellent job.
So, thank you for allowing me to, you know, make those
personal notes.
Mr. Chairman and members of the Commission, last week we
passed S. 2332, the Media Ownership Act of 2007. My record in
this area is long, and obviously one that I feel very strongly
about, so you know how I feel about the FCC moving in this
area. And I've made all the typical arguments--timing argument,
localism. I've made clear my concerns about cross-ownership. I
have real questions about the justification for it and the
motives of some of those that are trying to merge--not of the
Commission; I mean, you're trying to have a process that is
fair.
It was noted by Commissioner Tate and others that you've
had lots and lots of hearings. But I still don't see why you
need to force this thing to a head December 18, not because
you're going to change a lot of opinions by waiting a little
bit more, but because you take the argument away. I've tried to
force-speed things in my life and in this institution. It
doesn't work. Just a little patience, a little more time. Why
give us an argument to attack you all? Run the string out on
localism.
And it's been educational for me. I think some of my
concerns, some of my arguments about, you know, localism have
been addressed, and we haven't lost as much localism as, maybe,
I thought we had, but I still--really concerned about the
continued erosion in that area.
So, I would plead with you to take a little more time, take
away that argument, and then you're going to probably come to
the same conclusion, which I will certainly still disagree
with, and will--from a distance, will be supporting Senator
Dorgan, still trying to block cross-ownership.
I thought the reason for trying to get this done was the--
it was tied to the Tribune waiver. I didn't quite get that. My
argument was--and, by the way, you know, I don't have any
particular concerns or affection or angst about the Tribune; if
it's justified, give them a waiver; if it's not, don't. I don't
think they're tied together. Now you've given them the waiver,
so what's the hurry?
So, I think that argument has been pulled away a degree.
Really simply--oh, and one thing that really confuses me, the
FCC is worrying about the financial condition of the
newspapers? What? I just don't quite--I've looked at the law--I
don't see where this is an area you should be, you know, that
engaged. It's communications. I don't--I'm not sure that print
is included in that. But here's the other thing. I don't get
why Republicans would be crying alligator tears over newspapers
having problems.
[Laughter.]
Senator Lott. What? What are you doing? You know, look,
they're losing readership because times have changed. It's
technology. It's also because they give so much garbage, people
get tired of, you know, putting up with it. In my area, we buy
them to wrap our mullet with.
[Laughter.]
Senator Lott. Do I hope they survive? Sure. But, I mean,
goodness gracious, I want to make sure we do have diversity in
media, and diversity in choices, and fairness. And, yes, I do
think it's important we have the maximum opportunity for all
sectors of our economy, men and women, minorities, to be
involved in this.
So, I just--you know, you have suggested--or it's been
suggested, maybe, well, we'll limit to, I guess, what, 20
biggest markets. But I do think there's a lot of loopholes. The
language is very mushy. I think maybe you've indicated that you
are willing to make some changes on that, and I hope you would
do that.
One final point before I ask a couple of questions--and I
don't want to take too much time--is the Universal Service
Fund, too. This is a very critical area in my state, and a lot
of states. I think we really--Congress needs to decide what we
want to do in the future on Universal Service. I'd rather you
wouldn't do it. You know, I--there's no question in my mind
that, after Katrina--and the Katrina effect--has affected a lot
of my emotional feelings about a lot of things, but the towers
that we had in rural and coastal areas in Mississippi, thanks
to USF and Cellular South--without it, we wouldn't have been
able to communicate with anybody. And I just--I hope that you
will be careful about, you know, capping one sector of the
Fund--section of the Fund, rather than addressing a
comprehensive package. You've already done it. Basically, you
kept 52 percent. And I hope that you'll ease up on that.
Now, just a couple of questions before I yield my time. Let
me--Mr. Chairman, to you, you had indicated that you would be
willing to work to close the loopholes in this media cross-
ownership proposal that exists for smaller markets. Would you
confirm that again, and, maybe, kind of, suggest what some of
those solutions might be?
Mr. Martin. Sure. Thank you for the opportunity.
I certainly am happy to end up trying to clarify and put
more teeth in the concerns that have been raised by some of the
Commissioners about the criteria that we would consider in the
smaller markets, where there's not a presumption in favor of a
waiver, or there's a presumption against that. And one of the
criteria, for example, is whether there is going to be new news
that's going to be added, is a newspaper buying a broadcast
property that doesn't do any local news now? And I've said that
I think one of the concerns that's been raised by some of the
other Commissioners is, there's no specific amount of news
you're talking about. And I said, I'm happy to end up--and I've
had discussions with all the Commissioners about that--I'm
happy to put a specific amount of criteria that we would expect
on a weekly basis that someone would be adding local news to
that broadcast property if they were going to be seeking a
waiver of that. So, yes, I am committed to end up trying to
work with my colleagues to make those stronger, and am happy to
end up doing it. I think that's one of the specific examples
that I'd be willing to do.
Senator Lott. Well, in the future, I'll live more and more
of my time in Jackson, Mississippi; I just want to make sure
there's no waiver granted in Jackson.
[Laughter.]
Senator Lott. I want as much diversity in my choice of
media as I can get down there.
Commissioner Copps, on this USF issue, and the fact that,
basically, the mergers have already--that have been capped,
as--are already taking, what, 52 percent of that wireless fund.
What--how do you see us proceeding in this USF area?
Commissioner Copps. Well, what I'd like to do, Senator, is
to have Congress and the Commission working together, because I
think we are both part of the solution. We need a systematic,
holistic approach, not just a little item here, a little item
there, a pick-and-choose. I've always thought, if we had
broadband as part of the system, contributing and receiving, if
we got rid of the identical support rule, or modified it
significantly, we really did the audits, that we'd be pretty
far down the road, but if we had Congress coming in and saying
we could collect on intrastate, as well as interstate, I think
we would have the Universal Service Fund fixed for a pretty
long time. But that's going to take a cooperative effort
between us. But I think that should be done. I think it's
urgent.
I'm pleased that the Joint Board, at least, has put out a
proposal that looks comprehensive. I hope it will be put out
for comment. It's been sitting down at the Commission; it ought
to be out for public comment, so you can see it and we can see
it, and then, next session, maybe really get the ball moving on
it.
Senator Lott. I'll address this question to Commissioner
Adelstein, but it really should go to the Chairman, or all of
you. A number of us--Senators Rockefeller, Dorgan, Snowe,
Smith, DeMint, Thune--sent a letter, February the--I think it--
was it--regarding the letter recently--November 15--regarding
this post-February 17, 2009, dual-carriage obligation. We
haven't gotten a response. Can you give us some idea of when
we're going to get a written response about that? And are you
considering--reconsidering its--the position regarding the
waiver process?
Commissioner Adelstein. We did an order on dual carriage
that decided that there was going to be a requirement that
cable companies carry both the digital and analog signals of
digital broadcasters. I think that it's important that, as the
digital transition goes forward, we make sure that all cable
customers can continue to get access to broadcast signals. We
don't want anybody to be cut off. And we took care of that. The
cable industry worked with us to come up with a way of ensuring
that, for 3 years, that would be accomplished.
Senator Lott. Commissioner Tate, good luck. Keep these guys
under control. I've got faith in you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Mr. Chairman, in a recent GAO report on the digital
television transition, it appears that you took umbrage at the
GAO's decision to provide a link to a 96-page written response,
rather than printing the response in its entirety. And,
particularly, I want to quote from your letter, which states,
``Over the course of the past year, the Commission has
committed extensive resources to working with GAO on this and
other matters. We estimate that the Commission has devoted more
than 6,100 staff hours responding to the GAO's request, and has
provided more than 13,650 documents to the GAO. We estimate
that American taxpayers have paid more than $500,000 for the
Commission to respond to these requests. In light of the costs
incurred to respond to GAO's requests, as well as the GAO
standard cited above, the GAO should publish the agency's
unedited written comments in its final report.''
Mr. Chairman, I find the tone of that paragraph
regrettable. GAO, like the FCC, is a creature of Congress, and
I'm concerned that your response to the GAO not be read in any
way to argue against the right, and indeed the obligation, of
the Congress to exercise its oversight responsibilities. As a
result, Mr. Chairman, I would like your assurance that the tone
in your letter does not reflect an unwillingness to comply with
future investigations by GAO or any other Congressionally
directed agency.
Mr. Martin. Of course it will--of course the Commission
will end up complying with any investigation by GAO or any
Congressional investigation. What I was concerned about, and
what I was upset about, was not their willingness to publish it
on the website; at the time, they had not offered that, when I
submitted that letter. What I was concerned about was, we had
spent an enormous amount of time providing them an excessive
amount of information on the details of both our technical and
our policy decisions that we're putting in place rules and
responsibilities for the broadcasters in the industry to move
forward with the DTV transition; and, as a result of that, I
met with the auditor myself and said I didn't appreciate his
conclusion, after talking most extensively about our work with
NTIA on the public awareness campaign, to conclude, in the
concluding paragraph, that we had no plan on a technical or
policy basis, when we had done hundreds of rulemakings on those
issues. And I said that that was not an accurate assessment.
And I told him that personally. I said that if that was going
to be their conclusion, that they had an obligation to give us
an opportunity to respond and tell everyone about the many
policy and technical rulemakings that we had completed--he said
that he thought that was a fair point, and he would review it.
I was then told, afterwards, that they would review--either
consider taking it out of their conclusion or publishing our
response. And I said that this was important from the staff's
perspective who have been planning this DTV transition for
many, many years and who felt that their conclusion, without
any backup to that conclusion, short-shrifted the work that
they've been doing for the last decade on the transition.
He then informed us that they would not publish our
response, because it was too expensive, because there were too
many pages to our response, at which point we offered to pay
for the GAO's publication of our response, ourselves, out of
our budget. And then we were told no, and there was no offer to
put it on the website. So, at that point, yes, I was frustrated
that the Commission's opportunity to respond to allegations
that I didn't think were founded in the report were not
included. I think--and, as I discussed with the auditor at the
time, the concerns he might have about the public awareness
campaign were separate from whether we had, for example, given
out the licenses--the digital television licenses for the
broadcasters to be able to make the transition, whether we had
put all the technical and policy rules in place, which I think
the Commission has done. There's a lot of concerns and
legitimately so, about whether the public is aware of what is
about to transpire, and how we can make sure that they are
doing all that they need to do to make the digital transition.
But I think that the allegations that the Commission had not
done the technical rules were not fair, and were not actually
founded by the study, themselves. And the only response that
was included in their response to my letter was, ``Well, we're
doing a separate report on the technical issues, and we'll get
into more details of that there.'' And I thought that, as a
result, of course we'll end up cooperating, but I think it's
important that the Commission's work that has been done is
included.
The Chairman. Thank you very much.
Senator Stevens?
Senator Stevens. Thank you, Mr. Chairman.
It's nice to have you back. I don't think we've had a
meeting with the Commission for 10 months. I do echo, to a
certain extent, what Senator Lott has said. The bill that I
introduced in 2003 would have banned newspaper cross-ownership
of air media. It's been my opinion that mergers take place
because of advertising revenue and decreased service. They,
particularly, decrease the capability of these air media to
have--and desire these air media to have local reporters to
cover local activities once they're merged with the nationwide
air media, that they--the newspaper process, I think,
reflects--I mean, their situation reflects the decline in news
being--to be presented through them of local concern. And I--we
see advertising revenues going down, to the newspapers.
That's--the main reason is, local people don't pay any
attention to them anymore, because they don't contain, really,
accurate local news.
But, in any event, I do hope you'll listen to us. It would
be my feeling that that December 18 date ought to be postponed
until we can get some better understanding of where we're going
on this. We can't--I don't think we can get any bill passed
here before we leave, and I would hope that you would listen to
us, even though I think that you probably have--Mr. Chairman,
have the majority to do what you want to do. But I do think we
ought to take a little more time on that cross-ownership
business.
Let me ask this. One of my major problems, of course, being
from where--the state that I represent that's, after all, one-
fifth the size of the United States, we have been left out of
the expansion of media in the past, but this digital transition
presents some very interesting new opportunities for us, but
also some very unique needs. We need to make sure that the--
that we do have a smooth transition in rural America, is what
I'm saying to you. I think, if you look at the small cable
companies, for instance, the DTV transition would mean that
they would have to carry both the analog and digital signals,
dual-carriage, for their over-the-air broadcasters, but many of
them don't have that capacity. And I think we ought to take a
good, long look at what's going to happen to the small cable
people, as far as the transition is concerned.
I do understand you've provided a waiver procedure. Could
you explain that to me? For instance, we have two small cable
companies in Alaska--Haines and Skagway. They have a situation
where, if they have to have dual-carriage, they--I'm told
they'll go out of business. What is going to be the policy with
regard to that situation?
Mr. Chairman?
Mr. Martin. Sure. Well, I think that it's important to
understand, first, that the Commission has not been changing
its policy in regards to whether or not there'll be--or the
concerns that have been raised about the extra capacity that
might be required of any cable operator, small or large. I
think it's important to understand that today a broadcaster
puts out an analog signal, and the cable operators are required
to carry that analog signal to all of their customers, both the
analog customers that they have and the digital customers, the
one who have set-top boxes. And they do that by carrying the
signal either in two forms today or by giving their customers a
set-top box that can read the analog signals.
The requirement after the digital transition is no
different. They're still required to take a broadcast signal
and deliver it so that their customers can watch it, just like
they do today.
What we actually said is that the transition of the
broadcaster from putting out an analog signal to a digital
signal shouldn't be one that is an excuse for the cable
operator to no longer carry that signal to some of its homes.
They should continue to do what they're doing today with the
digital signal.
What we have said is that, if a cable operator comes to us
and says that they, for example, weren't doing that to some of
their current homes, and that this would cause a burden on
them, that's different than what they're doing today; we would
take that into account; for example, if they didn't have enough
capacity. But the rule we actually put in place--what you're
referring to as the dual-carriage rule--actually doesn't impose
or take up any more of their capacity after the digital
transition as what they have been using to deliver those
signals to everyone's home today. And I think that the
arguments, that it's going to take up more capacity on their
system, are inaccurate. Our viewability requirement that we put
in place just says they don't get any capacity back because the
broadcaster has moved from analog to digital. They still have
to carry it to all of those homes. If someone can come to us
and show that it does create a burden for them, and they don't
have that capacity, we'll, of course, take that into account,
and that's why we put the waiver process in place.
Senator Stevens. But I wonder whether you have the
capability to listen to all these small carriers on a waiver
basis, and I would hope you'd take a look at the waiver
procedure so that it would not, really, put an extra burden on
these small companies to come back here and make an appearance.
And it does seem to be an extraordinary burden for these small
companies to seek a waiver under the current situation.
Let me go to another subject. That is, we have--we created
a Congressionally mandated working group to recommend technical
standards for wireless alerts, and I understand that is still
before you. We--that was part of our port security bill last
year. Senator Inouye and I and Members of the Committee worked
hard on that. I do want to know, When will that network become
a reality?
Mr. Martin. Well, there were very strict timelines that
were put in place in that legislation, that the Commission
would have a technical working group, they would make
recommendations to the Commission, and the Commission would
adopt those recommendations. I think that we're on track to
make those deadlines. The recommendation came in from the
Technical Advisory Committee recently. There's an item in front
of the commissioners for us to consider putting that out for
further notice and comment so we can adopt those technical
standards. I think that we'll end up doing that in the time-
frame that was required by the statute.
I can't give you an answer for sure on whether or not, or
when, that will become a reality. Part of the legislation was
that that was still the option of the wireless industry, to opt
in to providing those warnings; I don't know for sure whether
any of the industry will actually opt in to providing it or
not. I actually am, obviously, hopeful that they do. And I'm
sure--I think Congress is, as well, but I can't give you a
guarantee of whether that will happen or not.
Senator Stevens. In terms of the--this transition, the
digital transition, we have concerns that--particularly in
Alaska, that the rural people, particularly village people,
will not have an opportunity to, really, be informed about this
transition. And I know we've provided a $40 voucher to help
them get it, but that doesn't help them get it when they're not
on a road system, they're on a--really, in very isolated places
throughout the country. What is going to be done about those
people, as far as the transition? Any of you particularly
working on the rural situation?
Mr. Copps?
Commissioner Copps. Yes, if I could answer that, what you
have to have there is outreach. I recently had the opportunity
to go to the United Kingdom, where they're doing a transition
to the digital television system between 2007 and 2012. And
they go in to rural areas and all the areas. They contact each
household at least twice, personally. They will help the aged
and the handicapped to hook up the equipment to get the job
done.
The important part is outreach. In a country of 60 million
people, they're spending $400 million to contact every
household twice, to do consumer surveys, and they do it town by
town, region by region, handouts, public opinion--not ``public
opinion,'' but surveys to see how people reacted, and all.
Here, we're going to pull the lever one day, February 17,
2009, and hope to gosh that everything goes right. And it's
never going to happen. We can have more likelihood that
there'll be less disruption if we really start taking this
seriously, but we ought to be doing some demonstration
projects. Why can't we do a demonstration project in rural
Alaska or West Virginia or any state? Why can't we pick a city,
pick a town? Some of these digital broadcasters are ready to
broadcast. Because otherwise we're just asking for trouble.
As I said in my statement, I think this will be the
granddaddy of all consumer backlash issues, when those TV sets
go blank. There's too many questions still out there. You
mentioned the small cable operators. We tried to provide them
some specific relief, instead of the questions of the waivers.
We still haven't really teed up DBS. The people who aren't into
local-local on DBS, they're getting their local news on rabbit
ears, we can't tell them that everything's fine as long as they
have satellite, because they're going to lose their local. So,
we have got to get a coordinated program.
I was part of the Y2K program in the previous
administration, and I know what a program looks like. It has
leadership, it has coordination, and it has outreach. And
this--we don't have that right now.
Senator Stevens. Well, that may have been our mistake in
not earmarking some of that money for that transition, beyond
just the vouchers. The money is earmarked, although there is a
cascading of that money, if it's enough. I think there will be
some money available for that to take place. Now, that problem
of allocation is something we could address here.
I do believe you all should help us determine what is
required to get to rural America and keep rural America
informed. The British system is, you know, dealing with a small
island. My state's about ten times the size of Great Britain.
You know, you can't use Great Britain as an example with me.
I'm sorry; you're a great friend, but I--that won't work. There
has to be something beyond the Federal Government dealing with
this, and I think it ought to be cooperation with the industry
and cooperation with the providers of the digital sets. And
there should be a plan. I do agree. I hope that you all,
really, will reconsider how a--get a plan for rural America. It
does not exist now, and it must exist. So, that's where the
hell's going to come from when those sets go blank.
Commissioner Copps. But I think you're right, the point is,
someone has to be in charge. And it doesn't have to be a
federally dictated program, it has to be a public-sector/
private-sector partnership. But that private sector needs to
know who in the government is running the government part of
it. And that's what we're lacking.
Senator Stevens. We have to have up-front money, and that's
a mistake. Probably, the mistake is right here, in allocating
that money the way we did, but we were interested in making
sure that everyone had access to a--the black box. But the
black box is not going to do you any good unless you know how
to use it, and I do believe we ought to have some national
system to make sure everybody understands that.
And, by the way, the $40 may not be enough. In some areas,
it may cost a lot more to get that box to those people. I--we--
I would urge you to give us some advice on what we should do.
Last--I'm taking too much time--we have, I understand, a
threat about the discontinuing of some of the national calling
cards in our state alone. Now, I thought we worked it out so
that we had a concept that the same rates would apply
everywhere on everything. Are you going to permit calling cards
to be available only in 49 States?
Mr. Martin. No. And I think you're absolutely right, that
the rate integration requirements in the law say that they've
got to be providing that to all 50 states, and----
Senator Stevens. But that was----
Mr. Martin.--with no exceptions.
Senator Stevens.--well, that's what's really started the
whole thing, back when Senator Inouye and I cosponsored that
resolution about Universal Service making certain that we had
ubiquitous service all over the country available everywhere,
no matter where they were, in terms of communications. Now, the
calling card is part of that. I hope you will carry--you'll
stick to that and tell the companies: if they issue those
calling cards, they must issue them in all 50 states. And I
would hope you'd take action against anyone that doesn't.
Mr. Martin. Yes, sir, we'll follow up on that--because,
that's right, they are----
Senator Stevens. Thank you, Mr. Chairman.
Mr. Martin.--they are required to do that everywhere.
The Chairman. Thank you.
Senator Rockefeller?
STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
Senator Rockefeller. Thank you, Mr. Chairman.
I want to, actually, just, sort of, make a few comments.
Maybe questions, maybe not.
First of all, you're one of the most powerful groups
around, and the American people don't particularly know that.
And yet, you affect the way this country is going, which is not
necessarily in a great direction.
Before I start, I want to thank the Chairman and others for
the Rural Healthcare Program that the Chairman mentioned. That
was actually part of what Olympia Snowe and I contemplated,
back in 1996, when we did the original Snowe-Rockefeller Act,
or whatever it was. And that was meant to be part of the
Universal Service Fund, and it never emerged, it's been lying
fallow all these years. And I give the Commission tremendous
credit for now breaking it out and putting it across the
country, because it changes the lives of people in
extraordinarily rural places, and allows them to get medical
decisionmaking and imaging on a long-distance basis. And so, I
thank you very much for that.
Now, from the bills that they pay for phone and cable, to
their ability to reach public safety in times of need, from the
content of what gets broadcast into the living rooms of their
homes, to the broadbrand networks that can bring equal
opportunity to our largest cities and smallest rural towns, you
oversee everything. The decisions you make are absolutely vital
to this Nation's future. Because we entrust you with these vast
powers, we also expect a lot from you. And should. Yet I, for
one, am growing increasingly concerned that the FCC is not
focused enough on making sure that consumers, in fact, as some
of the Commissioners testified, have real choices in
communications, that the competitive marketplace exists, and
that companies' public-interest obligations, which I have
always held to be very sacred, has been washed by the way.
Americans deserve public-interest obligations from
broadcasters, and they're not getting it. And we used to--we
used to talk a lot about it. We used to do it. We don't,
anymore.
Over the last 8 years of this Administration, the FCC's
general presumption has been to deregulate. I agree with the
comments on December 18, the deregulation of the communications
industry. We were told that, by setting on a deregulatory path,
consumers would have more choices. Well--they would also have
lower prices, and they would have greater opportunities. Now,
deregulation is not a bad thing, nor is regulation a bad thing.
But I believe it's time to chart a new course, Mr. Chairman,
because this one-way deregulatory policy has shortchanged too
many consumers, and it hurts, in a modern world. I fear that
communications policy is following in the footsteps of rail
policy in this country, and that's not a good thing to come
from me, because that's a 22-year fight, where I've made very
little progress, and I don't intend to repeat that experience.
Deregulation and consolidation was great for railroads'
bottom lines, it was awful for customers and for consumers, be
they companies, people, whatever. The Surface Transportation
Board is supposed to protect the interests of consumers and
rail customers, but it does not, and never has, and has never
worried about it, and has made no pretense of not doing it, and
have let all of the excuses about revenue inadequacy that the
railroads bring just float right by them, pay no attention to
them. The STB protects the interests of the railroads that
they're supposed to regulate.
I'm becoming increasingly concerned that the FCC appears to
be more concerned about making sure that policies they advocate
serves the needs of the companies that they regulate and their
bottom lines, rather than the public interest. We cannot allow
that to happen.
Now, it's very interesting to listen to all--the five of
you, because they're extremely different opinions, and I assume
there's a lot of turbulence and argument. And I know that. But
there's not, sort of, a clear direction.
Mr. Chairman, I believe that this Committee should spend
next year developing an FCC reauthorization bill that addresses
the structure of the agency, its mission, the terms of the
Commissioners, and how to make the agency a better regulator,
advocate for consumers, and a better resource for Congress.
In 2009, we're going to have a new Administration. In all
likelihood, we will have a new Chairman. We have two pending
FCC nominations. Without passing judgment on any of the
nominees or Commissioners, I believe that it's best to postpone
action on the nominees until a new Administration is
determined. I believe that we can spend 2008--because it's
going to be a very difficult year to get anything done at all,
so it's a very good time for us to be able to think through
exactly what the FCC is, what we want from it, and then
proceed. So, I mean, it's really about the reorganization of
the agency and to give the new Administration a chance to put
its mark on the communications policy.
I don't know, I just--there are so many places that just
don't have service, and, because telecommunications is such an
erudite subject, people don't really know a lot about it. Now,
they did when some 34,000 screens went blank in West Virginia,
and then they knew a great deal about that particular subject.
But what we seem to do here is, we pick on particular parts of
regulatory policy, or, particular parts of what you do, but we
don't look at the whole picture, the whole direction. And
that's what I think we should be doing next year.
Now, rather than arguing over process and personality, I
think we'd do much better to urge the FCC to get back to work
on the issues that matter to consumers. And they're the same
basic ones that have always been there and which are sometimes
handled, and mostly not. One, access to affordable broadband.
Second, high cable bills. Third, inappropriate content being
broadcast into their homes. It's very strange and upsetting to
me that, when that subject comes up in this Committee, that
there's very little sympathy toward that. First Amendment is
mentioned, and all the rest of it. And, in the meantime,
there's degradation taking place within values and structure of
families. And I think a lot of that comes directly from
television. And over content, you have the ability to regulate
it; you do not over violence, but that can be changed. Fourth,
I think strong consumer protection for wireless consumers is
essential. And then, finally, I think Universal Service is the
bottom line on everything. Ideas of capping it are outrageous.
It is the only chance that Americans have to make their voices
heard and to get access to telecommunications. This isn't
happening in parts of Maine, it's not happening in parts of
West Virginia. The talk from telecommunications companies is
magnificent, they have huge press conferences, announce huge
broadband programs, which, for the most part, just follow
business lines and profit-making lines. And, in some cases,
they'll go into a rural county and do a rural county, and then
you, sort of, feel good about that. But, on the other hand,
it's just one rural county out of 55 in West Virginia, and then
you look closely, and then you find that the place where you
were a VISTA volunteer in that county is not covered because
it's too remote.
So, I mean, I just think we have to take a whole new look,
Chairman Inouye, at the FCC, and our obligations, their
obligations, what we can do about it. I'm not happy with what's
happening. Yes, I'm upset about media consolidation. It's
causing havoc in our state, none of it helpful. And, actually,
I was very interested--and I won't ask this question, I'll just
pose the fact--that some of the Commissioners were talking
about the enormous amount of communication that went back and
forth. I think Commissioner Tate was saying hundreds of
thousands of views and this and that. Commissioner Copps was
saying, ``Well, we really haven't heard much at all.'' And what
that does is, just gives me a sense of discontinuity and lack
of common purpose within the FCC. Yes, you're individuals,
you're three-two in your political division, but this is just a
little bit more important than all of that. And so, I propose
that, next year, we get very serious about reforming and making
the FCC what it should be.
Thank you, Mr. Chairman.
The Chairman. I can assure you it will be done.
Senator Kerry?
STATEMENT OF HON. JOHN F. KERRY,
U.S. SENATOR FROM MASSACHUSETTS
Senator Kerry. Thank you very much, Mr. Chairman.
I think Senator Rockefeller obviously raised a lot of very
important points, a couple of which I want to, sort of, pursue
in the form of a question, if I can, a little bit.
Commissioner Copps, in response to--I mean, I heard
Commissioner Tate talk about the period of time that's been
taken, the numbers of witnesses that were heard, the ten
studies. I've also heard people call into question the
propriety of those studies, and most of the information of the
witnesses appears to be loaded against the decision that the
Commission appears to be moving on. Can you comment on that?
Can you help the Committee to understand why you or
Commissioner Adelstein have a problem, perhaps, with the
process, to this moment?
Commissioner Copps. Well, I think you have to start off
with the premise that the industry that we are looking at here
is probably the most important and influential industry in the
United States of America, from the standpoint of influencing
our culture and nourishing our democratic dialogue. So, we need
to take the time and ask the questions. And I think----
Senator Kerry. Are you suggesting that it hasn't adequately
been done?
Commissioner Copps. Yes, I am--I'm not just suggesting
that, I'm stating it outright. I think, when you're looking at
an industry that controls half a trillion dollars of public
airwaves, and we're looking to see the future ownership pattern
of this, and who's going to have access to it, it doesn't
impress me to have six hearings around the country and then we
ignore a lot of the public comment, it doesn't impress me when
you say we spend two- or three- or four-hundred thousand
dollars to come to terms with that. When I worked up here, I
remember, any industry that came in and wanted us to do
something would always be brandishing a million-dollar or a
two-million-dollar study, or something like that, for a much
more narrowly focused type of exercise. So, this is really big-
ticket. And yes, we did some studies, and yes, there was some
initial contact about where those studies should go, but that's
not where the studies went. They weren't as targeted. And so, I
think the process was deficient, and I think we are leaving
these huge problems that have been pending even longer than
media ownership--minority ownership, public-interest
obligations, localism--leaving those for another day and
rushing ahead to encourage more consolidation that has caused
those other problems in the first place. So, I think the
process has not been a good one.
Senator Kerry. Now, Commissioner Tate, you, in your
testimony, said very clearly, I think I quote, that ``a modern
communications system is critical to our country.'' We have
gone from fourth to, depending on the study, 16th to 21st in
broadband penetration in our country. That's obviously, on its
face, moving in the wrong direction. Other countries have far
more efficient, and have put far more efficient systems in
place. You can go into a field in some countries, in Europe and
elsewhere, and sit there and download into your computer at a
rate that is unprecedented, and you can't even do it in major
cities in America. Shouldn't that be the primary focus of the
Commission right now, reaching all Americans with modern
communications, not necessarily intervening in a dispute
between owners over consolidation? Consolidation certainly
doesn't do what broadband would do for the country.
Commissioner Tate. Certainly, Senator Kerry, I agree that
broadband is crucial to all areas of our economy.
Senator Kerry. Well, why isn't there a plan in place, after
all these years, to make it reach everybody, as the President
said in 2004? He said, we will have it universally accessible
by 2007. It's now the end of 2007, and there's still no plan.
Commissioner Tate. Well, it's interesting that, in many
parts of the country--for instance, I think that you probably
know about the ConnectKentucky example, where, by the end of
this year, the Commonwealth of Kentucky, which is fairly rural
and poor, will have broadband access across the whole state. My
home State of Tennessee is also involved in that same
initiative, called Connected Tennessee. So, I think that in
many parts of the country, there is a lot of leadership and
there are a lot of ideas. Obviously----
Senator Kerry. Regional and local, by and large. Would you
say there is a national plan that's emanating from the FCC and
from the----
Commissioner Tate. Well, and, I think, through many of our
other items that we take up, whether it's opening our video
franchising so that we can get more competitors who can then
also be broadband providers.
Senator Kerry. Well, let me, kind of, get to the nub of
this, if I can. Senator Lott, Senator Stevens, Senator Inouye,
others on the Committee, of long experience on this Committee,
editorial comment across the country, countless numbers of
organizations, countless numbers of witnesses have all objected
to the way the FCC is about to proceed, Mr. Chairman. We have
actually passed out of this Committee a request to have an
extended period of time now to try to complete the localism and
diversity issues before you consolidate.
Now, who is it who created the FCC, Mr. Chairman?
Mr. Martin. Congress did.
Senator Kerry. And Congress created the FCC for what
purpose?
Mr. Martin. To regulate the telecommunications and media
areas.
Senator Kerry. In the interests of the American people.
Mr. Martin. In the public interest, yes.
Senator Kerry. Correct. For their safety, security, and for
other purposes, correct?
Mr. Martin. That's correct.
Senator Kerry. And the Congress has expressed its will here
with respect to this Commission's potential action, has it not?
Mr. Martin. This Committee has passed a bill out of the
Committee that says that there should be a new process put in
place for our media ownership reviews. Congress----
Senator Kerry. And you're hearing from a bipartisan chorus,
are you not----
Mr. Martin. Congress----
Senator Kerry.--that----
Mr. Martin. Congress also expressed its will in 1996, where
they required us to undergo a biannual review of our media
ownership rules and to make any changes in those rules when we
find those rules are no longer necessary.
Senator Kerry. Yes.
Mr. Martin. So, there's also that part that we have an
obligation to do, as well.
Senator Kerry. But, nowhere in the FCC rules, either in
1934 or in 1996, is there anything that suggests that you have
a rationale or a motivation to make a decision that saves
newspapers. I mean, you've come into this Committee today, and
the first part of your testimony was an articulation of the
trouble the newspapers are in. Can you show me--I mean, I went
back and looked at it--can you show me, here, where there's any
mention of the word ``newspapers''----
Mr. Martin. The----
Senator Kerry.--in the 1996 or 1934 Acts?
Mr. Martin. I think we have an obligation to understand
what the impact of some of our rules have on the industries
that we regulate, including when we put in place the rules back
in the 1970s, they prohibited a newspaper from purchasing a
broadcast property, the impact that that may have had
inadvertently, on newspapers. And I----
Senator Kerry. But the purpose of that was not with respect
to the regulation of the newspaper. The purpose of that was
with respect to the consolidation of power in the dissemination
of information.
Mr. Martin. I think that's right. And that's the reason why
I think----
Senator Kerry. Well, what does that have to do with people
being fired or with loss of reporters or with the economics of
a newspaper?
Mr. Martin. I think it's also in making sure that the local
news-gathering is occurring, and robust. And I actually think
that the Commission has an obligation to understand what the
impact of its rules are. And I think, in this instance, we do
have an obligation to make sure and balance the importance of
independent voices in the local community, which the Commission
has under its precedent, traditionally looked at being beyond
just the broadcasters, but also the newspapers and other
independent voices.
Senator Kerry. Well, let's get to that. If that's true, and
that is your obligation--and I believe it is, part of it--but
it doesn't go to the question of cross-ownership. The question
of cross-ownership is to fulfill the larger obligation of the
FCC to protect the sourcing of information to the American
people so that you don't have a concentration of power.
Now, data in the official FCC record, particularly gathered
from the 2000 Section 257 studies, indicates that the primary
factors influencing female and minority broadcast ownership are
media market concentration, access to capital and equity, and
access to deals. And as the markets become more concentrated,
the cost of stations as acquisition targets become artificially
inflated, driving away potential new entrants in favor of
existing large chains. So, in effect, the concentration has the
effect of diminishing the ability of smaller and single-station
owners to compete for advertising and programming contracts.
So, you're in the middle of an analysis of this--the diversity
and the localism. And, notwithstanding that your responsibility
is to the public to make sure that diversity and localism are
well served, you're about to make a decision, for no--
absolutely understandable rationale, and against the will of
Congress and most of the witnesses, to actually increase the
concentration, which will make worse the localism and diversity
issues, without even having completed those studies.
So, my question to you is, why would you not--would you
agree, today, in the face of those realities and many more--I
can go on about what happens to the concentration and
diversity--would you agree with the opinion expressed from
Senator Lott, Senator Stevens, the Chairman, Senator
Rockefeller, and others, to postpone this decision from several
days from now and allow these next studies to take place and
complete the diversity and complete the localism analysis?
Would you agree to that?
Mr. Martin. No. And, if I can respond, I'm not sure I agree
with some of the other statements that were made in the
beginning, before you got up to the question, as well. But I--
--
Senator Kerry. Well, what is so----
Mr. Martin. But I----
Senator Kerry.--compelling--what is so----
Mr. Martin. But I----
Senator Kerry.--compelling that you have to move in several
days?
Mr. Martin. If I can respond, I think that there are
several concerns that I would end up having with some of the
statements you've made.
First of all, in characterizing the overall consolidation,
that may have occurred since the 1996 Telecommunications Act
was put in place, we're not actually lifting any of those other
rules as far as allowing any other--further consolidation on
radio, on television, at the national or the local level.
Senator Kerry. I know----
Mr. Martin. We are concerned about----
Senator Kerry. Yes, I know that.
Mr. Martin.--the cross----
Senator Kerry. I know what you're doing. You've got 20
cities that you targeted, but you also have a waiver process in
here. That----
Mr. Martin. No----
Senator Kerry.--waiver process would allow you to make any
kind of political decision you want with respect to the waiver.
Mr. Martin. The Commission has always had a waiver process.
People can always come in with a waiver. Indeed, I think it's
actually tightening it, and some of the comments that were
filed in response to what I have put out actually said that the
waiver process with a presumption against granting waivers is a
tighter standard than we currently have when a waiver is
provided.
Senator Kerry. What do you say to that, Commissioner Copps?
Commissioner Copps. I don't think we even have something
that would qualify for the term of ``waiver.'' This is just
overcoming a finding, with some very loose criteria. Is there
financial distress? That's undefined. Will there be more local
news produced? Is that 2 minutes or 5 minutes or 10 minutes?
So, it's just so porous as to be, I think, meaningless.
Senator Kerry. What do you say to that, Commissioner
Adelstein?
Commissioner Adelstein. I would agree. I mean, another one
of the conditions is financial condition. What does that mean?
There's also no definition, in terms of what level of
concentration of the market wouldn't be allowed. There are no
quantifiable standards anywhere. So, three Commissioners, at
will, could do a waiver in any market--no matter how small--
including Jackson, Mississippi, or anywhere in West Virginia or
western Massachusetts. I think it opens the door everywhere. We
need to tighten those standards.
Senator Kerry. Commissioner Martin, what I quoted to you,
in terms of what happens to the concentration of the market,
is, in fact, the official FCC record, which you're choosing to
ignore.
Mr. Martin. No, we're not ignoring it. I think that there's
no question that the concentration that has occurred makes it
more difficult for small businesses, including minorities and
women, to be able to be active and involved in the media
ownership.
Senator Kerry. So, why would you not want to wait until you
understand the impact better of the diversity and localism
analysis? What is so compelling----
Mr. Martin. I actually----
Senator Kerry.--in the face of all of the other imperatives
of communications in America, to move, you know, several days
from now rather than 180 days from now, 90 days from now?
Mr. Martin. We have not just proposed a change to the
newspaper/broadcast cross-ownership rule. I have also put forth
proposals that would address both the localism study that this
Congress has been encouraging us to complete and on the
minority ownership proceeding, including adopting many of the
recommendations that were put forth by our own diversity
committee.
Senator Kerry. But you realize the fundamental rationale
that you gave when you came in here was the dilemma that
newspapers have faced, which, incidentally, a lot of people
would contest. A lot of people would say that, all across this
country, newspapers are making lots of money, doing quite well.
They've had to retrench somewhat; yes, they've had to adjust.
But, as in any business, they're finding their outlets and
means of making money. In fact, one of the most profitable
entities in America today are some of these small newspapers in
cities and towns across America which are cash cows.
Mr. Martin. I think that the newspaper industry is having a
significantly difficult time in continuing some of its local
news-gathering----
Senator Kerry. But where is it----
Mr. Martin.--but I think----
Senator Kerry.--in your jurisdiction under the FCC to put
that ahead of the interest of diversity and localism and to
deal with the problem of concentration?
Mr. Martin. I'm not putting that ahead. I think we have to
put it in balance, and we have to take all of those things
into----
Senator Kerry. Then why would you not take a few extra
days, which is the will of the Congress and the will on a
bipartisan basis?
Mr. Martin. I think it's important for us to try to move
forward on all of these issues, both including what's involved
in increasing the opportunities for minority ownership and
what's involved for responding to the concerns that have been
raised on localism, and responding to the courts and the
Commission's previous decision that said that the absolute ban
on newspaper cross-ownership is no longer appropriate and that
reasonable analysis----
Senator Kerry. Yes, but that court----
Mr. Martin.--says that that's----
Senator Kerry. That's the Prometheus decision you're
referring to?
Mr. Martin. Yes.
Senator Kerry. All right. Well, it's my understanding that
parties on both sides believe you're in violation of the
Administrative Act as a consequence of not doing away entirely
with it, as a consequence of that decision.
Mr. Martin. It----
Senator Kerry. So, I mean, you just seem to be digging a
hole deeper and deeper here----
Mr. Martin. No----
Senator Kerry.--rather than trying to work this through in
a logical way.
Mr. Martin. You're right, the industry is saying that we're
in violation of the law for not----
Senator Kerry. The Administrative Procedures Act.
Mr. Martin.--for not removing the ban in its entirety and
allowing for newspapers to buy any broadcast property in any
market around the country----
Senator Kerry. But doesn't----
Mr. Martin.--but they're saying that the Third Circuit and
the law would require that. I think what we're trying to do is
find a balance, as you said, between the concerns about, how we
respond to the changing dynamic that's occurred in the
marketplace since our rule was put in place--which is what the
statute requires us to do that was passed in 1996--and the
concerns that have been raised about the impact of this on
small businesses and minorities and women. And I think that's
the very reason why I've put forth a proposal that I think
balances both of those.
Senator Kerry. Well, unfortunately, most of the advocates
on behalf of those entities do not share your view that you
are, in fact, advancing their cause; on the contrary, they feel
that this is going to disadvantage them significantly.
And what's very hard for me to understand is why you would,
sort of, chose to swim against the tide, so to speak, in
something as important as what Senator Rockefeller and others
have described this as. I mean, this is big stuff. Last time
you guys moved, sort of, on your own like this, there was a
spontaneous grassroots revolution across the country; and the
Republicans, who then ran the Congress, joined together with
the Democrats, and they overrode what you did.
It would seem to me you would want to try to find something
that's just got a little better consensus, a sense of
representing America's interests, not some sort of narrow
interest. And it disturbs me greatly that you're just, sort of,
so headstrong about this that, with even your own Commission to
split--I mean, why not try to get a unanimous Commission? Why
not try to get a decision----
Mr. Martin. I actually always work to try to get a
unanimous Commission, and this issue is no different. And I
think that you're absolutely right, it would be great if there
would be a consensus. I'm not convinced that, on media
ownership, there ever will be a consensus. Indeed, I've gone to
my colleagues in the past, even on the process and the policy
issues--all of my colleagues--starting as late as last summer
and early fall, saying, ``Let's discuss--what would be a
unanimous process? What would be a unanimous approach?'' And,
actually, I'm not convinced that there's much prospect of that.
Indeed, the concerns that have been raised about what they are
characterizing as loopholes in the waiver process, I've said
I'm happy to work with them to coordinate what those processes
should end up being, in any way they would like, but that would
mean they would have to engage in the substance, not merely
just demand additional process and additional time for the next
6 to 9 months. And I'm happy to end up doing that; however, I'm
not yet convinced that we will ever reach a consensus on the
media ownership issue. I think it may be just too politically
divisive. And I do think it's important that we have an
obligation to respond, as Congress told us to, and the courts
are waiting, for more than 3 years now, and I think that's what
we should do.
Senator Kerry. Well, I've used more than my fair share of
time here, and I apologize for that. But I--I think you are
inviting another Congressional response. And I regret,
enormously, that--I don't know, Commissioners Adelstein and
Copps, do you want to respond to what the possibilities are
here?
Commissioner Copps. This should be about substance. And
where I have been on this has been no secret, I think, to the
Chairman or any of my other colleagues on the Commission for
months and months and months. We are willing to vote on media
ownership when we deal with these long pending problems of
minority ownership and the lack of localism, because they have
been exacerbated by consolidation. So, I think it's not just
about process or division or inability to get an agreement
there. This goes to the substance of the matter.
Incidentally, I would add, if I could just make a quick
comment, because there's been a lot of argument to the contrary
about the health of the newspaper industry. We are not the
Federal Newspaper Commission, I understand that. But I would
just quote from a letter to the editor that the head of the
Newspaper Association of America wrote to The Washington Post,
last July 2. He said, ``The reality is that newspaper companies
remain solidly profitable and significant generators of free
cash-flow.'' Operating profit margins seem to be near 20
percent, which is pretty good. I wish I had some investments
that were doing 20 percent. So, it's not a one-sided story. Of
course there are challenges and necessities for adjustment, but
that's just to balance out what was said earlier.
And a final point, on divisiveness, I'll tell you one place
where this issue is not divisive, and that is across the United
States of America. There's a new poll out, just within the last
couple of weeks, that shows that 70 percent of Americans,
regardless of political party, regardless of liberal or
conservative affiliation, think that media consolidation is a
problem; 42 percent, I think, said it is a really serious
problem; and 57 percent favored laws to prohibit newspaper/
broadcast cross-ownership in specific markets.
Commissioner Adelstein. In terms of the process, I think,
to respond, certainly we have laid out a process today that we
could get agreement on, bipartisan agreement. The Committee
laid out a process, which we endorse, today.
So, there is a deal that we could reach right now. And I'm
willing to talk to the Chairman about an alternative process,
as well. He's been very good at building consensus. He's my
friend, we have a good working relationship. Ninety-five
percent of what we do is bipartisan and unanimous. So, he's
done a good job of building unanimous decisions. I don't see
why we can't do that again here. I really don't think it's
outside the scope of possibility to work together to try to put
aside our differences. But, in order to do that, we cannot, I
think, operate in defiance of this Committee's instruction that
we not go forward on December 18. I think we need to have time
to do it right, we need to make sure that we get the elements
of localism and the elements of diversity in place first.
That's going to take a little bit of time, not, maybe, every
minute that the Committee asks for. We could work with you, and
I'd like to work with the Chairman, on trying to see if we
can't come up with an accommodation. We work best when we work
together, and it's not too late.
Senator Kerry. Well, Mr. Chairman, I wish you would heed
all of these pleas. And I will just say to you, in closing,
that it is really clear from the evidence that if the
Commission intends to promote ownership diversity, you can't
accomplish that goal while simultaneously increasing market
concentration. It just doesn't--it's just a complete
contradiction. And with these analyses that we've requested
outstanding, it just seems extraordinary to me that we're not
able to have your agreement to wait a few days. Listen to the
American people. Listen to the Congress.
Thank you, Mr. Chairman.
The Chairman. Senator Lautenberg?
STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM CALIFORNIA
Senator Boxer. Mr. Chairman, can I just ask, what's the
order of recognition? Because we were all here for the
photograph. I was here for all the opening statements. I was
called out----
The Chairman. This was the----
Senator Boxer.--to do a phone call.
The Chairman.--list that was given to me.
Senator Boxer. I know, but I asked your staff. I don't
quite get it.
The Chairman. The next person is Senator Lautenberg.
Senator Lautenberg. Thank you.
Senator Boxer. And then what happens----
The Chairman. Following----
Senator Boxer.--after that?
The Chairman.--that is Senator Snowe, Senator Klobuchar,
Senator Boxer, Senator Cantwell.
STATEMENT OF HON. FRANK R. LAUTENBERG,
U.S. SENATOR FROM NEW JERSEY
Senator Lautenberg. Thanks very much, Mr. Chairman.
Not to be able to read the indignation and ire of the
Committee as we review this pending date strikes me as less
than a forthright review of the situation, Mr. Chairman. And
we've had many discussions about things. And I've found you in
a--typically, in a mode that says, ``OK, let's look at this
problem or that problem.'' And I just wonder whether--is there
anything pending by way of a merger or an acquisition that
would be helped by a decision on the 18th of December?
Mr. Martin. There's no particular transaction that is
pending before us, but it is having an impact on the industry,
the fact that these rules have been unclear for quite some
time. And, indeed, we've had several companies, for example,
announce that they're going to start to spin off their
broadcast properties from their newspaper properties because
they see no prospect of the Commission taking any action
anytime soon. That was announced by several companies earlier
this fall. So, I think it does have a significant impact,
whether we are, in fact, going to go forward or not. But, no, I
can't say there's a particular transaction that would be
impacted.
Senator Lautenberg. Mr. Chairman, I thank you for enabling
us to have held a hearing in New Jersey, and that Commissioners
Copps and Adelstein were able to attend the public forum on the
license renewal of WWOR-TV. And it's the only high-powered
commercial station licensed in New Jersey. New Jersey, with 9
million people, not identified as a media market, has a very
bad review of events that are considered news available to the
public there, and 200 people turned out to the forum. And now
that the forum's been held, what's the next step for your
consideration of WWOR's license renewal application?
Mr. Martin. I think that we are going to have to end up
considering whether or not they met the conditions that were
put on that license. As you and I have discussed in the past,
they had a specific requirement that they were supposed to
provide extra additional news coverage above and beyond what
would normally be required of the State of New Jersey, to make
sure it didn't become just a New York station. There's been
evidence submitted in the record, along with the comments at
the public hearing, that emphasize that they believe that
licensee has not done that. We'll have to do a debate here at
the Commission, a discussion about whether or not they have met
that criteria, and, if they did not, what should be the
ramification and result of that.
Senator Lautenberg. The information that was developed said
that there was more New Jersey news produced by New York-based
stations than there was at WWOR. And a condition for their
license was very specific. It had to be a New Jersey station,
the facility had to be based in New Jersey, the news
department. And what's been happening with the present
ownership is, they've tried to slip past things, and they were
in the process of moving the news department to New York City.
They have a logo that said, ``New York 9.'' And, what a
coincidence, just the day before we had the hearing, they
dropped the New York news identification.
So, what else do we have to have that says to us that this
license will not be renewed. It's extended now, as part of the
original license, but what assurance do we have that we're
going to be able to make certain that, before that license is
renewed, that they will meet the standards?
Mr. Martin. I think that we do need to end up making sure
that there are more specific requirements put in place. I
haven't reviewed all of the record, but, from the studies that
you have shown me and that I've looked at, it does appear that
they did not meet the requirements of providing the news
specific to New Jersey. And I think, then, the Commission's
going to have to decide what steps they need to end up taking,
as you say, to make sure that they're going to meet those in
the future, and that may require something more specific to be
included. And we'd be anxious to hear from your offices on what
you think would be most appropriate.
Senator Lautenberg. Is it possible to have yardsticks that
are specific, that can be placed in the consideration for
renewal?
Mr. Martin. Yes. There was a condition that was originally
placed, just of a general one. You could put one in place that
would actually have something that would be very specific
instead this time, and that could be measured in reporting
requirements, so that they would have to come back and report,
and there wouldn't be an elongated period of time again before
they came back and provided what was going on.
Senator Lautenberg. Commissioner Copps, you were there, you
heard the public response, you saw the material that was
produced to make the case on behalf of a more rigid standard
for the renewal of the license. Is there anything there that
would suggest to you that these conditions have been met, or
that there was a willingness by the present ownership to step
up to the plate here and do what is required?
Commissioner Copps. Well, I think--first of all, let me
say, I think that was one of the best public hearings that
we've had in a long, long time. I found the public commenters
really articulate and impassioned. And I hope that all of my
colleagues will look very closely at the public record, perhaps
more closely than we've looked at the public record on media
ownership, just to understand the depth of the feeling that
people have up there. Obviously, this is a pending item, so
there are some limitations on our ability to discuss this, but
I think you know where I come from, from the standpoint of
localism and the necessity to encourage local news, community
activities, and all that. So, the hearing was very helpful from
that standpoint. And I look forward to working with the
Chairman and my other colleagues to make sure that, when this
license proceeding is over--and I hope that will be sooner
rather than later--that it will lead to an enhancement of
localism in New Jersey.
Senator Lautenberg. Commissioner Adelstein, you were there.
Do you have any observations that you'd like to make here?
Commissioner Adelstein. Why, sure. I appreciate the
Chairman's willingness to get that hearing scheduled in New
Jersey. It was the first such hearing that we've held. It was
quite dramatic. A lot of people from your state felt that their
needs weren't being met, in terms of news from that station,
and that they were getting more news on New York stations than
on the one station that's required by law to serve New Jersey.
As you mentioned, that's a very unusual statute, and I think
all of us have to recognize the importance of ensuring that it
is adhered to. I think there has to be real and substantial
requirements placed upon that licensee in order to ensure that
the people in New Jersey are served, in terms of their news and
information and localism, including what's happening in New
Jersey, not across the river in New York.
Senator Lautenberg. Yes. Thank you.
And, Commissioner Tate, we haven't had a chance to talk
about it. Mr. McDowell, we have. And I hope that we'll get this
resolved in a relatively short period of time so we can do it.
And one last question, Mr. Chairman. New Jersey's a net
contributor of almost $200 million a year to the Universal
Service Fund. And I know it's been discussed here at some
length. And as the Fund keeps growing, the burden on New Jersey
and other donor states gets bigger and bigger. There are many
proposals for reforming the Fund, including temporary caps,
longer-term proposals. When can I tell my constituents that
they're going to see some action from the FCC to stop this
growth of the Fund and the cost to my constituents?
Mr. Martin. I do support trying to take some steps
immediately to put a stop to some of the growth of the Fund. We
have increasing amounts of money flowing to some companies that
were not required to provide any of the costs of what they're
doing with that money, and I think that is a concern, and I
think that we should at least put a cap on that part of the
program. I don't know for sure--I've got proposals in front of
the Commissioners right now--that they would do that. I've
voted that. If others end up voting it, then you could tell
your taxpayers that. There are concerns about it by others that
are concerned about implications for stopping the flow of some
of the Universal Service money. But I do think we need to take
some steps to at least make sure that everyone who is getting
Universal Service money provides us with their actual costs, so
we know what they're spending the money on.
Senator Lautenberg. Mr. Chairman, I don't want to take--I
would like to take the time, but it's an imposition on
colleagues, so we'll review that question in writing with the
other Commissioners.
The Chairman. Thank you.
Senator Lautenberg. I thank you for the----
The Chairman. Senator Klobuchar?
STATEMENT OF HON. AMY KLOBUCHAR,
U.S. SENATOR FROM MINNESOTA
Senator Klobuchar. Thank you, Mr. Chairman.
Thank you, Commissioners, for being here. I had three areas
of questions. One was rural broadband, and Senator Kerry did a
good job of covering that. I continue to be concerned in our
state, not only with the availability, but how slow the service
is, and how our ranking with the rest of the world has fallen
instead of improved. And I support the work that we're doing
with the mapping requirements, and also some of the work that's
coming out of the House. But I hope we will pursue that later.
I want to, particularly, focus on the cell phone issue.
And, as you know, Senator Rockefeller and I introduced a bill
that I think has some pretty simple, straightforward, consumer
protection rules in it, given that this industry hasn't really
been regulated. And one of the requirements is to prorate the
early termination fees. I know some of the companies, Verizon
and AT&T, have now started to do this. So, I don't understand
why there would be a problem to put that into law.
And I know that the wireless industry has asked the FCC to
rule that these early termination fees are rates charged, and,
therefore, that the state regulation is preempted. And I'm
wondering what the status is of this proceeding.
And I will tell you that I continue, because we're doing
this bill, to get people coming into my office with complicated
bills that they can't figure out and huge early termination
fees. We've got the case that was reported in the paper, of the
consumer that tried to fake their own death by drawing up their
own death certificate, to get out of an early termination fee.
Even that didn't work.
And so, I'm wondering what is the status of this proceeding
as we push through our legislation? And do you view these ETFs
as rates charged, and, therefore, that would be exempt from
state regulation?
Chairman Martin?
Mr. Martin. I think that the problems related to early
termination fees are significant. I am concerned about it.
They're actually proliferating, not just in the wireless
industry, but we're beginning to see them pop up across other
sectors, as well. And I think that they are problems.
I think that the Commission would, potentially, be able to
regulate them as a fair business practice under Section 201 of
the Communications Act. I've had multiple discussions, both
with consumer advocates and with the industry about it,
including several sessions with both of them. The consumer
advocates, actually, have encouraged the Commission to not rule
on what would be reasonable under Section 201, because they're
concerned about wanting to make sure they preserve the
opportunity for their state litigation to go forward.
I actually think that the Commission, though, if there were
enough complaints filed, and we wanted to, we probably would
have authority, under Section 201, to talk about what was a
reasonable practice. But I don't necessarily agree that it's a
part of their rate, as you would say.
Senator Klobuchar. All right. Anyone wanted to add to that?
No?
Could I also ask about the area of the handset portability?
I remember, I was practicing in this area at the time when
number portability came up. Everyone claimed the sky was
falling. And now we have this issue of the handset portability.
And I just think that most American consumers are--as you know,
are unable to take their phones with them if they change
service. And I'm wondering how you feel about this handset
portability. In our bill, Senator Rockefeller and I have
actually simply asked the FCC to look at this. But I think
there's just going to be more and more of a clamor, whether
it's consumers surgically operating on their own phones or
whatever's going on here, to try to move toward this. And it,
again, is another consumer issue. And what's happening with
this over at the FCC?
Mr. Martin. Again, I agree with you that this is an
increasing problem, and that consumers are in demand of it.
That's the very reason why we put requirements in the upcoming
spectrum auction--for almost a third of the spectrum that we're
going to be auctioning--that whoever wins that spectrum will be
required to have a more open platform and have an open handset
requirement. I think that the Commission's goal, and we stated
at the time, was, we thought providing a more open handset
environment would lead, not only to that individual provider,
but also push the industry to do that, as well. And I think
we've already seen some of the benefits of that, in terms of
both the recent announcement by the technology companies, where
they've developed an open handset standard that would be
utilized, and, indeed, by Verizon, who's now announced that
they're going to follow and incorporate that standard into
their existing network. So, I think the Commission has taken
steps on that, and I think that's important.
If Congress gives us the authority to--and tells us we need
to directly require that--even of the existing licensees, we'll
obviously implement it. But I think we're going to see some of
the changes that are going to occur as a result of the steps we
took in the context of the upcoming auction already.
Senator Klobuchar. Anyone?
Commissioner Copps. There may be a connection between these
two issues you talked about--affordability and early
termination fee--because if you take that phone with you, we
should make sure that there's no early termination fee that's
going to be attached to that; the logic being the fee is to
subsidize the telephone. But if you're bringing your own phone,
there's no need to do that.
Senator Klobuchar. OK. All right. The last area I wanted to
ask about was just the digital TV transition. As I've told this
committee before, there are 430,000 households in Minnesota
that are going to be affected by this, and I can just tell you,
most of them are not in areas where they have a big store right
around the corner that they're checking out so they find this
out, and they don't have podcasts set up. And I just don't
think they know much about--that this is going to happen, their
TV's going to go off.
And I know, Commissioner Copps, that you just recently went
to study the transition in the United Kingdom. And are there
lessons to be learned from that? What do you think we need to
do here? Are you concerned about what's going on?
Commissioner Copps. We chatted a little bit about that
earlier, but there are tremendous lessons to be learned. And I
think it's not because there are differences in sizes between
countries or anything like that. The point is that, in the
United Kingdom there is a DTV transition that takes place over
a period of some 5 years, region by region, station by station,
with lots of public information so people know what's coming,
they know a DTV transition is coming. I think probably over
half of Americans have no idea a DTV transition is coming in a
little more than a year now. That is going to be, potentially,
highly upsetting and highly enraging to many of them.
So, we have to--we have to find a way to get the word out.
We have to provide the kind of help that they're providing in
the United Kingdom. If you're old or if you're disabled, they
will come in and actually connect the new attachments that need
to be connected. They do the consumer surveys to see what's
working and what's not working, and they correct at every
stage. Someone is in charge. Here, nobody is in charge. And
that's our biggest problem. This has to be a partnership. It
shouldn't be a government program. I don't think it can be
entirely private sector. It should be a partnership. And that's
what we had with the Y2K program that, back in the previous
Administration, I worked on. That was a program that had
leadership, it had direction, and it had accountability. Most
of those----
Senator Klobuchar. And I also know----
Commissioner Copps.--things are lacking.
Senator Klobuchar.--Senator McCaskill is very concerned
about this. She has a lot of people in Missouri. She's
presiding over the Senate right now. I'm going to try to spell
her so she can come back. But what is happening with having a
single person in charge and accountable here, right here in the
United States?
Commissioner Copps. Well, we don't have that. I think
that's exactly what we need to have. Ideally, if I was in
charge I would push for a White House Task Force so that
everybody could be coordinated and everybody would know that
there's a DTV transition coming--we knew there was a Y2K. If we
flubbed that, we were going to have a mad President of the
United States, and Vice President of the United States, so we'd
better get it right. Not that there weren't lots of other
motivations to get it right, too. But that helped, because
there was accountability and oversight. Every week, we were
dragged, as the deadline came closer to 2000, over to John
Koskinen's shop in the White House, and we really shared
information, and everybody knew there was leadership. That's
what we need here. They have that in Great Britain. They have a
fellow who's in charge of it--Ford Ennals is his name; he's on
television all the time; he's a recognized public figure--so
people know this is happening.
Senator Klobuchar. Commissioner Adelstein?
Commissioner Adelstein. You don't have to just take it from
us, the Government Accountability Office has said that there is
nobody in charge, and that they really believe there needs to
be. And the Government Accountability Office, GAO, said the FCC
really is the best positioned agency to take that role. So, I'm
hopeful that we can do that, that we can step up to the plate.
There needs to be a lot of coordination. It doesn't have to be,
necessarily, a czar running it top-down, but there has to be
someone in charge, where the buck stops, at least in terms of
the broader issues. And we need to coordinate with the private
sector, as well. It's not a command-and-control thing, where we
tell them what to do, or dictate the message, but to ensure the
message is coordinated, because we have so many different
interests. As Vice Chairman Stevens said, we don't have much
money to do this. There's $5 million. But the private sector
has nearly a billion dollars they've committed to do this,
which is an enormous amount. We need to make sure that that
message is coordinated. And GAO said that there is, right now,
not a process in place to ensure that message is consistent and
coordinated. The government can't dictate it, but I think we
could work with these organizations, who are open to working
with us, to try to ensure that there's a coherent message, that
there's a coherent plan. And we need to do that immediately,
because there's no more time to waste.
Senator Klobuchar. OK. Just one last follow-up. At the
beginning, I asked, with the cell phone proceeding, the ETF,
what is the status of that, timing-wise? When is that going to
be done?
Mr. Martin. Well, I'm not sure that I anticipate the
Commission ruling saying that they were part of the rates,
which I think is what you were asking.
Senator Klobuchar. OK.
Mr. Martin. But I can get back to you on it, on a better
timeframe.
But, as I said, the consumer groups who are concerned about
this actually have encouraged the Commission not to act. But I
can follow up with you about that, if you'd like.
Senator Klobuchar. Thank you.
Thank you very much----
The Chairman. Thank you.
Senator Klobuchar.--Mr. Chairman.
The Chairman. Senator Boxer?
Senator Boxer. Thank you, Mr. Chairman.
On DTV, I just want to echo the sentiments of my
colleagues. You've got a train coming down the track at you,
Chairman. And I'll just tell you right now, you're going to be
blamed for this if it's not handled right. If it was me, I'd
slow down your other thing that you look like you're jamming
through, on the cross-ownership, sit down with your colleagues,
reach consensus, not on the outcome--I agree with you, you may
never be able to--but certainly on the way to proceed. We
reached a consensus here on that. Pay attention to that. And I
think, if you don't do this, there's going to be a disaster
coming our way. It's a nightmare, and I just--that's an
opinion.
But I really want to focus my questions on concerns about
transparency and openness at the FCC that I've, kind of, tried
to do all along.
Chairman Martin, as you're well aware, in September 2006, I
made public two media ownership studies, prepared by FCC staff
at taxpayer expense, that were shoved in a drawer because their
conclusions ran counter to certain interests. Now, I just want
to make sure I understand this. Is it true that you, sir, and
the Commission, choose who the Inspector General will be over
at the FCC?
Mr. Martin. The Inspector General statute requires that
when there is someone who resigns as Inspector General, the new
agency head appoints the new----
Senator Boxer. Right.
Mr. Martin.--Inspector General.
Senator Boxer. So, you have appointed--you and the
Commissioners have to agree--is that right?----
Mr. Martin. Yes.
Senator Boxer.--on the--OK. Well, I just want to say that,
to me, this is the fox guarding the chicken coop, and I'm going
to introduce legislation to change that. Over in my Committee,
Environment and Public Works, the Inspector General is
nominated by the President and has to be confirmed by the
Senate, by the Committee.
And this is why it's important, and listen to this: In
October of this year, the FCC Inspector General came to brief
me on the findings of his investigation into the matter that I
talked about, shelving those reports that had a conclusion that
you, I know, sir, don't agree with. Unfortunately, that
investigation raised more questions than it answered.
For example, the IG uncovered a December 2003 e-mail from
then-media bureau chief Ken Feree, in which he stated he did
not want to release the 2003 radio report, which raised some
questions about this consolidation, in terms of localism,
because he didn't like the results. We have the writing of Mr.
Feree. He wrote, ``I am not inclined to release this report
unless the story can be told in a much more positive way. This
is not the time to be stirring the pot on radio consolidation.
All in all, this is a bad time to release something like
this.''
Imagine. You get a report, and you don't agree with it, so
you deep-six it.
So, the IG now, who's appointed by you all, despite the
clear evidence that this was shoved in a drawer, he said that
Mr. Feree, who was a political appointee, did nothing wrong. I
had a big argument with the IG in my office. I never had a
situation like that. I never saw such a coverup from an
inspector general. Well, he's not independent. Now I get it.
Now, we don't even know who else knew this happened,
because the IG made a bizarre decision not to follow up and
interview key FCC staff, including your fellow Commissioners.
So, the IG, who you appointed, and your Commissioners agreed
to, does an investigation, finds out that a political appointee
essentially said, ``Don't make this public, because I don't
like the outcome,'' finds nothing wrong with it, and then
doesn't interview anybody else.
So, here we are now trying to conduct oversight over an
agency that, in my opinion, has shirked its responsibility to
protect the public interest.
Now, I'd like to ask Commissioners Adelstein and Copps,
what do you think about the IG's report on the shelved studies?
And were you troubled that the IG didn't go ahead and question
you all or the rest of the Commissioners, or didn't question
staff?
Commissioner Adelstein. I was very troubled by the report,
Senator Boxer. I felt that the evidence in the report was not
reflected in the report's conclusions. I couldn't understand
how he could conclude that everything was done properly, when
there is that clear evidence, that you read, that the reason it
was deep-sixed was because it was inconsistent with what they
wanted to do: more media consolidation. It was clearly
improper. And I think that the fact that the report was so at
odds with its own evidence indicates that there wasn't a fair
analysis, that it truly wasn't an independent analysis. It was
a very strange and, I think, inappropriate finding by the IG.
Senator Boxer. Commissioner Copps, do you agree with that?
Commissioner Copps. I would agree with that.
Senator Boxer. Commissioner Martin?
Mr. Martin. I think that the Inspector General said that
there had been no law violated. I think that, actually, he
highlighted the evidence and some of his concerns. I think that
it's important for the Inspector General to actually describe
what the legal standards are for a violation of any Commission
employee, and whether or not that has actually occurred should
actually be the Inspector General, not the Commissioner----
Senator Boxer. Well, wait a minute. You're focusing on
whether a law was broken. The whole point was to find out
whether something was deep-sixed for political reasons. You
don't have to--not everything they do has to do with whether a
law is broken.
Mr. Martin. I thought that he was saying the law wasn't
broken, but he actually highlighted the evidence, including
making sure--bringing to everyone's attention the e-mail that
you read, which certainly implies that Ken Feree had deep-sixed
the report. And I actually, again, just to point out--the same
as we did when we talked about this a year ago--I don't know
what happened in that context. I wasn't----
Senator Boxer. But the bottom line is----
Mr. Martin.--Chairman at the time.
Senator Boxer.--yes, the report was deep-sixed, we got the
e-mail, we see why. It was very obvious. Nobody was hiding
anything. ``This isn't going to help us in our debate, so let's
bury it.'' And then, the IG, who is appointed by you all, now
decides--he found exactly what happened, and then he walks away
from the whole investigation. It's absurd. And so, I'm just
saying, I'm going to push hard for an independent Inspector
General. This is ridiculous.
And, again, I hope I don't need to reiterate what
colleagues said. My God, you--you're rushing in one front,
you're slowing on another front. You've got it all mixed up,
sir. And I hope you'll heed what we're saying here, because it
is bipartisan.
Thank you.
Senator Boxer [presiding]. And I'll turn this over now to
Senator Cantwell, then she can turn it over to Senator Nelson.
STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON
Senator Cantwell. Thank you, Senator Boxer.
Chairman Martin, I want to just pick up on a point that
Senator Kerry made, and just ask you a question. Do you see any
circumstances in which you'd be willing to delay the vote for
this proposed rule change before the hearing? Do you see any
circumstances in which you would change that?
Mr. Martin. Oh, sure. Listen, what I've said is that my
plan is to end up moving forward. I'm going to continue to have
my discussions with all the Commissioners about a consensus,
not just on the process, but on the substance. So, sure,
there's the potential or possibility there could be
circumstances. But, at this point, I would say that, no, I
anticipate that we would end up moving forward, and that, at
this point, that's my plan.
Senator Cantwell. In your testimony, you talk about
listening to your colleagues, and you said that you
incorporated input from them. What input did you incorporate?
Mr. Martin. When we were beginning the process of the
studies during the Notice of Proposed Rulemaking that we
released in July 2006, all of the Commissioners voted on what
would be the topics. After that, I approached all of the
Commissioners and said, ``What would you like the topics of the
studies to be?'' No Commissioners gave us anything in writing.
Several had suggested--made suggestions orally about what they
wanted, to extend and expand the number of topics. We
incorporated that. I put that in a written memo. I circulated
it to all my colleagues, again asked for input. No one gave me
any written comments. One of the Commissioners said he wanted
to make sure--and, again, expand some of the topics, which we
then incorporated again. When we then went forward and said we
wanted to identify what individuals, if they had any, to
perform the studies. I relied upon the chief economist at the
time to try to come up with academics around the country to do
it. Several of my colleagues had suggestions of people they
wanted to do some of the studies. Every suggestion that my
colleagues put forward of any individual in the country who
they wanted to do a study, we contacted to see if they'd be
willing to do a study. Several of them said no, several of them
said yes. The ones who said yes, we contracted with, asked them
to do studies. One of the ones----
Senator Cantwell. Can I--since I don't----
Mr. Martin.--one of the people that----
Senator Cantwell.--I don't want to take as much time----
Mr. Martin. Oh, I'm sorry.
Senator Cantwell.--as my colleague Senator Kerry did. Could
I ask them to respond to that? Because that was a pretty good
elaboration.
Commissioner Copps. I would take exception to trying to
portray this as a completely open and participatory process.
There was some initial outreach on subjects of studies. I think
we responded--I thought we had--with a list of about 12 or 15
very targeted kinds of studies. And that was kind of the end of
that until we saw what the studies that were selected were
going to be. Most of them were kind of ill-targeted, I thought,
and several of them went to the ``robustness'' of this or that,
and really didn't ask the important questions that needed to be
asked in the context of media ownership. So, while I think
there was some outreach, to imply that this was a small-d,
democratic, fully participatory, we all make the decisions
about who's going to do the studies and what gets studied, I
think, is not 100 percent accurate.
Senator Cantwell. Commissioner Adelstein?
Commissioner Adelstein. I didn't find my ability to give
meaningful input really afforded. I felt that there was very
little time between the time we were asked about it and the
time that all of a sudden, just several days later, a whole
list of authors appeared. Clearly, all the work had already
been done about who they wanted to ask, and, by the time these
decisions were made, I had no meaningful input into the
authors. And the authors were not, for the most part, except
for one that was suggested by Commissioner Copps, experts in
the field of media ownership. They were, in fact, broad
generalists in economics, and a lot of the best experts that
were, I heard, asked about whether they wanted to participate,
were given conditions to operate under in which they felt they
couldn't possibly do the right level of work. The initial take
on the ownership studies was set forth by our chief economist,
who wrote a memo, which was found under FOIA, that said that
she was offering thoughts and ideas about, ``how the FCC can
approach relaxing newspaper/broadcast cross-ownership
restrictions.'' So, the person who put together the concept of
how these studies would be done did it with an outcome in mind.
I think that if you look at the studies, they weren't properly
peer-reviewed. Federal law requires, in the Data Quality Act,
that all these studies go through a peer review before they're
disseminated. And we didn't. That wasn't done until afterwards,
and a lot of the peer reviewers were consulting back and forth
with the authors, in violation of Federal guidelines.
So, this process, I don't think was conducted with
transparency. I don't think it was conducted properly. I know
that there are questions being asked over in the other body, in
the investigative committees there. I don't think that the
studies really accurately reflect the knowledge base that's
available in academia about these issues. And, in fact,
consumer groups looking at the studies found major flaws in
them, even though they were given very little time. They were
given a very short period of time to review them, and they
weren't given the proper data to review, until later in the
process, under very restrictive conditions.
So, I don't think that this process was open and
transparent.
Senator Cantwell. The reason I'm asking that is, it seems
like we are taking one piece of data and trying to twist it or
use it as a scapegoat to come to a conclusion. And I guess,
Chairman Martin, I'm directing this at you. Your statement says
``Allowing very limited cross-ownership may help forestall the
erosion in local news coverage by enabling companies to share
these local news-gatherings across multimedia platforms.'' And
it seems as if you are trying to use the Internet as a
scapegoat to say that somehow the competition that the Internet
is providing to the newspaper industry, that technology that's
provided a new distribution channel for print media now to be
online, is somehow blowing up their business model, and that
the solution to that is that you ought to allow big media
companies to get bigger. And I would say that this change in
technology, which is a benefit to the underlying notion of
allowing 1,000 flowers to bloom and lots of different opinions,
is going to be a change, and that many newspapers are working
through those new business models. Technology change does mean
that some existing business models are challenged, but it
doesn't mean that you should throw the baby out with the bath
water. So, you're basically saying, ``Yes, let big media
companies own newspapers,'' because somehow the Internet is
making it more of a challenge.
Now, Commissioner Copps came up with those statistics, or
one of the--I think it was Commissioner Copps--and I would just
like to note that, in 2006, supposedly a very disastrous year
for newspapers, they did average profit margins, for publicly
traded companies, of 17.8 percent. And if you contrast that for
the rest of corporate America, that's about, over the last 25
years, 8.3 percent. So, there's something that's not right
here. I can imagine, with those numbers, 17.8 percent, yes, I
can imagine a lot of big media companies would like to own
newspapers. The truth is, their numbers aren't so bad. And, as
a distribution channel, they still represent a very interesting
delivery system, and one that I say should still have a shot as
they try to broaden into their online distribution business
models.
But, to say that the consolidation, which will bring about
a concentration of voices, is somehow--that that particular
logic is in keeping with the notion of competition, diversity,
and localism, I'm having a very tough time understanding. So,
I'm happy to hear your response to that.
Mr. Martin. Sure. I think that it's Congress, actually, in
the 1996 Act, that required the Commission to review its rules
and modify, and eliminate them, the ownership rules, to the
extent that the competition had changed the marketplace. And I
believe that is one of the things that Congress charged the
Commission with doing, updating its rules and actually removing
them when they were no longer necessary because of competition.
The rule that we put in place in 1975, the media
marketplace has--no doubt, has changed dramatically since then.
The Internet is one significant part of it, so are the number
of opportunities, in terms of broadcast outlets, so are the
opportunities, in terms of cable television and satellite
television that were not available in 1975, when the rule was
put in place.
The Commission has, in the past--and, actually, almost
every Chairman at the Commission since 1996, both Republican
and Democrat, have all concluded that there needs to be some
modification to the newspaper/broadcast cross-ownership rule,
in light of the changes in the marketplace that have occurred
since 1975, and the fact that this is the only rule that has
not been changed since 1996. All of the rest of our ownership
rules have been, and this is the only one that hasn't. And, as
a result, I think that Congress actually charged us with that.
Yes, the Internet competition does demand that we re-evaluate
our rules to see if they're still necessary. And I think it is
harder to make the case that they're still necessary in the top
20 markets for a newspaper to be prohibited from buying the
number five, six, seven broadcast station in those markets.
Senator Cantwell. I think you're getting it absolutely
wrong. And I don't see logic in your answer of why big
broadcast corporations ought to consolidate and own more media
because of the Internet. That doesn't make any sense. The
Internet is about competition, but, at this point in time,
we're talking, still, about nascent business models. And you're
saying, let's allow some of the big corporations to gobble up
one other distribution channel, just because you're going to
use the Internet as a boogeyman in this case. And when the
truth is that what you're doing is allowing for more
consolidation of existing distribution channels that are a lot
more mature than the nascent Internet, even though it's been
around, the business models are still developing. So, I have,
like my colleagues, a great deal of concern about this
proposal, and think that the basis for it--I am troubled by the
studies and the analysis, if your fellow colleagues there are
saying that there hasn't been enough, particularly, consumer
content. The one thing that I think is clear here, that as the
Digital Age continues to play out, the one thing that has to be
in place, the one thing that absolutely has to be in place, is
stronger consumer protections. But this seems to be going in
the absolute wrong direction.
And, Mr. Chairman, I think I'll actually stop with that and
turn it over to my colleague.
The Chairman [presiding]. Thank you.
Senator Cantwell. Or allow you to turn it over to him.
The Chairman. Senator Nelson?
STATEMENT OF HON. BILL NELSON,
U.S. SENATOR FROM FLORIDA
Senator Nelson. Mr. Chairman, since I'm the cleanup hitter
here, what this whole thing seems to boil down, to me, is, it's
a question of the company's interest versus the reader's and/or
consumer's interest. And in the information that has been put
out here, we see a question of timing, we see a question of,
how do you calculate revenue? We see a question of access to
data. We see a question of documentation withheld in order to
present a certain picture. And, of course, whenever you pick a
decision of where you want to go, you can make statistics, or
withholding of statistics, prove your particular point. And
when you get right down to it, as a country boy would look at
it, it seems to be that it is a question of, do you want to be
on the side of the companies or do you want to be on the side
of the consumers?
Now, Mr. Chairman Martin, your comments were not due until
Tuesday. Is that enough time to consider the comments before a
December 18 vote?
Mr. Martin. When we are doing a proceeding at an open
meeting, 1 week before that open meeting, we always end up
having Sunshine come to a close, which means that people can't
provide comments to us any longer in writing. I think that that
is not unusual. I think, in this case, what is unusual is that
I took the extra step of actually publishing the rule that I
had proposed to my fellow Commissioners. That's not something
that we typically do. And, actually, I had done that to make
sure that everyone was able to have an appreciation for what I
was proposing for the Commission--what action the Commission is
to take. And I think that it was important to try to do that,
to shed as much light on what we were proposing, in part
because there were many concerns that we were doing things, and
going further in consolidation, than I was actually proposing.
But I do think that that's not unusual. Sunshine always
come down a week before we end up voting on something at an
open meeting. I think that this is obviously an unusually
contentious issue. Many people are interested and involved. But
I think that the Commission should make sure that we're trying
to do it and proceed in as open a manner as possible.
Senator Nelson. So, you think, on an issue that is this
big, that a week to consider all those comments is sufficient?
Mr. Martin. Yes, I think that we should----
Senator Nelson. OK. You----
Mr. Martin.--be able to--I think we should----
Senator Nelson.--said yes.
Mr. Martin.--I think we should be able to, yes.
Senator Nelson. You said yes. And I would respectfully
suggest that a lot of people would feel very uncomfortable with
a week. Well, let me ask you this. In your testimony, you're
talking about these newspapers universally losing money. Did
you look at the revenue that's being generated by the Internet
websites?
Mr. Martin. Yes, what I talked about was some of their
circulation declines that have occurred on their regular
newspapers. They obviously have had increased circulation in
advertising as a result of their websites. As I understand it
from the industry, that doesn't completely replace the
advertising dollars they've lost. But, more importantly, what
you also can reference is, if you look at the press accounts of
individual newspapers--the San Francisco Chronicle has reported
that it's losing a million dollars a day. I can only tell you
what the public reports are, but I think that is including all
of their advertising revenues, for example, including the
Internet advertising.
Senator Nelson. OK, that's not the question. The question
is, did you use, in the calculation of the newspapers losing
money, did you include the revenue that they have from their
Internet sites?
Mr. Martin. From my testimony, when I said those newspapers
were losing money, yes, that was taking into account how much
those were losing. But they were based on public press
accounts.
Senator Nelson. So, the answer is ``yes'' or ``no''? I
don't understand your answer.
Mr. Martin. Yes, it takes into account their advertising
dollars, as I understand it, but those figures are all taken
from public press accounts.
Senator Nelson. So, the answer is ``maybe''? Because it was
based on published press accounts?
Mr. Martin. No, I'm saying that, yes, I understand it is
there, but I'm basing that just on what was available publicly.
Senator Nelson. Well, you guys are the deciders. Isn't that
something that you should know?
Mr. Martin. Yes, I think it does take into account the fact
that they are losing more money on their daily circulation,
even when you take into account that they're gaining some money
from advertising on the Web. Yes, I think that's what the
newspapers are saying.
Senator Nelson. Well, I have newspapers in Florida that are
telling me that, although they're not making up the difference,
they are--and I have one newspaper that's telling me that it is
actually getting more advertising dollars from the Internet
than it is from their actual printed newspaper. So, wouldn't
that be an important decision, to have the facts nailed down
absolutely?
Mr. Martin. I'm not disagreeing that some newspapers might.
I'm saying the newspapers that I cited in my testimony, I
think, are, on balance, losing money, which means they're not
making as much money on the Internet as they're losing on their
daily circulation.
Senator Nelson. OK. Let's take up another issue. To provide
access to the underlying data, that's actually required by the
Data Quality Act. So, are you going to ensure that these
proceedings are complying with the Data Quality Act?
Mr. Martin. We are. I think you're talking about the peer-
review process for the studies that we did undergo, and we have
made sure that that data is available to everyone. There was a
concern that some of the data that was used was copyrighted,
and we had to work through the legal aspects of making sure
that that was made available. But we did make all of that data
available, for the peer-review process of the studies that were
conducted.
Senator Nelson. Would the Data Quality Act require you to
have the information about the revenue that newspapers are
getting from the Internet?
Mr. Martin. It requires us to provide any data--we have
disclosed whatever data that we have on the issues, and I don't
think there was a particular study that was done that was
saying that--across the industry, that was answering the
question that you're asking.
Senator Nelson. So, the answer to the question, ``Does the
Data Quality Act require that kind of information?'' is what?
Mr. Martin. I don't think the Data Quality Act required us
to collect that kind of information.
Senator Nelson. So, the answer--your answer here to the
Committee is ``no.''
Mr. Martin. I think that it requires us to provide that
data for peer-review process--whatever data was relied upon,
for peer-review process, which I think is what we've done.
Senator Nelson. All right, I'll take that as a ``maybe.''
Let me ask you about information that has not been
provided, that has been withheld. Is it correct that, as of
today, 1,400 pages of responsive documents have been withheld?
Is that true?
Mr. Martin. There was a FOIA that was provided to the
Commission more than a year and a half ago about all the
underlying documents and data related even to the previous
media ownership and localism reviews. The Commission responded
to it in a FOIA context, we took the documents and provided
them in our normal legal course. There's 800 pages of that
1,400--840 pages--that are copyrighted data that we are not
legally allowed to provide to others; another 300 of those
pages are the Commission staff's running of numbers of that
copyrighted data--again, we're not legally allowed to provide.
The remaining few hundred pages are e-mails and copies of e-
mails and copies of memoranda that have the internal
deliberative process that we never provide in the context of a
FOIA. You're talking about a FOIA that was going on. The person
who asked for that in the FOIA process, we've given them--what
we're legally required to give them. As for the copyrighted
data, we actually went back, and I asked the lawyers, ``Was
there any way to give them the copyrighted data, even though
we're not allowed to?'' And the lawyers weren't able to
determine a way, under a FOIA, that we would provide data that
we are allowed to give to other people under the copyright that
we got it from, the source. But--so, that data has not been
provided in the FOIA process, no.
Senator Nelson. So, those 1,400 pages will not be provided
to the public before December 18, is what you have said, and
you've given the reasons for it.
Mr. Martin. Those 1,400 pages aren't going to be provided,
because, under the FOIA laws, we are not either required or
supposed to be providing them when we have data that we've
gotten from a source that we're legally not supposed to give to
other people, because they sell this data to other people, if
we bought data from somebody, and then we just turned around
and provided it to the public, that would mean they wouldn't be
able to sell that data to others. So, when we buy it from
someone, they tell us that it's still copyrighted, we can't
just provide it to the public. If we do that, they won't sell
it. They're not able to sell it. We would take away their
business of selling the data. So, no, we can't provide that
underlying data. I know people would like us to give it to
them, so they wouldn't have to go buy it, but we can't do that,
legally, because we purchased it, and part of the purchase
agreement was, we won't just release it to the public. Other
people have to go back to that source and buy it, as well.
Senator Nelson. In some of those notes that you said were
personal notes, is that--are you claiming, under attorney-
client privilege?
Mr. Martin. It's not under attorney-client. Under FOIA
litigation, anything that's so-called ``deliberative process,''
the internal e-mails back and forth, you're not required to
provide to the public as part of a FOIA request. When anybody
can write in and say, ``I want all your official documents,''
you don't have to provide e-mails back and forth between staff.
Senator Nelson. Thank you for your time. And I'll conclude
with this. There was a GAO report that noted leaks of
Commission's information to lobbyists with interests before the
Commission. And you indicated that you're going to put out a
weekly list of items circulating among the Commissioners for a
vote. Does this solve, in your opinion, the underlying problem?
Mr. Martin. I think so. The underlying problem was they
said that only certain lobbyists knew when there was a decision
in front of the Commission for consideration. I've always done
my best to make sure that the public interest groups were
aware, as well. Many times, I've actually called them, myself.
Even in this media ownership proceeding, when I came up with
the time-frame for us to be deciding this, back in September,
and I alerted my other fellow Commissioners to it, I actually
personally called several of the consumer groups to make sure
they understood this was what I was thinking. I've always done
my best to end up doing that. But I think it does solve the
problem, to make sure everyone is aware of the proceedings that
are in front of the Commission.
Senator Nelson. So, you don't think any further reform
practices are needed with regard to the GAO report.
Mr. Martin. I think this addresses their concern. I think
there's always things the Commission can work on to try to find
ways to end up making sure that everyone's informed about what
we're doing. But I think that this addressed their concern that
was included in that GAO study.
Senator Nelson. Does anybody on the Commission feel like
that there ought to be reform measures that should be adopted
in the wake of this GAO report? Anybody who would like to
address that, besides the Chairman?
Commissioner Adelstein. Well, one other recommendation that
I think might make sense is that we announce when we, what's
called ``white-copy'' items. In other words, before we consider
something at an open meeting, the Commissioners are to be given
3 weeks notice. It would be nice if everybody knew when we were
given notice, so that they would have the opportunity, then, to
ramp up and have the opportunity to have input during that
period. Knowing what's on the circulation list doesn't
necessarily indicate to them what is actually going to be on
our upcoming open meeting agenda. They might not find that out
until what's called the Sunshine Notice is given, which is 1
week out. At that point, they can't contact us, they can't even
get to us without us asking them questions. So, ironically, the
first time they find out something's coming up on our agenda is
the very minute that they can no longer contact us.
So, I think if we were to do that 3 weeks out--and it's
something I've discussed with my colleagues--I think that might
be even more helpful.
Mr. Martin. I think that might end up being a helpful
suggestion. Commissioner Adelstein and I have talked about it.
I don't think that was the issue that GAO was concerned about.
GAO was concerned that they didn't even know there was an issue
in front of the Commission. Because we're publishing everything
that's in front of us, everyone would know what's in front of
us, so if there was an issue that you were following that you
wanted to make sure you understood the Commission might be
considering, we would alert you to that. Commissioner Adelstein
suggested that, and that might be a helpful suggestion, to make
sure they know that we might be anticipating ``deciding this
issue that's on that list on this day'' earlier. I think that
could be helpful to do. I don't think GAO actually was critical
of that aspect of our decisionmaking process, but that might be
helpful.
Senator Nelson. Mr. Chairman, with all these questions
raised by a Committee of the U.S. Senate, do you intend to
continue with this proceeding on December 18?
Mr. Martin. As I said, I plan, at this point, to continue
on with the proceeding, but I certainly am going to talk to all
my colleagues about it, and I think it's important for us to
engage both on the process and on the substance to try to
determine what's the appropriate way to proceed, see where
there's consensus on the Commission. But, yes, at this point, I
think it's important for us to still proceed.
Senator Nelson. In your mind, do you think that, of the
concern that has been expressed by this Committee, that it has
any veracity, in your opinion?
Mr. Martin. Oh, I have no doubt that the Committee is being
truthful and it's raising its concerns. I think, though, this
process has been, actually, more open and more transparent and
more inclusive than any other of the decisionmaking processes
that the Commission engages in. And I think that we have,
actually, done our very best to make sure that the public has
an opportunity, not only to know what we're thinking about
doing, but, in a very specific way, actually knowing the exact
proposal.
I also think that the Commission has an obligation to, not
only look at the concerns that have been raised at the public
hearings about being opposed to media consolidation and
concentration, in general. Many of the complaints are about
things that have already occurred and that Congress itself put
in place as limits. Many of the concerns that were raised, for
example, at the public hearings about radio concentration are a
result of the radio caps that Congress put into the law in
1996. That was one of the overwhelming concerns that we heard
over and over again.
I've proposed no further changes to any of those rules, but
I think that it is incumbent upon us to recognize that there
may be rules we have that the courts have actually said are no
longer justified--they've supported the Commission's decision
on that--and that are not responding to, or are actually
creating some additional problems in the industries. And I
think that we need to end up responding to that.
Senator Nelson. Do you think a cloud has been placed over
the appropriateness of your actions if you force this to a
decision on December 18?
Mr. Martin. I think that during my time at the Commission,
every time the Commission has ever considered anything related
to media ownership, there's been a cloud over the Commission. I
don't think that's the first time.
I think it's the most contentious issue we end up dealing
with, and I've done my best to do so in a open and transparent
fashion. But I think it is important on us, at some point, to
proceed.
Senator Nelson. Mr. Chairman----
The Chairman. Yes.
Senator Nelson.--thank you for the opportunity, as one
Member of this Committee, to get some answers.
Thank you.
The Chairman. Thank you.
Senator McCaskill?
STATEMENT OF HON. CLAIRE McCASKILL,
U.S. SENATOR FROM MISSOURI
Senator McCaskill. Thank you, Mr. Chairman.
You all are so popular, I never dreamt that I could go
preside at noon, for an hour and a half almost, and still get
back, and you would still be here. I don't know whether to
congratulate you or console you.
[Laughter.]
Senator McCaskill. You know, and I've got to say, just as a
comment, Chairman Martin, to say that this process is more open
and transparent than other actions taken by the FCC, I've got
to tell you, I think that's a pretty low bar. I think openness
is a real problem. I think, you know, there is a sense I have
that this whole area--it's almost like smoke signals. And if
you know the right code with the smoke signals, if you're the
right lobbyist or the right person in the right industry, you
have much more of a finger on the pulse of what's going on over
there than, maybe, sometimes even your fellow commissioners.
And I think that's a huge problem for a public agency that's
dealing with something as important as public communications
and the access of the public to all kinds of media outlets. It
appears to me this is a runaway train.
I want to talk about DTV a little bit. I am really worried
that your penchant and obsession with this media ownership
thing has moved DTV off the burner, to the detriment of the
public. And let me go over a few realities.
I know you're cranky about the GAO report, but I've got to
tell you, I've read the report, I've looked at your response,
and I get what they're saying.
First, there's no final public education rule. OK? I think
you will agree with that, correct?
Mr. Martin. I'm sorry, there's no final what?
Senator McCaskill. Public education rule on DTV.
Mr. Martin. There's no final public education rule. There
is an item in front of the Commissioners to vote, that I voted,
that would have the requirements of PSA requirements, as I
think others, and you, I believe, in a letter to us have
written us, encouraging us to do. But, no, it has not been
adopted by the Commission.
Senator McCaskill. We are 17 days from the beginning of
this program. Seventeen days from the beginning of this
program, and there is no final public education rule, but yet,
we can make sure that we do this media ownership at the next
meeting.
Mr. Martin. If you're talking about the public education of
the converter-box program, that actually is something that the
NTIA has not only the responsibility for, but the funds for. If
you're talking about public education of the conversion that
will occur in 2009, that's the public education campaign I was
talking about. The converter-box program is not something we
either control or have any funds for.
Senator McCaskill. But you--but these are not two unrelated
items. Public education requires that the public understand
both programs. Why in the world would the coupon program even
resonate with them if we aren't even to the point that we're
ready to educate the public about why in the world a coupon
would even be necessary? I mean, I think, to say that the
responsibility for public education is just NTIA, which, by the
way, the guy that runs NTIA said, ``I'm done, I'm gone,'' right
before the whole thing happens. He's outta here. Talk about
feeling like you have a deck chair on the Titanic, you know, I
don't think that you have a sense of urgency----
Mr. Martin. But this----
Senator McCaskill.--about the public----
Mr. Martin. I think----
Senator McCaskill.--communication about this.
Mr. Martin. I think that's not true, that we don't have a
sense of urgency, but I do think that we also have to respect
that, actually, the Commission had come to Congress and had
asked for, in our budget, money to do a public education
campaign, and twice we received zero in our budget to do a
public education campaign. Instead, through the process that
was done in the budget that set the 2009 deadline, the money
for public education was explicitly given to the Department of
Commerce and not to the Commission. It was considered by the
Committees, and it was decided to go to the Department of
Commerce.
Senator McCaskill. Well, I still----
Mr. Martin. We have no funds for it. What we can do is try
to require the industry to end up implementing it.
Senator McCaskill. The public education rule for a program
that is just over a year away from full implementation, the
idea that it's not even on the agenda at next week's meeting, I
think, is troubling.
Second, you haven't finalized the rules and requirements
for channel allotment for broadcasters. Is that correct?
Mr. Martin. No, we finalized the DTV Table of Allotments in
August. Some broadcasters may have filed individual petitions
for reconsideration, which we'll deal with after we get an
opportunity for notice and comment. But we finalized that DTV
Table of Allotments in August.
Senator McCaskill. Well, we have 11 commercial stations in
Missouri that need approval before they can build out their DTV
facilities. Eleven stations in my state. And we are a year and
a few months away from liftoff.
I also want to point out that the construction permits--you
haven't even finalized the rules for construction permits yet.
Is that correct?
Mr. Martin. No. I think that we--I thought that we had, in
the final, most of those rules. We've got an annual periodic
review, we're doing our third periodic review in anticipation
of the DTV transition, that, again, the Commission had
indicated to Congress that we would finalize by the end of this
year, we would circulate it around by the end of this year and
finalize it, which I, again, have circulated to the
Commissioners for consideration.
Senator McCaskill. You began circulating the third periodic
review last week, December 4. You released the NPRM in May, 7
months ago, and it's not even on the agenda next week. Now,
this is urgent. This whole thing about making sure newspapers
are profitable, I'm not sure that should be on the front burner
when you've got this kind of massive program that's going to
impact literally hundreds of thousands of my constituents, and
it doesn't appear it's getting the prioritization that it
deserves, based on how important it is.
Mr. Martin. I would respond that I think that the
Commission moving from a Notice of Proposed Rulemaking to a
final order in 7 months is actually indicating that that's
something that's a high priority. When we put out a Notice of
Proposed Rulemaking, it takes about 30 days for it to be
published in the Federal Register. Then people usually have to
comment on it, 30 or 60 days, along with, then, replies, and
then us doing an order off of that, is actually moving it very
swiftly. I think that's actually an indication of how important
that is, when we put that out in May and we're moving to final
order already.
And I actually think that we have also significantly begun
some of the consumer education efforts. We've had our staff in
all of the field offices go around to--for example, into the
senior centers and into places all around the individual states
where they're located. They've visited thousands of sites and
provided information. They've made hundreds of presentations in
those communities. I think, without any funds, we are actually
doing a very good job of trying to educate consumers, at this
point.
Senator McCaskill. Well, you know, I hope you're right, but
I am worried that we don't have the prioritization of the
items, what actions must be completed before January 1, 2008,
or before February 1, 2009. I don't think you've done enough on
risk mitigation. I thought the GAO report was fair and
comprehensive, and I think that you've listed a lot of things
that you had done, but there is no strategic plan there,
there's no hardline goals, there's no performance measures that
you have put. There is not a comprehensive plan that you have
come forth with, with those kinds of things that would give us
the assurances that we need on DTV. There is not a plan. And,
again, the things that are supposed to be done are late.
You know, and let me talk a little bit about transparency.
I know Senator Nelson just referred to it. Why--when you just
publish the list you're talking about, I mean, it's my
understanding--and I've glanced at one of these--it's a very
long list, and it includes stuff that's old, that's not really
going to be considered. Why--you know, why not do what
Commissioner Adelstein said, why don't you actually say, ``OK,
we're going to vote on these things, this is going to be on the
agenda,'' and give them as much notice as possible, everyone.
And, finally, my question is--and I would like every
Commissioner to answer this--why aren't the votes public? I
don't get that?
Mr. Martin. Well, first, I'm happy to make public what the
Commissioners have voted on and which ones they haven't.
Indeed, I think that's a good idea. I don't have any problem
with that. I think you should ask the other Commissioners, to
make sure that they're OK with that, as well, but I'm perfectly
happy to make sure everyone knows what items have been voted,
or not.
You're right, many of the items are very, very old. They're
very, very old, because it's very difficult to get the
Commissioners to vote on items that are on circulation. I think
that that's an increasing challenge for the Commission, but I
think it's important for us to continue to try moving forward
on the issues. And I think that it's critical for us to try to
make sure that we are moving forward on all of them, so I think
it's helpful for everyone to know just how many are on
circulation. And I don't have any problem with everyone knowing
who has voted what. I think that's helpful.
Senator McCaskill. Is it--Commissioner Copps, are you OK
with votes being public in the Commission meetings, as to what
was voted on and how everyone voted on each item?
Commissioner Copps. Certainly, I have no problem with that.
I think we ought to be striving for openness, transparency, and
clarity, and that would assist that.
Senator McCaskill. Commissioner Adelstein, do you have any
problem with votes being public and everyone knowing what was
voted on and how everyone voted?
Commissioner Adelstein. I think it's a good idea to let
people know as much as possible.
Can I add something on the third periodic review? I think
that you're exactly right on priorities. I'm extremely
concerned that we have asked broadcasters to take on an
enormous responsibility, and we haven't given them the
instructions as to how they're to do it. This could have been
done a long time ago. This should have been done faster. We
spent a lot of time over the fall worried about a lot of
different issues, and this wasn't one of them. I talked to the
bureau months ago about getting this done. I testified before
this Committee in October, and I said that this wasn't done.
Now only 41 percent of full-power TV stations are positioned to
broadcast in digital, and the remaining stations are at varying
levels of preparedness. They've got issues with tower
construction, antenna and equipment replacement, channel
relocation and coordination with Canada and Mexico. We talked
about this with Senator Hutchison, as you might recall, at the
last hearing. There are a lot of big issues. And instead of
dealing with those, we've been obsessively trying to let
newspapers buy broadcast stations. I cannot understand the
priorities. Your constituents will suffer if we don't get this
done, because, in most of Missouri, they're not going to be
able to do construction in the wintertime, and this winter's
out. So, they should have already been given this guidance long
ago.
I think that it should be what we're voting on December 18,
rather than this. We actually should have voted on it even
earlier. I've been calling for it, for some time.
Now, the current proposal before us is problematical. I'll
tell you, that, after waiting this long, leaving broadcasters
in a very difficult position, what we have before us is very
regulatory and not very flexible, in terms of giving
broadcasters the flexibility they need. Now that we've got them
up against the wall and we're asking them, nationwide, to do
this all at once, I think we need to afford them a little bit
more flexibility. And I hope we can all work together to make
this item a little bit more responsive to some of the concerns
that broadcasters have raised, and we need to move on it
immediately. This is an urgent priority, much more a priority
than allowing big media to get bigger.
Senator McCaskill. Commissioner Tate, are you willing to
have all the votes done publicly, with how everyone voted being
made part of the public record?
Commissioner Tate. Well, I want the public to know it
already is, and then our statements are also all put online, so
the public knows how we vote on every issue.
Senator McCaskill. Well, but should the votes be public?
Commissioner Tate. Well, at our meeting, they are public,
and then we also vote on a myriad of other things that are on
circulation.
Senator McCaskill. So, you have no problem with every vote
that's being done, everything being given to the public on how
you vote, yes.
And you, Commissioner?
Commissioner McDowell. No problem.
Senator McCaskill. OK, great.
Well, I think that the openness and the transparency would,
maybe, deal with some of the frustration that you've heard from
this hearing today. And I will tell you, you are a remarkable
public leader, if, in light of public opposition and the
bipartisan opposition that you have heard today, from what you
are about to do on December 18, if you move ahead and do it,
you're a braver man than I am.
[Laughter.]
Senator McCaskill. Thank you all very much.
The Chairman. Thank you very much.
This has been a long session, but it was historic, in the
sense that the attendance rate was much better than any other
hearing, I believe, in the history of this Committee. It says
much about your Commission.
And I want to thank you for your patience and for your
responses to our questions.
However, as you've noted, some of the Members were not able
to stay for the full hearing and had to leave, and they have
asked that their questions be submitted. And, if I may, I will
be submitting those questions and would want a response, if at
all possible, by the middle of January, just for the record.
Once again, thank you very much.
Hearing is adjourned.
[Whereupon, at 1:35 p.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Jim DeMint, U.S. Senator from South Carolina
Mr. Chairman, thank you for holding this hearing. I appreciate all
the Commissioners being here this morning.
Mr. Chairman, I ask that my full statement be included for the
record. Thank you.
The signals being sent lately by the FCC are mixed. Deregulation,
albeit very timid, is being pursued on the media consolidation front,
while every possible angle to increase regulations on the video market
seems to be pursued. I urge the Commission to let the free market grow
and allow consumers to enjoy new benefits and innovations in 2008.
Media Ownership
Our media environment is more complex than anyone could have
dreamed 30 years ago. Then, the average citizen perhaps had a one
newspaper, 3 TV broadcasters, and a handful of radio stations in their
local community.
It was a time before:
widespread cable or satellite TV (both are now available to
practically every household, offering hundreds of channels)
satellite radio (also now available to all)
the Internet (offering limitless information from limitless
sources)
To suggest that American citizens in 2007 have limited, or even
decreasing, access to voices is laughable.
The Commission is right to amend the dated cross-ownership ban. By
listening to some of my colleagues, you may think that the changes
being proposed are earth-shattering. Of course, they are not.
There are currently many examples of cross-owned local newspaper
and TV properties already existing in the United States. Over 30
percent of U.S. households live in those communities. I do not believe
democracy is suffering because of it.
I would like to point out that the Commission could go further,
however. I think we should stop regulating competing media segments
differently, based on transmission technologies they use.
For example, the two satellite radio companies in America are close
to getting their merger approved. They use different transmission
technology than local radio stations, but they compete with each other.
I would like to know why regulators allow one segment to essentially
have ownership deregulation, but another to face limits that have the
effect of hurting consumer choice and market competitiveness.
Regulation in the Video Market
It is unnecessary and harmful for the government, through the FCC,
to get involved in private business negotiations. The competitive
market rewards those offering the best product and punishes those that
do not. These incentives provide the impetus for agreements to be
reached between programmers and distributors in nearly all cases.
It is also unnecessary and harmful for regulators to mandate the
way companies in a competitive industry offer their product to
consumers, whether at the retail or wholesale level. I believe ``a la
carte'' is a great idea and I would like to have someone offer it at my
home in South Carolina. But, the government mandating it is a bad idea
that needs to be buried.
Again, thank you, Mr. Chairman, for holding this hearing today. I
look forward to the testimonies and discussion this morning.
______
Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
Thank you, Mr. Chairman, for holding this oversight hearing for the
Federal Communications Commission. I also want to thank all five FCC
Commissioners for taking time to appear before this committee this
morning. The hearing today provides a timely opportunity for the
Commission to address recent actions that have concerned many members
on this committee as well as the general public.
One of the more pressing matters is the FCC's attempt to ease
restrictions on certain long-standing media ownership rules. This
committee last month held a hearing on this very issue, where many
members of this committee voiced concern about any relaxing of current
media ownership rules, particularly because of the negative impact on
localism, diversity, and competition in broadcasting.
However, less than a week after that hearing, a proposal to lift
the newspaper-broadcast cross-ownership ban in the top 20 media markets
was announced. Worse yet, the FCC allocated only 28 days for the public
to comment on this new proposal. No matter what side of the issue you
are on, to provide such an abbreviated time-frame for the public to
weigh in on the specific proposal Chairman Martin has offered is very
disconcerting, especially considering FCC precedent.
For example, last month, the FCC provided sixty days for public
comment and reply for a Notice of Proposed Rulemaking for amending pole
attachments rules. On December 4, the Commission gave forty 5 days for
public comment and reply on a rulemaking proposal to indefinitely
extend the very popular Do-Not-Call list registration period. And, in
November 2006, the FCC granted ninety days for public comment and reply
on the effects of communications towers on migratory birds.
It defies logic that the FCC would place this on an accelerated
path. Historically, the Commission has provided 60 to 90 day comment
periods. By hastily concluding this proceeding, the Commission is
inevitably muting the public's voice and in doing so is wilfully
negating its principle responsibility to uphold the public interest.
It appears to me that the FCC is having severe difficulty
understanding the communications from the Congress as well as the
American people and even the Courts. I know that at a localism hearing
in Portland, Maine this past summer, my constituents communicated
significant concerns about any further weakening of the media ownership
rules. Aside from shareholders and employees of broadcasting companies,
I can think of no sector of society that could possibly be clamoring
for further monopolization of America's media markets. When the FCC
erroneously considered this issue back in 2003, the Commission received
more than 2 million public comments on the issue--the vast majority of
which opposed further media consolidation.
While the Third Circuit Court of Appeals, in its Prometheus
decision, concluded that ``reasoned analysis supports the Commission's
determination that the blanket ban on newspaper/broadcast cross-
ownership was no longer in the public interest,'' it also stated, in
its decision, that it could not uphold the Cross-Media Limits
themselves because the Commission did not provide a reasoned analysis
to support the limits that it chose.
Furthermore, the Court stated that its remand of the FCC's ``cross-
media limits also gives the Commission an opportunity to cure its
questionable notice.'' Most observers would agree that 28 day's notice
for public comment for significant rule changes and 5 day's notice for
localism and media ownership hearings in Washington, D.C. and Seattle,
WA is unreasonably deficient. Therefore, many of us were compelled to
convey our concern through the Media Ownership Act of 2007, which was
reported favorably out of this committee last week. This bill requires
a 90 day public comment and reply period on the Commission's proposed
final rule and a separate proceeding on localism, which must be
completed before any changes to media ownership rules. I hope it and
this hearing result in the FCC reconsidering this rulemaking.
Another crucial issue is the status of the DTV Transition. While a
lot of progress has been made recently, there are still several
critical issues that persist. There is a lack of clear leadership or
central government authority managing the transition efforts--instead
it's more of a partnership between the FCC and Department of Commerce,
which could lead to consumer confusion about whom to contact regarding
particular issues and problems. We have yet to discern how the
government will work with industry and other organizations to provide
greater assistance to the more vulnerable groups such as seniors,
people with disabilities, minorities, and low-income families that will
require that help. Also, over the summer, the FCC found that label
compliance of retailers was not impressive. With the holiday season
currently underway, hopefully that has improved dramatically.
I appreciate the benefit of your testimony today and I look forward
to hearing from the panel on these topics as well as other timely
issues. Thank you, Mr. Chairman.
______
Consumers Union, Consumer Federation of America, Free Press
December 12, 2007
Hon. Daniel Inouye,
Chairman,
Hon. Ted Stevens,
Vice Chairman,
Senate Committee on Commerce, Science, and Transportation
Washington, DC.
Dear Chairman Inouye and Vice Chairman Stevens:
We offer this letter for the official record of the hearing on
``Federal Communications Commission Oversight'' to be conducted by the
Committee tomorrow. This is the outline of a response to Chairman Kevin
Martin's latest proposal to relax media ownership rules by three of the
largest groups representing consumers on media policy issues.
Despite Chairman Martin's apparent effort to propose a compromise
modification of the newspaper/broadcast cross-ownership ban,
fundamental flaws in the Commission's data gathering, administrative
procedures and ambiguities in the plan make it impossible for us to see
how this proposal could serve the public interest goals of promoting
diversity, competition and meaningful local and minority programming
opportunities. Unless Chairman Martin remedies procedural flaws,
eliminates dangerous and vague exceptions, and thoroughly expands
meaningful minority ownership and local programming needs, his plan
will not serve the public interest or meet minimum legal fairness
requirements for FCC rules.
On November 13, 2007, Chairman Kevin Martin offered the public a
proposal to relax the newspaper/broadcast cross-ownership rule. He did
so outside the normal channels of agency procedure, publicizing the
proposal instead through a press release and an Op-Ed in The New York
Times.\1\ The proposal and the time table for public comment were not
conducted using standard Commission process, nor were they published in
the Federal Register or put out on Public Notice. The Chairman declared
that he would permit 30 days for public comment, due December 11th.
Immediately thereafter, the ``sunshine rules'' would apply in advance
of a December 18th vote and the public would have no further
opportunity to comment or to reply to the comments of other
stakeholders.
---------------------------------------------------------------------------
\1\ Kevin J. Martin, ``The Daily Show,'' New York Times, Nov. 13,
2007, Available at http://www.nytimes.com/2007/11/13/opinion/
13martin.html; Federal Communications Commission, ``Chairman Kevin J.
Martin Proposes Revision to the Newspaper/Broadcast Cross-Ownership
Rule,'' News Release, Nov. 13, 2007, Available at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-278113A1.pdf.
---------------------------------------------------------------------------
We believe this process is fundamentally inadequate and runs at
cross-purposes with the public interest as a simple matter of proper
review and consideration. The process used to put the proposal out can
in no way replace a proper opportunity to comment on an actual proposed
rule. Indeed, the act of the Chairman putting out a proposed rule in an
Op-Ed rather than in a Notice of Proposed Rulemaking smacks of abuse of
administrative process, which has typified this proceeding for the past
5 years. The process fouls committed by this agency on everything from
data collection to research agendas to peer review are legion. It is
our view that a December 18th vote on media ownership rules--as
proposed by the Chairman--is not in the public interest.
Beyond our procedural concerns, the Chairman's proposal to allow
case-by-case review of newspaper/TV mergers in all media markets
suffers from a number of critical infirmities. The benefits he claims
for it in his Op-Ed are not demonstrated in the record. The assertions
that cross-owned combinations produce more news and that they benefit
the financial viability of the newspaper business are simply not borne
out by the facts and in no way justify reducing the diversity of
viewpoint in our community. Our analysis shows that long-term cross-
ownership situations do not increase the amount of news in the market
as a whole, or even by the individual station, and the stations tend to
slant the news they produce. We note that both broadcast stations and
newspapers (to the extent the Commission even has jurisdiction over
these entities) continue to be very profitable businesses that do not
deserve a bail out at the expense of the public interest. Further,
there has never been any explanation for how the checks and balances
provided by independent voices in different local media will be
replaced in consolidated markets. The idea that the Internet is a
suitable substitute for local news and original reporting doesn't pass
even the lowest evidentiary bar. These are the central issues in
setting the limits on cross-ownership. Chairman Martin's proposal does
not meet any of these public interest tests.
It is notable that the new proposal appears to permit media
concentration only in the largest markets. However, this facial
difference from the proposal of the previous FCC (which would have
swept away ownership limits in all but the smallest markets) does not
appear to hold up under scrutiny. Those mergers that are not permitted
presumptively would be subject to a four part test. The criteria it
proposes to use to ensure that mergers do not harm the public interest
are vague and unspecified, and therefore unlikely to afford protection
from harm. Of greatest concern, perhaps, is the fact that this new four
part test could possibly be met almost entirely with unilateral
assertions from merging companies (``Yes, we will do more news after
consolidation.'' ``Yes, we are having financial difficulties.'').
Effectively, this new waiver standard could permit waivers in most
markets in the country.
Finally, we look in vain for any mention of minority ownership in
this proposed rule, despite the fact that both the Congress and the
courts have repeatedly asked the Commission to address the issue. The
agency's record on the issue of minority broadcast ownership can best
be described as one of willful neglect. People of color own just 3
percent, and women just 5 percent of all TV stations, even though those
groups make up 35 percent and 51 percent of the U.S. population,
respectively. Sadly, those striking numbers had to be compiled by Free
Press because the Commission has never conducted an accurate census of
minority owners. The FCC has clear statutory and moral obligations to
address the woefully inadequate levels of minority and women-owned
broadcast outlets before it moves forward with any further changes in
its media ownership rules.
For this proposal to be worthy of consideration by the public and
the Congress, the FCC should first correct its process problems and
complete the record with regard to localism and minority ownership.
From there, if the Chairman is determined to press forward quickly, it
is imperative that strong limits on media mergers are preserved with
very narrow exceptions based on important public policy goals that
would prevent the most dangerous consolidation that could harm our
democracy. Among those provisions that would be a starting place for
consideration, the Commission should maintain the top four-firm
exclusion concept as a hard line and impose a high standard with regard
to other mergers, eliminating the loose waiver process. To the extent
that a newspaper/TV combination will add news production to a TV
station that has not produced local news during the period of its
license (as opposed to merely adding news to an outlet that already
does news), it should raise the merits for its consideration. The
Commission should study the impact of top market mergers on minority
owners and the quantity/quality of local news to determine the economic
impact at the market level.
To prevent excessive concentration, the FCC should adopt a ten
voice test--which is consistent with the DOJ/FTC Merger Guidelines for
the threshold where a market is defined as unconcentrated (more than 10
voices). The voice count should be based on a measure of market
concentration that reflects all types of media outlets, their audiences
and their relative contribution to the overall media marketplace. Only
by adopting such an approach to counting of voices will the FCC ensure
that its market analysis reflects the reality of media markets and
achieves the public policy goal of promoting ``the widest possible
dissemination of information from diverse and antagonistic sources.''
Within this conceptual frame, the Commission should adhere strictly to
the thresholds of impermissible concentration in the Merger Guidelines.
The current Martin plan will not serve the public interest or meet
minimum legal fairness requirements for FCC rules. We therefore call on
Congress to make sure that the FCC addresses all of these concerns
before promulgating new media ownership rules.
Sincerely,
Gene Kimmelman,
Vice President for Federal and International Policy,
Consumers Union.
Mark Cooper,
Research Director,
Consumer Federation of America.
Ben Scott,
Policy Director,
Free Press.
cc: Senate Commerce, Science, and Transportation Committee Members
______
December 11, 2007
Hon. Daniel K. Inouye,
Chairman,
Hon. Ted Stevens,
Vice Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Chairman Inouye and Vice Chairman Stevens:
We write to express our concerns with the FCC's proposal to impose
a ``temporary'' or ``interim'' cap on high-cost Universal Service
funding for wireless carriers and other competitive entrants and with
the Joint Board's recent recommendation that the FCC go further and
impose a permanent cap on all Universal Service support, with dramatic
reductions in support for wireless in rural areas. Some of the
signatories to this letter have recently appeared before your
committee, and all of the undersigned feel it important to let you know
that both proposals are contrary to the clear direction Congress, and
your committee in particular, provided to the FCC with the enactment of
the Telecommunications Act of 1996.
At the outset, any FCC proposal that purports to be ``temporary''
or ``interim'' is suspect. The FCC suggests that the interim cap would
only last until long-term reforms are adopted, yet it has neither a
deadline nor an incentive to complete long-term Universal Service
reform. This is no small matter, given that key portions of the FCC's
promise to reform high-cost support contained in numerous orders
between 1997 and 2001 remain just that--promises. Since 2001, the FCC
has not adopted a single order reforming Universal Service
distributions for areas served by rural telephone companies. Worse yet,
we have yet to see any recent proposal that comports with the 1996
Act's principle of competitive neutrality and key Universal Service
principles that were codified as Section 254 of the Communications Act
(47 U.S.C. 254).
Both of you have previously expressed strong support for
competitive neutrality. H.R. 5252, approved last year by the full
Committee, and S. 101, introduced earlier this year by Senator Stevens,
both require that ``Universal Service support mechanisms and rules
neither unfairly advantage nor disadvantage one provider over another,
and neither unfairly favor nor disfavor one technology over another.''
Proposals to freeze Universal Service support only for a select group
of providers, but not for others, would violate this bedrock principle.
A cap on support for wireless competitive eligible
telecommunications carriers in high cost, rural, and insular areas
would violate the clear principle that Congress set forth in Section
254 that rural consumers are entitled to communications services and
prices that are comparable to those available in urban areas. A CETC-
only cap will impede the deployment of wireless services needed for
personal and public safety, limit consumers' choices, harm constituents
who seek to obtain and maintain jobs but lack wireline service, and
hinder rural America's ability to compete in the global economy.
We applaud Senator Stevens' statement at the Committee hearing on
June 12, 2007, that imposing a funding cap on ``new carriers [who] come
in with new technology . . . [is like] someone's putting their head in
the ground. This is an ostrich approach as far as I'm concerned.'' In
the twenty-first century, consumers increasingly are selecting wireless
as their voice service of choice. Yet rural areas are typically 3 years
behind more urban areas in wireless deployment. A cap on funding only
to competitive carriers would result in the delay or cancellation of
wireless network construction in high-cost areas that would otherwise
be underway. As you know, wireline carriers have now drawn $25 billion
from the Federal Fund since 1999, while wireless carriers have drawn
less than $3 billion. Adoption of a CETC-only cap would further this
inequity, unfairly skew the marketplace, and improperly favor one
technology over another. That is why at least eleven other members of
the Committee have also written to urge the FCC not to adopt a
wireless-only funding cap.
Perhaps most important, a CETC-only cap would slow momentum toward
appropriate reform of the Universal Service system that is needed to
more effectively promote both broadband and mobile services across the
country. We strongly agree with the concerns Senator Inouye expressed
at the same June 12 Committee hearing that ``we cannot let short-term
proposals free us from the need to address long term reform.''
Unfortunately, recently released proposals for long term reform
have similar problems. On November 20, the Federal-State Joint Board on
Universal Service released its Recommended Decision, proposing long
term reform of the Universal Service distribution methodology. Although
the Joint Board's recognition of the value of supporting broadband and
mobility is laudable, if adopted, the recommendations would eviscerate
competitive neutrality and create an incredibly complex system for
distributing support that will ultimately lock many areas into
government subsidized monopoly telephone service--precisely the problem
that the 1996 Act was attempting to cure.
The Board's proposals are particularly harmful to wireless
consumers, who contribute almost $3 billion to the Fund each year, but
in many areas have yet to see a benefit. The proposals would deprive
wireless consumers of the funding needed to improve, expand, and
operate wireless networks in most rural areas, and would deny consumers
access to quality services in rural areas comparable to those available
in urban areas. The Joint Board's recommendations would unfairly
eliminate support for the operating costs of wireless service, while
preserving or expanding the dollars funneled to the traditional
landline voice services that rural consumers use less and less every
year. They would limit support for broadband service to a patently
inadequate $300 million per year. And they would impose a permanent cap
on the entire Universal Service Fund, without ever addressing whether
that concept is consistent with the Congressional directive in Section
254 that support be ``sufficient'' to ensure that consumers can receive
the supported services.
The Board's idea that regulators are going to select a single
provider in each area to receive support for wireline, broadband, and
mobility, respectively, turns the 1996 Act on its head. Further, their
proposal to delegate to State commissions the ability to select a
favored recipient of funding for each service in each area, with few if
any uniform Federal standards is fraught with opportunities for
jurisdictional and regulatory conflict and creates serious risks that
deployment of voice, wireless, and broadband services will not be
ubiquitous. A properly functioning and modern national Universal
Service system must enable rural consumers to select the service and
service provider that best suit their needs. Universal Service
mechanisms are supposed to work with competition, not impede it by
favoring one technology or provider over another.
In sum, we view the Joint Board's recommendations as evidence of a
well-intentioned process that regrettably ill serves your constituents
and our customers. The Board provided but 18 pages of sparsely outlined
recommendations that will require years of rulemaking and litigation to
reach a conclusion. Now that the Joint Board has concluded its work,
the process requires responsible stewardship if there is to ever be
meaningful reform that benefits consumers. We respectfully call upon
you to take a leading role in providing new guidance to the FCC on long
term reform and ensuring that the FCC upholds the law that Congress
wrote.
We appreciate your continuing support and we pledge to continue
working with you, the Joint Board and the FCC to achieve these worthy
goals.
Sincerely,
John Altamura,
President,
Airadigm Communications, Inc.
Richard N. Massey,
Chief Strategic Officer and General Counsel,
Alltel Communications, Inc.
Ron Smith,
President,
Bluegrass Cellular, Inc.
Victor (Hu) Meena,
President,
Cellular South Licenses, Inc.
Michael J. Small,
President and Chief Executive Officer,
Centennial Communications Corporation.
Jonathan D. Foxman,
President and Chief Executive Officer,
Chinook Wireless.
Bryan Corr,
President,
Corr Wireless Communications.
Dan Rule,
General Manager,
Golden State Cellular.
Laura Phipps,
Executive Vice President/General Manager,
Leaco Wireless.
Larry Lueck,
Manager, Government Relations,
New-Cell, Inc., d/b/a Cellcom.
Frank DiRico,
President,
N.E. Colorado Cellular d/b/a Viaero Wireless.
Jerry Whisenhunt,
General Manager,
Pine Cellular Phones, Inc.
Richard Watkins,
Vice President,
Smith Bagley, Inc.
Robert G. Dawson,
Chief Executive Officer,
SouthernLINC Wireless.
John E. Rooney,
President and Chief Executive Officer,
United States Cellular Corporation.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Hon. Kevin J. Martin
Question 1. Last year, a provision to reform the FCC's forbearance
authority was included in the Committee's telecom reform bill.
Specifically, it would have eliminated the ``deemed granted'' language
in Section 10 in order to ensure a fairer process at the FCC. I
recently introduced legislation that will eliminate this provision, so
we can avoid a situation where the agency erases its rules simply by
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
Answer. As you know, section 10 establishes a process by which a
forbearance petition ``shall be deemed granted if the Commission does
not deny the petition'' within a maximum of 15 months. The Commission
must follow the Communications Act of 1934, as amended, including the
forbearance provisions codified in section 10 of the Act. I agree that
it is preferable for the Commission to issue a decision. To enable the
Commission to do so, it is policy to circulate to all of the
Commissioners draft Orders addressing forbearance petitions at least 21
days prior to the statutory deadline, and to remind them of the
statutory deadline at that time. In addition, Commissioners are
regularly provided with lists of upcoming statutory deadlines for
forbearance petitions.
The Commission has routinely adopted Orders granting or denying
forbearance petitions within the statutory deadline. Since I have been
Chairman, every forbearance petition that has been granted has been
preceded by an up-or-down vote. Only one forbearance petition has been
deemed granted by operation of law. That petition, Petition of the
Verizon Telephone Companies for Forbearance under 47 U.S.C. 160(c)
from Title II and Computer Inquiry Rules with Respect to Their
Broadband Services, WC Docket No. 04-440 (Verizon Forbearance
Petition), was ``deemed granted'' after the Commission, by a recorded
2-2 vote, failed to adopt a draft Order that would have granted the
petition in part and denied it in part.
The circumstances surrounding the Verizon Forbearance Petition were
unique, given that only four Commissioners were available to vote.
Further, there has never been a grant or denial of a forbearance
petition during my tenure as Chairman in the absence of an up-or-down
vote. On December 7, the D.C. Circuit upheld the Verizon forbearance
relief, specifically finding that ``[t]here is no indication that the
Commission or individual Commissioners have abused this provision or
have acted in bad faith.''
The Commission takes very seriously its obligation to faithfully
implement the Communications Act of 1934, as amended, including the
forbearance provisions codified in section 10 of the Act. I will
continue to ensure that forbearance proceedings will be conducted in a
fair and open manner and that decisions are made on the basis of a
sound record.
Question 2. Earlier this year, the FCC released a Notice of
Proposed Rulemaking examining so-called ``two-way, plug-and-play
standards'' for cable navigation devices. Do you support implementation
of Section 629 in a way that will create a retail market for ``two-way,
plug-and-pay'' devices and allow for greater competition and consumer
choice? Do you believe that FCC oversight is sufficient to ensure that
any standards and specifications are created and changed through a fair
process that treats all affected parties equitably?
Answer. I support implementation of Section 629 of the
Communications Act in a way that will help create a retail market for
two-way plug-and-play devices and allow for greater competition and
consumer choice. In fact, that is precisely the mandate Congress
provided the Commission when it approved Section 629. When adopting the
unidirectional solution that the consumer electronics industry and
cable industry agreed upon, the Commission anticipated that the parties
would negotiate and agree to a similar agreement on bidirectional
compatibility of cable television systems and consumer electronics
equipment. The path to a bidirectional agreement has presented business
and technical hurdles that were not present in the unidirectional
discussions.
The Commission needs to continue to work to ensure that any
standards and specifications are created and changed through a fair
process that treats all parties equitably.
______
Response to Written Questions Submitted by Hon. John F. Kerry to
Hon. Kevin J. Martin
Question 1. On September 5, 2007, I sent you a letter concerning
TracFone's Eligible Telecommunications Petition to provide wireless
Lifeline telephone service to low income consumers in eight states
including Massachusetts. I have not yet received a response to this
letter. Please provide me with an update regarding this situation.
Answer. I have presented my colleagues at the Commission a proposed
Order that addresses some Universal Service issues. That Order would
grant the petitions of TracFone Wireless to be designated as an ETC for
Lifeline support in New York, Florida, Connecticut, Virginia,
Massachusetts, Alabama, North Carolina, and Tennessee.
Question 2. I've been told that telephone companies and cable
companies now have or will soon have the ability to engage in ``deep
packet inspection'' of the content of Internet consumers'
communications on a regular basis, and am concerned that there are no
privacy protections in place to prevent providers from monitoring,
capturing and then internally using or disclosing the content of users'
communications. Chairman Martin, would you support action, and even
more importantly, do you intend to take action, to establish a rule
preventing providers from monitoring and/or using the content of
consumers' Internet communications unless and until the user
voluntarily agrees to waive the privacy of their communications?
Answer. It is important to safeguard the privacy of consumer's
communications. As Chairman, I have taken important steps to strengthen
the Commission's safeguards that protect the privacy of consumers'
communications. Section 222 of the Communication Act of 1934, as
amended, establishes a duty of every telecommunications carrier to
protect the confidentiality of its customers' customer proprietary
network information, or CPNI. The Commission has adopted comprehensive
rules implementing section 222. In March 2007, the Commission extended
the application of these privacy rules to providers of interconnected
VoIP service. As a result, companies that provide telephone service
over the Internet generally are prohibited from using or disclosing
CPNI without customer approval. We also strengthened these rules by
requiring carriers to obtain explicit consent from a customer, rather
than less restrictive opt-out consent, before disclosing a customer's
CPNI with their partners for the marketing of communications services.
The Commission is exploring what if any consumer privacy protection
rules are necessary in the broadband context.
______
Response to Written Questions Submitted by Hon. Byron L. Dorgan to
Hon. Kevin J. Martin
Question 1. On December 18 you held a vote on a major change to the
nations' media ownership rules, despite substantial concern here in the
Senate. The Commerce Committee passed S. 2332, the Media Ownership Act
of 2007, on December 4. We have over 20 bipartisan cosponsors. We asked
you to delay this vote to consider important issues of localism and
minority ownership and allow a proper period of comment on the rules.
Why was it so important to move ahead on December 18 despite this
opposition? Why could you not delay this vote beyond December 18?
Answer. While I appreciate your and others' concerns about my
decision to hold a vote on the media ownership Report and Order at the
December 18 meeting, I do not believe that further delaying that
decision would have been appropriate.
Over the past year and a half the Commission has had to grapple
with the most contentious and divisive issue to come before it: the
review of the media ownership rules. The Commission's Media Ownership
Order adopted on December 18, 2007, strikes a balance between
preserving the values that make up the foundation of our media
regulations while ensuring those regulations keep apace with the
marketplace of today.
Section 202(h) of the 1996 Telecommunications Act, as amended,
requires the Commission to periodically review its broadcast ownership
rules to determine ``whether any of such rules are necessary in the
public interest as a result of competition.'' It goes on to read, ``The
Commission shall repeal or modify any regulation it determines to be no
longer in the public interest.''
In 2003, the Commission conducted a comprehensive review of its
media ownership rules, significantly reducing the restrictions on
owning television stations, radio stations and newspapers in the same
market and nationally. Congress and the court overturned almost all of
those changes.
There was one exception. The court specifically upheld the
Commission's determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that ``. . .
reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.''
It has been over 4 years since the Third Circuit stayed the
Commission's previous rules and over 3 years since the Third Circuit
instructed the Commission to respond to the court with amended rules.
It is against this backdrop that the FCC undertook a lengthy,
spirited, and careful reconsideration of our media ownership rules.
In 2003, when we last conducted a review of the media ownership
rules, many expressed concern about the process. Specifically, people
complained that there were not enough hearings, not enough studies, and
not enough opportunity for comments and public input. When we began
eighteen months ago, the Commission committed to conducting this
proceeding in a manner that was more open and allowed for more public
participation.
I believe that is what the Commission has done. First, we provided
for a long public comment period of 120 days, which we subsequently
extended. We held six hearings across the country: one each in Los
Angeles, California; Nashville, Tennessee; Harrisburg, Pennsylvania;
Tampa Bay, Florida; Chicago, Illinois; and Seattle, Washington. And, we
held two additional hearings specifically focused on localism in
Portland, Maine and in Washington, D.C. The goal of these hearings was
to more fully and directly involve the American people in the process.
We listened to and recorded thousands of oral comments, and allowed
for extensions of time to file written comments on several occasions.
We've received over 166,000 written comments in this proceeding.
We conducted ten independent studies. I solicited and incorporated
input from all of my colleagues on the Commission about the topics and
authors of those studies. We put those studies out for peer review and
for public comment and made all the underlying data available to the
public.
Although not required, I took the unusual step of publishing the
actual text of the one rule I thought we should amend. Because of the
intensely controversial nature of the media ownership proceeding and my
desire for an open and transparent process, I wanted to ensure that
Members of Congress and the public had the opportunity to review the
actual rule prior to any Commission action.
After engaging in this extensive process and providing the public
with unprecedented opportunities for input, the time had come to
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership
rules which Congress has directed us, by statute, to undertake.
Moreover, I felt strongly that we must provide certainty for a media
industry that has for several years operated in a climate of
uncertainty.
Question 2. You say you provided a lengthy public comment period of
120 days, which you extended to 167 days. You also held six hearings
and finished the two localism hearings. But how could the public be
expected to adequately comment on your proposed rules if you issued the
proposed rules at the end of the process?
Answer. On July 24, 2006, the Commission issued its Further Notice
of Proposed Rulemaking in the media ownership proceeding. That Further
Notice satisfied the Commission's notice-and-comment obligation under
the Administrative Procedures Act, which requires notice of the ``terms
or substance of the proposed rule or a description of the subjects and
issues involved.'' 5 U.S.C. 553(b)(3) (emphasis added). Although not
required, I took the unusual step of sharing with the public the actual
text of the one rule I thought we should amend. Because of the
intensely controversial nature of the media ownership proceeding and my
desire for an open and transparent process, I wanted to ensure that
Members of Congress and the public had the opportunity to review the
actual rule prior to any Commission action. This was above and beyond
any applicable legal requirement.
Indeed, the Commission has no obligation to go through that extra
step before we adopt an order. The Commission rarely goes through the
extra step that we did here of publishing the actual rule so that
people could see it before Commission action.
Finally, issuing proposed rules earlier in the process might not
have been effective. The Commission commenced a review of its media
ownership rules, held public hearings throughout the country, and
completed ten ownership studies in order to gain public input into the
impact of media ownership on the three core goals which its ownership
rules seek to further--competition, localism and diversity. Only after
the Commission compiled a substantial record, took hours and hours of
testimony, and completed the ownership studies were we able to
determine whether to revise any of the media ownership rules and if so
how.
Question 3. You say you held six hearings across the country at a
cost of more than $200,000. I worry that the $200,000 was totally
wasted as you're now ignoring the input of the public. They testified
against consolidation. You didn't hear people coming out and saying
they wanted the newspaper to own the television station. You heard
massive opposition to consolidation. You'll say that you didn't hear
people constantly sounding off against cross-ownership, but why would
you hear that--you never told them what you were concentrating on. How
could you vote on a rule to relax the cross-ownership ban having heard
the massive opposition to consolidation and then brag about spending
money on hearings?
Answer. When we began our review of the media ownership rules more
than 18 months ago, we committed to conduct the proceeding in a more
transparent and publicly accessible manner. The Commission reviewed the
record carefully and listened to the concerns of the public. It is
partly because of public input that we have, in every context except
the newspaper/broadcast cross-ownership rule, kept the ownership limits
exactly the same.
Moreover, we made certain that those directly affected by
newspaper/broadcast cross-ownership had their voices heard. Three of
the six public hearings on media ownership were held in markets where
there is currently newspaper/broadcast cross-ownership.
You are correct to note that most people commented on consolidation
in general. And, I believe we responded to the majority of people
concerned with consolidation generally, by not changing the local TV
rule, the local radio rule, the local TV/radio rule, the national TV
cap, or the national cable cap. At the same time, we also took into
account the Third Circuit's decision affirming the Commission's prior
decision to eliminate the ban on newspaper/broadcast cross-ownership.
When we examined all of the evidence, we found that a modest relaxation
of the outright ban on newspaper/broadcast cross-ownership in the 20
largest markets in the country in narrow circumstances would not harm
competition and could further localism and diversity. Notably, for
example, in Seattle only a few people even mentioned newspaper cross-
ownership, and one in fact supported relaxation.
Question 4. You spent almost $700,000 on ten independent studies,
but you had the results already pinned down. In a letter to me and
Senator Lott you say that with the 10 economic studies the FCC
commissioned, ``the Commission exerted no control over the study
designs or the authors' conclusions.'' And yet the Georgetown Institute
for Public Representation submitted a FOIA request and found evidence
that the FCC's Chief Economist at the time, Leslie Marx, when planning
for the studies started from the results the agency wanted and worked
backward. According to a July 2006 research plan, Marx began the
research process with ``thoughts and ideas'' about ``how the FCC can
approach relaxing newspaper/broadcast cross-ownership restriction.''
She then identified ``some studies that might provide valuable inputs
to support a relaxation of newspaper/broadcast ownership limits.'' The
studies outlined in the document were then implemented by the FCC, and
at least one researcher identified as being on the ``A-list'' was
chosen to carry them out. Now why wouldn't you start from a position of
neutrality? The court didn't order you to relax the cross-ownership
rule.
Answer. In its Report and Order in the 2002 biennial review of
media ownership rules, the Commission concluded that, ``a blanket
prohibition on the common ownership of broadcast stations and daily
newspapers in all communities and in all circumstances can no longer be
justified as necessary to achieve and protect diversity. Although we
continue to believe that diversity of ownership can advance our goal of
diversity of viewpoint, the local rules that we are adopting herein
will sufficiently protect diversity of viewpoint while permitting
efficiencies that can ultimately improve the quality and quantity of
news and informational programming.'' (Report and Order at para. 355).
The Prometheus court affirmed the Commission's decision to
eliminate the newspaper/broadcast cross-ownership rule, holding that
``reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.'' Additionally, the court upheld the Commission's
determination that the prohibition was not necessary to protect
diversity.
Thus, unless it determined that its previous conclusion was
incorrect, the Commission needed to determine how to approach relaxing
the cross-ownership prohibition and adopting any new limits.
Question 5. You say you held Chairman Powell's final two hearings
on localism, but the Washington, D.C. hearing was hardly an actual
hearing. It was an FCC meeting with some public participation and a
recounting of the docket comments. You had a number of panelists at
that hearing who asked for more to be done on localism. You since
issued an order on disclosure requirements--requiring the broadcasters
to report what they're actually doing. This is good. The results of
these reports will be useful, but shouldn't you have the results of
these reports before you move to change the media ownership rules?
Answer. When Chairman Powell announced the localism hearings, he
committed that the final hearing would be in Washington, D.C. Moreover,
as with every other hearing, we opened the hearing to public comment
and every person who wanted to speak was given the opportunity to do
so.
I agree that the Commission needed to consider the important issue
of localism. Last month, the Commission adopted a Report on Broadcast
Localism and Notice of Proposed Rulemaking. In this item, after
analyzing the record compiled in the localism proceeding, including the
more than 83,000 written comments received in response to its Notice of
Inquiry and the testimony received at the six field hearings conducted
throughout the country, the Commission took a number of actions to
enhance localism. Specifically, the item directs the Media Bureau to
revise ``The Public and Broadcasting,'' a publication made available by
the Commission and licensees, to better educate members of the public
about the obligations of licensees, including that involving localism,
and describing the Commission's processes in enforcing those
requirements and in acting on applications for the renewal of station
licenses. In addition, the item also establishes a contact person
within the Commission to respond to public inquiries, including those
regarding renewal proceedings. Finally, the Commission directs the
Media Bureau to create a software program, to be made available to the
public, to assist potential applicants in locating available
frequencies for new commercial FM stations.
In the item, the Commission also seeks comment on its tentative
conclusions that: (1) qualified LPTV stations should be granted Class A
status, which requires them to provide 3 hours per week of locally-
produced programming; (2) licensees should establish permanent advisory
boards (including representatives of underserved community segments) in
each station community of license with which to consult periodically on
community needs and issues; and (3) the Commission should adopt license
renewal application processing guidelines that will encourage all
broadcasters to provide news, public affairs, political, and other
types of locally-oriented programming.
It also seeks comment on other proposals designed to enhance
localism, including those that would: (1) expand the requirement that
licensees seeking renewal of their licenses make local announcements to
better involve the public in renewal proceedings, by requiring the
posting of such announcements on the licensee's website, and providing
links to the Commission's website; (2) require that a station's main
studio be located within its community of license; (3) require that
stations affiliated with networks be provided network programming
sufficiently in advance of airing to allow each station to review the
material and determine its appropriateness; (4) regulate the practice
of voice-tracking and, if so, in what manner; and (5) require licensees
to provide data regarding their airing of the music and other
performances of local artists and how they compile their station
playlists and whether the local nature of a station's music programming
should be considered in any renewal application processing guidelines.
The Report also refers to recent Commission actions in other
proceedings that will enhance broadcast localism, including those in
which the Commission: (1) increased the amount of information regarding
locally oriented programming that licensees must place in their public
files, and requiring that much of such files be placed on the Internet
(Standardized and Enhanced Disclosure Requirements for Television
Broadcast Licensee Public Interest Obligations, MM Docket Nos. 00-168
and 00-44, Report and Order adopted November 27, 2007 (for television);
Digital Audio Broadcasting Systems and Their Impact on the Terrestrial
Broadcast Service, Second Report and Order, First Order on
Reconsideration and Second Further Notice of Proposed Rulemaking, 22
FCC Rcd 10344 (2007) (for radio); (2) adopted and proposed various
actions designed to enhance media ownership diversity (Promoting
Diversification of Ownership in the Broadcasting Services, MB Docket
No. 07-294, Report and Order and Third Notice of Proposed Rulemaking
adopted December 18, 2007); (3) revised the leased access rules to
facilitate the ability of independent programmers' material to be
carried on cable systems (Leased Commercial Access: Development of
Competition and Diversity in Video Programming Distribution and
Carriage, MB Docket No. 07-42, Report and Order, adopted November 27,
2007); and (4) modified the rules that govern the LPFM service, to
foster the development of stations in that service and their offering
of locally oriented programming (Creation of A Low Power Radio Service,
Third Report and Order and Second Further Notice of Proposed
Rulemaking, released December 11, 2007)).
Finally, the Report discusses other ongoing proceedings in which
rule changes are being considered that would enhance localism efforts
including those: (1) looking to require that radio licensees maintain a
physical presence at their stations during all hours of operation
(Amendment of Parts 73 and 74 of the Commission's Rules to Permit
Unattended Operation of Broadcast Stations and to Update Broadcast
Station Transmitter Control and Monitoring Requirements, Report and
Order, 10 FCC Rcd 11479 (1995) for radio; the Report seeks comment on
whether such a requirement should be extended to television); (2)
examining the rules governing which television stations are offered to
subscribers by cable and satellite operators (under consideration); (3)
considering the use of FM translator facilities by AM stations
(Amendment of Service and Eligibility Rules for FM Broadcast Translator
Stations, Notice of Proposed Rulemaking, 22 FCC Rcd 15890) (2007); (4)
reviewing the rules regarding the Emergency Alert System (Review of the
Emergency Alert System, Second Report and Order and Further Notice of
Proposed Rulemaking, 22 FCC Rcd 13275 (2007); (5) considering the
adequacy of the Commission's sponsorship identification/payola rules
(Commission reminds Broadcast Licensees, Cable Operators and Others of
Requirements Applicable to Video News Releases and Seeks Comment on the
Use of Video News Releases by Broadcast Licensees and Cable Operators,
Public Notice, 20 FCC Rcd 8539 (2005); and (6) studying the appropriate
interference status between FM translator and LPFM stations (Creation
of A Low Power Radio Service, Third Report and Order and Second Further
Notice of Proposed Rulemaking, released December 11, 2007).
In addition, as you mention, in November 2007, the Commission
adopted a Report and Order which requires television broadcasters to
provide more information on the local programming they are broadcasting
and facilitate the public's access to that information. The Commission
is committed to establishing and maintaining a system of local
broadcasting that is responsive to the unique interests and needs of
individual communities. That action ensures the public is well informed
about how well television stations are serving their local communities
and will make broadcasters more accountable to their viewers.
Question 6. The Media Ownership Act of 2007 requires the FCC to
seek 90 days of comment on proposed changes to its broadcast ownership
rules; complete a separate rulemaking on localism, with a study at the
market level and 90 days of comment on localism, prior to rule changes
being issued for comment; and convene an independent panel to make
recommendations on increasing the ownership of broadcast media by women
and minorities. Why did you have a problem with doing any of these
tasks?
Answer. Section 202(h) of the 1996 Telecommunications Act, as
amended, requires the Commission to periodically review its broadcast
ownership rules to determine ``whether any of such rules are necessary
in the public interest as a result of competition.'' It goes on to
read, ``The Commission shall repeal or modify any regulation it
determines to be no longer in the public interest.''
In 2003, the Commission conducted a comprehensive review of its
media ownership rules, significantly reducing the restrictions on
owning television stations, radio stations and newspapers in the same
market and nationally. Congress and the court overturned almost all of
those changes.
There was one exception. The court specifically upheld the
Commission's determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that ``. . .
reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.''
It has been over 4 years since the Third Circuit stayed the
Commission's previous rules and over 3 years since the Third Circuit
instructed the Commission to respond to the court with amended rules.
I agree that the Commission must act to ensure that broadcasters
serve both localism and diversity. At our December 18 meeting, the
Commission adopted items designed to enhance broadcast localism and
foster greater diversity in ownership. I did not believe, however, that
it was appropriate to further delay the Commission's decision on its
media ownership rules until the Commission completed a separate
rulemaking and study on localism. The Commission is required by statute
to review its media ownership rules. Moreover, the Third Circuit's
remand was more than three-and-a-half years old when we acted.
Finally, the FCC already has an independent panel that makes
recommendations on increasing diversity--the Advisory Committee for
Diversity in the Digital Age. And, as I noted above, on December 18, we
adopted an item that seeks to implement many of that Committee's
recommendations on how to increase minority and female ownership of
broadcast outlets.
Question 7. You say, ``allowing very limited cross-ownership may
help to forestall the erosion in local news coverage by enabling
companies to share these local news gathering costs across multiple
media platforms.'' But why is it the job of the FCC to even examine the
profits of newspaper companies? You regulate the broadcast companies
and yet you're obsessed with the strength of the newspaper industry.
Answer. The 32-year-old rule governing newspaper/broadcast cross-
ownership affects both broadcast stations and newspapers. The
Commission has been regulating what a newspaper is allowed to own for
more than three decades. Given that fact, I believe that it is
important that the Commission assess and evaluate how the rule has
impacted not just broadcasters but also newspapers. The record in our
proceeding shows that daily newspapers play a particularly critical
role in local news-gathering, and that without them, Americans would be
worse off. We would be less informed about our communities and have
fewer outlets for the expression of independent thinking and diverse
viewpoints. I believe a vibrant print press is one of the institutional
pillars upon which our free society is built. To the extent that the
newspaper/broadcast cross-ownership rule has hurt the viability of
newspapers and eroded the vital service they provide to their
communities, we must take this into account.
Question 8. Why did you put out your proposed rules in a New York
Times op-ed and then in an FCC press release? Why not in the Federal
Register?
Answer. Although not required, I took the unusual step of sharing
with the public the actual text of the one rule I thought we should
amend. Because of the intensely controversial nature of the media
ownership proceeding and my desire for an open and transparent process,
I wanted to ensure that Members of Congress and the public had the
opportunity to review the actual rule prior to any Commission action.
Question 9. You have heard concerns that your proposal opens up
cross-ownership to much more than the top 20 markets. At the House
hearing you said you would work with your fellow Commissioners to
ensure this wasn't the case. I don't agree with any cross-ownership at
all. Not in the top 30, not in the top 20. I think I'm saying the same
thing as the 1,000 people who came to the hearing in Los Angeles and
the 1,100 people who turned out in Seattle. Why are we not being heard?
Answer. We have reviewed the record carefully and have listened to
the concerns of the commenters. This is in part why we have, in every
context except the newspaper/broadcast cross-ownership rule, kept the
ownership limits the same. From the outset of the current phase of the
rulemaking, the Commission committed to conduct the proceeding in a
more transparent manner that provided considerable opportunity for
public participation. We heard a wide range of views on the substantive
issues--from individual citizens, industry, and public advocacy
groups--and I believe that the rules we adopted reflect an appropriate
balancing of the concerns we heard from all sides. The outcome also
rests on consideration of the extensive empirical data in the record
and attention to the Third Circuit's remand decision.
In particular, I have sought the input of my colleagues at the
Commission on the shape of all of the rules, including all of the
existing regulations that we kept intact--such as the TV duopoly rule,
the local radio rules, the TV/radio cross-ownership restriction, and
the dual network ban. I note that in several cases these newly approved
rules are a step back from the Order that the Commission adopted in
2003. Moreover, when several Commissioners sought modifications to my
proposal for modestly revising the newspaper/broadcast cross-ownership
rule, I listened. In an effort to strengthen the rule and address
concerns about viewpoint diversity in local markets, I incorporated
changes suggested by my colleagues.
The record in the proceeding reveals that newspapers are struggling
and that, across the industry, circulation is down and advertising
revenue is shrinking. Allowing limited newspaper/broadcast cross-
ownership only in the 20 largest markets may help to forestall the
erosion in local news coverage by enabling companies to share local
newsgathering costs across multiple media platforms. The revised rule
balances the need to support the availability and sustainability of
local news while not significantly decreasing or harming viewpoint
diversity. Finally, we have committed to review and evaluate each
transaction on its merits, and determine whether the specific
transaction is in the public interest.
Finally, the majority of the people in Los Angeles and Seattle
expressed concern about consolidation generally, and I believe we have
responded by not changing the local TV rule, the local radio rule, the
local TV/radio rule, the national TV cap, or the national cable cap.
Question 10. On August 10, 2006, the Georgetown Institute for
Public Representation presented you with a FOIA request. You had 20
days to respond. After 99 days you gave them some documents. You are
sitting on 1,400 pages that the FCC still has not released. When will
you release these documents?
Answer. I do not plan to release these documents. Of the pages to
which you refer, 840 contain copyrighted materials, and the public
release of such material would violate our contract. Another 300 pages
involve the use of the copyrighted data by Commission staff in various
analyses. The remaining materials are internal e-mails and memoranda.
Like other government agencies, the Commission does not produce these
materials in response to FOIA requests. FOIA provides a statutory
exemption for deliberative process materials (Exemption 5) because to
do otherwise would stifle the interactions, deliberations, and debate
that produce good public policy. I would also note that this matter is
currently in litigation and the Commission of course will comply with
any court decision.
Question 11. You addressed Universal Service in your testimony.
What do you intend to do with the Joint Board's recommendations?
Answer. The Commission will put the recommendations out for public
comment.
Question 12. Regarding the recent decision on the Verizon six-city
forbearance petition the agency recently ruled on, I am pleased those
petitions were denied. As you know, I have shared with you my concern
over these forbearance petitions being used to short-cut a full agency
review of local access policies because of the unique features of the
forbearance process. I am gratified to know that the FCC recently
initiated a rulemaking on establishing rules to govern the FCC's
consideration of forbearance petitions and I hope this can be concluded
promptly. Can we count on this rulemaking to be completed soon?
Answer. The Commission is moving forward with respect to the
rulemaking regarding procedural rules to govern the conduct of
forbearance proceedings initiated under section 10 of the Act. The next
steps include collecting public comments and reply comments. Comments
will be due 30 days after publication of the notice in the Federal
Register and reply comments will be due 15 days after comments. We
continue to take seriously our task of conducting proper and rigorous
analyses in evaluating petitions for forbearance under the statute,
consistent with the mandate to forbear from applying unnecessary
regulations where the statutory criteria are satisfied.
Question 13. Recently concerns about unfair discrimination have
been raised in relation to Verizon Wireless blocking the text messaging
service of the pro-choice group, NARAL. Verizon Wireless quickly
corrected the problem, but the fact that it happened raises major
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the
FCC asking for your views on this issue. I have not received a
response. Will we receive that response letter soon? Can you tell me
your views?
Answer. A response to the letter sent by you and Senator Snowe has
been transmitted to your office under separate cover. The Commission
adopted an Internet Policy Statement with four policy principles aimed
at protecting consumers' access to the lawful Internet content of their
choice, and ensuring the free flow of information across networks. The
activities attributed to Verizon Wireless, however, involved wireless
text messages rather than access to Internet content. Although neither
Congress nor the Commission has addressed text messaging, I believe
that the principle of ensuring consumer access to content on the
Internet generally applies to providers of text messaging services as
well. For this reason, I have directed the Enforcement Bureau to
initiate an investigation into such practices. In addition, the
Commission will be seeking public comment on a Petition for Declaratory
Ruling filed by several public interest groups to clarify the
regulatory status of text messaging services, including short-code
based services sent from and received by mobile phones.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Hon. Kevin J. Martin
Question 1a. In adopting proposals designed to ensure opportunities
for minorities and women to own broadcast stations, we understand that
the FCC is proposing to provide certain preferences for ``small
businesses'' as defined by the Small Business Administration. The SBA
defines small businesses as those with annual revenues of $6.5 million
or less in radio and $13 million or less in television. 13 C.F.R.
124.103. The FCC estimates that as many as 95 percent of radio stations
and 66 percent of television stations fall within this definition. See
2006 Quadrennial Regulatory Review, Further Notice of Proposed
Rulemaking, 21 FCC Rcd 8834, Supplemental Initial Regulatory
Flexibility Analysis, App. B, at para. 51-54. (July 24, 2006). How will
the preferences for small businesses, which the majority of existing
licensees can take advantage of, increase opportunities for minorities
and women to own broadcast stations?
Answer. To determine eligibility, the Commission does not evaluate
an individual radio or TV station's revenues but the revenue of the
owner and its affiliates.
Question 1b. Has the Commission considered using different or
additional criteria to increase the likelihood that its proposal will
in fact increase ownership by minorities and women? If so, what
criteria? If not, why not?
Answer. The Commission on December 18, 2007, adopted a Third FNPRM,
along with the Diversity Order, seeking comment on whether the
Commission can or should expand the definition of eligible entities to
specifically identify the groups eligible to benefit from measures
designed to enhance diversity. The Third FNPRM acknowledged the
recommendations of commenters for a race-conscious definition of
socially and economically disadvantaged business (``SDB''). The Third
FNPRM notes however that race-based classifications are subject to
strict scrutiny and will be judicially upheld only if they are narrowly
tailored measures that further compelling government interests. Thus,
the Commission has decided to employ a race- and gender-neutral
definition in the rules adopted on December 18 to avoid Constitutional
difficulties that might create impediments to the timely implementation
of the steps taken to diversify broadcast ownership. Indeed, even the
Diversity and Competition Supporters acknowledge that a race-conscious
definition ``cannot be implemented immediately.'' The Third FNPRM also
seeks comments on any alternative definition of eligible entity that
may better advance the Commission's goals of promoting ownership
diversity and new entry, including the ``full-file review'' concept.
Question 2a. The Minority Media and Telecommunications Council
(MMTC) has argued that minority-owned stations are even less well
represented among SBA-defined small businesses than they are in the
industry as a whole. According to a Free Press study, although
minorities own about 7.78 percent of commercial radio stations, only
5.88 percent of stations that fall within the SBA's small business
definition are minority-owned. Thus, MMTC argues that the FCC's
proposal is actually regressive. See MMTC Supplemental Comments (filed
Nov. 20, 2007). Do you believe that using the SBA small business
definition will result in increased station ownership by minorities?
How?
Answer. It is not the case that minority-owned radio stations are
less well represented among SBA-defined small businesses than they are
in the industry as a whole. Free Press made a fundamental error in
concluding that minorities own 5.88 percent of the commercial radio
stations qualifying as small businesses under SBA's definition. To
determine eligibility under the definition, Free Press mistakenly
looked at an individual radio station's revenues, rather than the
revenues of the station's owner, which include the revenues of the
owner's other businesses and affiliations. Based on BIA figures as of
December 1, 2007, and using Free Press' data, we calculate that at
least 8.5 percent of commercial radio stations owned by SBA-defined
small businesses are minority owned. Furthermore, it is impossible to
estimate how many minority-owned new entrants may form to take
advantage of the Commission's diversity initiatives, thereby increasing
the percentage of minority-owned small businesses.
Question 2b. Has the Commission considered using a race-neutral
``full file review,'' as MMTC has proposed, to give preference to
persons who have overcome significant social and economic
disadvantages? If not, why not?
Answer. In the Third FNPRM, the Commission seeks public comment on
the advisability of adopting the ``full file review'' approach, among
other options.
Question 3. Right now, who is actually leading the DTV transition
effort? Is the FCC leading it? Is NTIA? Private industry? How do we fix
this, and actually assign responsibility?
Answer. Congress decided to divide the responsibilities of the DTV
transition among several agencies, assigning the Commission some
responsibilities and NTIA some responsibilities. For example, in the
Deficit Reduction Act of 2005, Congress specifically allotted NTIA one
hundred million dollars ($100,000,000) to spend on administrative
expenses for the digital transition and the converter box program,
including five million dollars ($5,000,000) ``for consumer education
concerning the digital television transition and the availability of
the digital-to-analog converter box program.'' Deficit Reduction Act of
2005, Public Law 109-171, Sec. 3005(c)(2)(A), Feb. 8, 2006. In
addition, Congress anticipated that the administrative expenses might
be even greater than $100 million and therefore gave NTIA the ability
to spend an extra $60 million on such expenses.
Nevertheless, the Commission has been working both on our own and
in coordination with industry, other governmental agencies, and
consumer groups to advance the transition and promote consumer
awareness.
Question 4. As you are probably aware, Florida is currently the
largest ``net payer'' state into the Universal Service Fund. Florida
pays in more than $300 million more to the USF than it receives in
disbursements. Getting beyond the idea of a ``cap'' of some sort--which
may raise competitive issues--it seems like one other way of achieving
efficiencies is through more effective targeting of support. How do you
feel about this approach?
Answer. I support long-term reform, which would include measures to
more effectively and efficiently target support to achieve the goals of
Universal Service. I continue to believe the right long-term answer for
such reform of high-cost Universal Service support is to move to a
reverse auction methodology. I believe that reverse auctions could
provide a technologically and competitively neutral means of
controlling the current unsustainable growth in the Fund and ensuring a
move to most efficient technologies over time.
Changes in technology and increases in the number of carriers that
receive Universal Service support have placed significant pressure on
the stability of the Universal Service. A large and rapidly growing
portion of the high-cost support program is now devoted to supporting
multiple competitors to serve areas in which costs are prohibitively
expensive for even one carrier. These additional networks in high-cost
areas don't receive support based on their own costs, but rather on the
costs of the incumbent provider, even if their costs of providing
service are lower. In addition to recommending an interim cap, the
Joint Board has recognized the problems of maintaining this identical
support rule.
I have circulated among my colleagues at the Commission an Order
that adopts the recommendation of the Joint Board to place an interim
cap on the amount of high-cost support available to competitive
eligible telecommunications carriers (ETCs). Further, the Commission
has voted to seek comment on two Notices of Proposed Rulemaking, one
that would require that high-cost support be based on each carrier's
costs in the same way that rural phone companies' support is based, and
one that would explore the use of reverse auctions for distributing
support. I'm supportive of measures to control the growth of the Fund
in order to preserve and advance the benefits of the Fund and protect
the ability of people in rural areas to continue to be connected.
Question 5. Please provide an update on the status of the special
access proceeding. Also, if the Commission is waiting on particular
sets of data to complete the proceeding, please indicate what data sets
are missing and what action the Commission is taking to obtain that
data.
Answer. In January 2005, the Commission adopted a Notice of
Proposed Rulemaking, which, among other things, sought comment on the
special access regulatory regime, including whether the Commission
should maintain or modify the Commission's pricing flexibility rules
for special access services. A majority of the Commissioners asked to
seek further comment in this proceeding, and the Commission released a
Public Notice on July 9, 2007, setting an expedited comment cycle for
interested parties to refresh the existing record. Comments were filed
on August 8, 2007, and reply comments on August 15, 2007. After the
Commission received these comments, I provided an options memo to all
of the Commissioners by September 2007. To date, there is no option
that is supported by a majority of Commissioners.
Question 6. Are you currently considering regulations that would
require cable programmers and operators to offer ``a la carte''
programming? If so, what is the statutory and factual basis for those
regulations?
Answer. There is no pending item before the Commission that would
require cable television system operators or any other multichannel
video programming distributors (``MVPDs'') to offer programming on an
``a la carte'' basis to their subscribers.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Kevin J. Martin
Question 1. At the December 5 House Energy and Commerce Committee
hearing, Representative Inslee asked you a question regarding the
timeline in writing and placing your November 13 Op-Ed piece in The New
York Times. You did not seem to have a ready answer. As you have had
some time to reflect, let me try it again. At the time you made your
opening remarks at the public hearing in Seattle on the afternoon of
November 9, how far along was your staff in the drafting of the
proposed rules released on November 13? Had you already approved the
proposed rule or were the proposed rules still awaiting your approval?
Also, by that time had Commission staff contacted The New York Times
regarding the placement of the Op-Ed that was published on November 13?
When did your office first contact the Times about the placement of the
Op-Ed on the change to media ownership rules? And when your office
contacted the Times, was it shopping around a completed Op-Ed or was it
pitching a proposal?
Answer. A draft of the Op-Ed was submitted to The New York Times on
November 9. I submitted the Op-Ed for publication in the newspaper and
released my proposed rules (on November 13) to further public
discussion and debate on these contentious issues. I took the
extraordinary step of publishing the Op-Ed and releasing my proposed
rules in order to share my views on these issues with the public in an
open and transparent manner. This also began the process of engaging my
colleagues regarding what action, if any, the Commission would
ultimately decide regarding media ownership. After months of hearings
and public comment, the Commission had an opportunity to consider my
proposed rules and could either accept, reject, or modify the proposal.
As with other proposed rules, the Commission moves forward to decide
issues only when a majority of Commissioners agree on a course of
action.
Question 2. How did the Commission conclude that there is a
presumption that it is in the public interest that the current ban on
newspaper/broadcast cross-ownership in the same market be lifted in the
top twenty media markets? Why not the top ten? Why not the top thirty?
And why did the Commission conclude that at having eight independent
voices in these media markets should be one of the conditions? Why not
ten voices? Did the Commission consider the impacts on small business,
the increased consolidation of media outlets may have on local
advertising rates?
Answer. The Commission has applied the positive presumption only in
the largest markets based on the evidence in the record that the twenty
largest markets contain a robust number of diverse media sources and
that the diversity of viewpoints would not be jeopardized by certain
newspaper/broadcast combinations. The record also shows that newspaper/
broadcast combinations can create synergies that result in more news
coverage for consumers. In short, the new rule lifts the complete ban
but does so in a modest manner in order to ensure both that the
Commission's goals of competition, localism, and diversity are not
compromised and that the Commission may achieve the economic benefits
of allowing certain combinations.
The Commission's determination to draw that line at the top twenty
markets is reasonable and well supported by the record, based on an
examination of the media marketplace in the largest DMAs in the
country. Specifically, the Commission found notable differences between
the top 20 markets and all other DMAs, both in terms of voices and in
terms of television households. For example, while there are at least
10 independently owned television stations in 18 of the top 20 DMAs,
none of the DMAs ranked 21 through 25 have 10 independently owned
television stations. Additionally, while 17 of the top 20 DMAs have at
least two newspapers with a circulation of at least 5 percent of the
households in that DMA, four of the five DMAs ranked 21 through 25 have
only one such newspaper. Moreover, the top 20 markets, on average, have
15.5 major voices (independently owned television stations and major
newspapers), 87.8 total voices (all independently owned television
stations, radio stations, and major newspapers), and approximately 3.3
million television households. Markets 21 through 30, by comparison,
have, on average, 9.5 major voices, 65.0 total voices, and fewer than
1.1 million television households, representing drops of 38.5 percent,
25.9 percent, and 56.3 percent from the levels in the top 20 markets,
respectively. Markets 31 through 40 and 41 through 50 have average
numbers of voices for each category similar to markets 21 through 30,
and even fewer television households on average, 837,800 and 679,200,
respectively. Markets 50 through 210 show even more dramatic drops
with, on average, 6.7 major voices, 31.2 total voices, and
approximately 231,000 television households. These figures represent
drops of 56.4 percent, 61.7 percent, and 90.7 percent from the levels
in the top 20 markets, respectively.
The Commission selected the number eight for the major media voice
count because this will assure that the largest television markets
continue to enjoy an adequate diversity of local news and information
sources. As noted above, there are at least 10 independently owned
television stations and two major newspapers in the great majority of
the top 20 markets. Further, all of those markets have at least eight
television stations and one major newspaper. As we do not want to allow
a significant decrease in the number of independently owned major media
voices in any of those markets, we will only presume that a transaction
is in the public interest if at least eight major media voices will
remain post-transaction. In addition, in the context of the local
television ownership rule, the Commission retained its eight voice-
count test. Specifically, the local TV ownership rule requires a
minimum of eight independently owned-and-operated television stations
to ensure that robust competition exists in the local television
marketplace. By also adopting an eight voice count test for the
newspaper/broadcast cross-ownership rule, the Commission generally took
a cautious approach, trying to maintain consistency with the rules that
it left unchanged.
The Commission did consider the impact of newspaper/broadcast
cross-ownership on competition, finding that most advertisers do not
view newspapers and television stations as close substitutes. The
Commission had previously made this finding in 2003 and the Third
Circuit subsequently affirmed it. Because newspapers and broadcasters
do not compete for advertising sales, the Commission does not expect
its modest relaxation of the ban on newspaper/broadcast cross-ownership
to have any impact on local advertising rates.
Question 3. After reading your New York Times Op-Ed it sounded like
the reason the FCC issued these proposed rules was to save the
endangered newspaper industry, an industry the Commission does not
regulate. Has the number of morning dailies published increased or
decreased between 1990 and 2005? Has the circulation of morning dailies
increased or decreased between 1990 and 2005? Do you believe the
business case for morning dailies is different than that of evening
dailies?
Answer. The number of morning dailies increased from 559 in 1990 to
817 in 2005, while the number of evening dailies decreased from 1,084
in 1990 to 645 in 2005 for an overall net decline of about 180 daily
newspapers. The circulation of morning dailies increased from 41.3
million in 1990 to 46.1 million in 2005, while the circulation of
evening dailies decreased from 21.0 million in 1990 to 7.2 million in
2005 for an overall decline in daily circulation of about 9 million.
I believe the business case for morning dailies is different than
that of evening dailies. There are more morning newspapers now, and
fewer evening dailies, than in the past. The trend appears to be part
of a long and ongoing shift in demand for more timely news reporting
coupled with the rise of alternative delivery modes for news.
Question 4. Do you believe that the newspaper industry is
profitable today?
Answer. The industry is recording pre-tax profit margins in the
high teens, but the print newspaper business is ailing. Circulation is
declining, advertising is flat, and some analysts suggest that
newspapers appear to have entered a period of ``protracted decline.''
In 2006, the traditional indicators were all negative: circulation fell
even faster than in previous years; industry revenues were flat--a poor
showing in a non-recession year; and, on the print side, retail,
national and automotive classified ads all showed weakness.
Industry analysts attribute the more recent, steeper declines to
many factors, not one or two. Some news consumers, particularly the
young, have moved online. Only 35 percent of persons aged 18 through 34
read newspapers on a daily basis. The current generation of young
adults also includes more people who have no interest in news. ``Free''
dailies (i.e., advertising-only papers) are a competitive factor, too,
especially in larger cities. The net result is not so much that people
are giving up on newspapers altogether as that they read them less
often. Seven-day-a-week subscribers have become a smaller group; many
have switched to getting the paper a few days a week and skipping
others. The most severe losses were in large metropolitan markets like
Los Angeles, Boston, San Francisco and Philadelphia. The top 50
newspapers in circulation lost an average of 3.6 percent daily
circulation, almost 1 percentage point more than the industry average.
In the two previous years, the three national papers had managed to
stay even, but not in 2006. Circulation was off 3.2 percent at the New
York Times, 1.9 percent at The Wall Street Journal, and 1.3 percent at
USA Today.
Question 5. How many daily newspapers in the top twenty media
markets failed in the past decade? What were their names?
Answer.
Top 20 TV DMAs--Daily Newspapers in 1996 That Are Not Dailies in 2007
------------------------------------------------------------------------
DMA
Rank DMA City County ST Newspaper
------------------------------------------------------------------------
1 New York Mamaroneck Westchester NY Mamaroneck Daily
Times
1 New York Mt. Vernon Westchester NY Mt. Vernon Argus
1 New York New Westchester NY New Rochelle
Rochelle Standard Star
1 New York Ossining Westchester NY Citizen Register
1 New York Peekskill Westchester NY The Star
1 New York Port Westchester NY Daily Item
Chester
1 New York Tarrytown Westchester NY Tarrytown Daily
News
1 New York Yonkers Westchester NY Herald Statesman
2 Los Angeles Hemet Riverside CA Hemet News
2 Los Angeles Los Angeles Los Angeles CA Los Angeles Daily
Commerce *
2 Los Angeles San Pedro Los Angeles CA San Pedro News
Pilot
2 Los Angeles Santa Los Angeles CA Santa Monica
Monica Outlook
2 Los Angeles Temecula Riverside CA Temecula
Californian
5 Dallas Arlington Tarrant TX Arlington Morning
News
5 Dallas Bonham Fannin TX Bonham Favorite
6 San Antioch Contra CA Antioch Ledger
Francisco Costa Dispatch
7 Boston Haverhill Essex MA Haverhill Gazette
10 Houston Bay City Matagorda TX Bay City Daily
Tribune
10 Houston Texas City Galveston TX Texas City Sun
12 Phoenix Chandler Maricopa AZ Arizonan Tribune
12 Phoenix Gilbert Maricopa AZ Gilbert Tribune
12 Phoenix Scottsdale Maricopa AZ Scottsdale
Progress Tribune
12 Phoenix Tempe Maricopa AZ Tempe Daily News
Tribune
14 Seattle Bellevue King WA Eastside Journal
14 Seattle Kent King WA South County
Journal
18 Denver Gunnison Gunnison CO Gunison Country
Times
19 Orlando Sanford Seminole FL Sanford Herald
20 Sacramento Turlock Stanislaus CA Turlock Journal
------------------------------------------------------------------------
* This publication appears to be a specialty publication that may not be
within the scope of the rule.
Sources: Editor & Publisher 77th Ed. 1997; BIA database 12/07 plus FCC
staff research.
Question 6. How many waivers to the newspaper/broadcast cross-
ownership rules has the Commission granted prior to 2007?
Answer. When the Commission adopted the newspaper/broadcast cross-
ownership prohibition in 1975, the Commission grandfathered
approximately 133 existing combinations. Of those grandfathered
combinations, 36 are in existence today.
After 1975 and prior to 2007, the Commission granted four permanent
waivers of the newspaper/broadcast cross-ownership rule, two of which
are still in existence. Those still in existence are the permanent
waivers granted to News Corporation for its cross-ownership of WNYW-TV
and The New York Post in New York, and to Stafford Broadcasting for its
cross-ownership of the Daily News and WSCG(AM) in Michigan. Two
permanent waivers are no longer in existence (one in Chicago, involving
WFLD-TV and two daily newspapers in Chicago, and one in Bloomsburg, PA,
involving Station WCNR(AM) and the Press-Enterprise).
In addition, the Commission has granted a number of temporary
waivers and most of these have expired. There are three temporary
waivers that were granted prior to 2007 and that are still in effect: a
waiver to News Corporation for its cross-ownership of WWOR-TV and The
New York Post, and waivers to Morris Communications for its cross-
ownership of media outlets in two locations, (1) the Amarillo Daily
News & Globe Times and KGNC(AM) and KGNC(FM), and (2) the Topeka
Capital-Journal and WIBW(AM) and WIBW(FM).
Finally, the Commission has typically granted temporary waivers to
allow companies to divest properties or otherwise come into compliance
with our ownership rules.
Question 7. Both policymakers and industry rely heavily on testing
performed by the Office of Engineering Technology. It is essential that
their work is beyond reproach. And over the years they have maintained
a great reputation for the quality of their technical work and not
getting mixed up in the politics. Last February, when you testified in
front of the Committee, I asked you about the Commission moving forward
with the testing of prototype devices for use in the so-called white
spaces. There are several members on the Committee, including myself,
who support the use of unlicensed fixed and personal portable devices
in the vacant spectrum in a way that allows them to co-exist with over-
the-air broadcast television stations. You committed to timely testing
of the devices and several of us applauded that action. As you know a
series of tests were conducted over the summer, with the net result
being more testing and more delays. Did your office offer any guidance
to OET during the planning, execution, or evaluation of the testing of
the white space prototype devices?
Answer. I did not offer any substantive guidance to OET during the
planning, execution, or evaluation of the testing of the white space
prototype devices. The Chairman's office was kept apprised of the
progress of the tests and was made aware in mid-June 2006 that the
devices were not consistently detecting TV broadcasts or wireless
microphones. The Chairman's office relied on the expertise of OET's
engineers to complete the testing and prepare an initial report for
public comment.
Question 8. I understand from the press that a number of companies
have submitted prototype devices to the Commission for testing in the
last few days. Can you commit to a prompt testing regime and a final
order in the first quarter of next year?
Answer. The Commission supports the efficient and innovative use of
spectrum including white spaces. The FCC Laboratory recently received
prototype white space devices from Microsoft, Philips, Motorola, and
Adaptrum, and we anticipate we may receive one or two additional device
from other parties. The Office of Engineering and Technology plans to
conduct both laboratory tests and field tests on these devices in an
open and transparent manner. While we are committed to moving forward
as expeditiously as possible, I can not predict a specific time-frame
for adoption of final rules. Any rules the Commission establishes to
provide for the operation of unlicensed devices in the TV bands must be
vetted by all five FCC Commissioners. I can assure you that we will
thoroughly consider all of the engineering data, test results (i.e.,
both laboratory testing and field testing), and responses submitted in
the record before adopting final rules.
Question 9. If you recall, a prior prototype delivered to the
Commission was broken, but the staff never told anyone outside the
Commission and wasted weeks testing a device they knew was broken. Can
you commit that, this time, if the staff has a problem in making the
device work they will tell the company involved about it--so no time is
wasted?
Answer. The Commission is committed to working with all parties to
continue the process of investigating the potential performance
capabilities of TV white space devices in an open and transparent
manner. Both laboratory testing and field testing of prototype white
space devices will be open to observation by any interested party. To
the extent that the Office of Engineering and Technology has a problem
making a prototype device work, it will tell the particular company
involved.
Question 10. What steps is OET taking to ensure that the various
stakeholders are satisfied with the transparency of the process for the
next series of tests that will begin in January?
Answer. The Commission is committed to working with all parties to
continue the process of investigating the potential performance
capabilities of TV white space devices in an open and transparent
manner. On October 5, 2007, the Office of Engineering and Technology
issued a Public Notice inviting the submittal of prototype white space
devices for laboratory testing and field testing. That same day, Office
of Engineering and Technology staff met with parties to the proceeding
to discuss the further round of testing.
Both laboratory testing and field testing of prototype white space
devices will be open to observation by any interested party and the
press. Any updates or changes to the testing schedule for the prototype
TV white space devices will be publicly disseminated and available on a
dedicated FCC Internet site.
Question 11. A recent GAO report cited that no comprehensive plan
exists for the digital television transition. The GAO stated ``Among
other things, a comprehensive plan can detail milestones and key goals,
which provide meaningful guidance for assigning and coordinating
responsibilities and deadlines and measuring progress. Such planning
also includes assessing, managing, and mitigating risks, which can help
organizations identify potential problems before they occur and target
limited resources''. This week the Commission released a written
response to the GAO report. Chairman Martin, at this point in time,
what do you consider to be the top five risk factors with respect to
American consumers getting through the digital television transition
with minimal disruption? Which of these risk factors fall under the
jurisdiction of the FCC? How is the FCC managing and mitigating these
risks?
Answer. I consider the following to be the top five essential
aspects of and risks for the digital transition: (1) Construction and
Operation of Broadcasters' Digital Broadcast Facilities; (2) Ability of
Consumer Equipment to Receive Digital Signals; (3) Availability of
Digital to Analog Converter Boxes; (4) Viewability of Digital Signals
for Analog Cable Customers; and (5) Consumer Education and Outreach.
(1) Construction and Operation of Broadcasters' Digital Broadcast
Facilities:
One of the most important responsibilities of the Commission,
with respect to the Nation's transition to digital television,
has been to shepherd the transformation of television stations
from analog broadcasting to digital broadcasting. Currently, 95
percent of all full power television stations (1,636 stations)
are broadcasting in digital, and over 99 percent of stations
(1,706 stations) have been assigned a final post-transition
channel for operations.
It has taken a series of complicated steps, spanning over two
decades, in order to get to this point. First, the Commission
worked with industry leaders and with other countries to adopt
a standard for digital operations. Second, the Commission
planned the process for recovering analog spectrum, with a
focus on jump starting digital transmissions. Accordingly, the
Commission established eligibility for and assigned digital
channels, with this process ultimately resulting in a final
post-transition channel for each broadcast station throughout
the country for post-transition operations. Third, the
Commission established construction deadlines for stations to
build and operate pre-transition digital facilities. The
Commission stayed very involved with this process by providing
oversight for the buildout of pre-transition facilities. The
Commission then turned to work on post-transition operations,
and established mechanisms and deadlines for stations to elect
and build final, post-transition facilities. This entire
process has involved the Commission processing over 10,000 DTV
modification applications, license applications and special
temporary authority authorizations to expedite digital build
out. The process has also involved intricate international
negotiations with Mexico and Canada. The Commission adopted the
final DTV Table of Allotments, which assigns virtually every
full-power television station a final channel for post-
transition digital operations.
And, more recently, the Commission released the Third DTV
Periodic Report and Order, which mandates strict, final
deadlines for stations to complete construction of digital
facilities. In this order, Commission made technical
adjustments to its rules and policies to enable broadcasters to
take the actions necessary to complete the conversion from
analog to digital. The Commission is doing everything in its
power to ensure that broadcasters successfully transition their
stations to full digital operations.
(2) Ability of Consumer Equipment to Receive Digital Signals:
The Commission also must ensure that consumers who buy and
correctly install the equipment to receive digital signals will
be able to receive a good quality signal on February 18, 2009.
This is the Commission's responsibility, along with retailers
and equipment manufacturers.
First, the Commission adopted rules limiting and ultimately
eliminating the importing and shipping of analog-only
television receivers and equipment. The Commission's DTV tuner
requirement took effect according to a phase-in schedule that
applied the requirement first to receivers with the largest
screens and then to progressively smaller screen receivers and
other television receiving devices that do not include a
viewing screen, i.e., VCRs and DVD players, to minimize the
impact of the requirement on both manufacturers and consumers.
Thus, responsible parties were prohibited from importing or
shipping television receivers without DTV tuners pursuant to
the following schedule: (1) receivers with screen sizes 36" or
more--effective July 1, 2005; (2) receivers with screen sizes
between 25" and 25"--effective March 1, 2006; and (3) all other
television receivers and other video devices capable of
receiving television signals--effective March 1, 2007.
In May 2007 we issued NALs against two companies--Syntax
Brillian Corp. (approx. $2.9 million) and Regent USA, Inc.
($63,650)--for apparent violation of our rules in this area.
One of these companies has already paid the fine and we are
working on a forfeiture order with respect to the other
company. In addition, we are in the process of investigating
potential violations against another two companies.
Second, with respect to retailers, the Commission adopted a
Labeling Order that requires retailers to fully inform
consumers about the DTV transition date at the point of sale of
analog televisions. Specifically, the Commission found that, at
the point of sale, many consumers were not aware that analog-
only televisions would not be able to receive over-the-air-
television signals without the use of a digital-to-analog
converter box after February 17, 2009. Accordingly, the
Commission required sellers of television receiving equipment
that does not include a digital tuner to disclose at the point-
of-sale that such devices include only an analog tuner and
therefore will require a converter box to receive over-the-air
broadcast television after the transition date.
With respect to this labeling requirement, the Commission has
inspected over 1,000 retail stores and websites and issued
several hundred citations notifying retailers of violations for
failing to comply with our requirements. Because retailers are
not licensees, we must give them a citation prior to issuing a
Notice of Apparent Liability (NAL). NALs are pending against
seven large retailers for apparently violating the Commission's
labeling requirements. These fines, in the aggregate, total
over $3 million. We have also circulated NALs to an additional
seven retailers, totaling over $500,000. In addition, the
Enforcement Bureau has issued another six NALs on delegated
authority. It is my hope that through our vigorous enforcement
actions, retailers will take concrete actions to avoid consumer
confusion as the digital transition draws near.
Finally, we are ensuring that manufacturers make digital tuners
in compliance with the Commission's V-Chip regulations. As you
know, the Commission's rules require digital television
manufacturers to include the V-Chip in their equipment and to
ensure that their devices can adjust to changes in the content
advisory system. As a result of these investigations, we have
circulated NALs against three manufacturers, totaling over $11
million.
Swift enforcement of all our DTV-related rules is critical to
ensuring that consumers have the equipment necessary to view
digital signals on February 18, 2009.
(3) Availability of Digital-to-Analog Converter boxes:
Congress specifically assigned NTIA with primary responsibility
for development of the program for availability of digital-to-
analog converter boxes. In the Deficit Reduction Act of 2005,
Congress specifically allotted NTIA one hundred million dollars
($100,000,000) to spend on administrative expenses for the
digital transition and the converter box program, including
five million dollars ($5,000,000) ``for consumer education
concerning the digital television transition and the
availability of the digital-to-analog converter box program.''
Deficit Reduction Act of 2005, Public Law 109-171, Sec.
3005(c)(2)(A), Feb. 8, 2006. (Congress anticipated that the
administrative expenses might be even greater than $100 million
and therefore gave NTIA the ability to spend an extra $60
million on such expenses). Thus, Congress explicitly gave NTIA
the responsibility for the coupon box program.
(4) Viewability of Digital Signals for Analog Cable Customers:
Last fall, the Commission adopted an order ensuring that all
local broadcast stations carried pursuant to this Act are
``viewable'' by all cable subscribers. Specifically, in order
to guard against the risk that analog cable consumers may not
be able to view their local television stations after the
transition, our Viewability Order requires cable operators to
either: (1) carry the digital signal in analog format, or (2)
carry the signal only in digital format, provided that all
subscribers have the necessary equipment to view the broadcast
content.
According to Commission staff calculations, while there are
approximately 15 million households with more than 30 million
television sets that rely on over-the-air signals, there are
over 40 million homes with 120 million television sets that
subscribe to analog cable. Thus, in the absence of Viewability
Order, some broadcast stations would have become unwatchable on
these 120 million television sets. And, millions of consumers
would have been disenfranchised.
With the adoption of this order, cable operators will be
obligated to ensure that all of their customers will be able to
watch all broadcast stations after the digital transition. This
item ensures that all Americans with cable--regardless of
whether they are analog or digital subscribers--are able to
watch the same broadcast stations the day after the digital
transition that they were watching the day before the
transition. Thus, cable operators may not simply cutoff the
signals of must-carry broadcast stations after the digital
transition.
(5) Consumer Education and Outreach:
Consumer education and outreach is one of the Commission's top
priorities, but it is one that we share with NTIA and industry.
Although NTIA has taken the lead with respect to consumer
education concerning the converter box program, the Commission
has been actively promoting general consumer awareness of the
upcoming transition through education and outreach efforts. Our
overarching goal in these activities is to reach consumers who
are likely to be unaware of the upcoming digital transition,
including: (1) senior citizens; (2) non-English speaking and
minority communities; (3) people with disabilities; (4) low-
income individuals; and (5) people living in rural and tribal
areas.
We have been employing a variety of methods to reach these
communities. Specifically, we have been focusing our resources
on three primary activities: attending conferences and hosting
events, disseminating information via the news media, and
partnering with industry, consumer, and other groups.
Conferences and Other Events. With respect to conferences and
events, Commission staff has been attending as many conferences
as possible to distribute DTV educational materials. We are
also utilizing the agents in the Commission's field offices
around the country to expand the scope of our consumer
education efforts. Designated representatives in each our 24
field offices have been targeting communities that risk getting
left behind in the DTV transition, such as senior citizens. Our
field agents have been distributing information materials to
senior centers, libraries and other venues. They then follow up
these visits by giving DTV presentations to further inform
these communities.
Through the work of our field agents, we are able to reach
consumers in a total of 36 states--ranging from Alaska to
Florida. We have already distributed information to over 2,670
senior centers, senior organizations, and community groups and
given nearly 275 DTV presentations. And, through a series of
workshops held at the Commission with stakeholders, we will
have focused on how we can best reach and educate these groups
of consumers. We have already held three workshops and
announced dates for the remaining two workshops.
News Media Activities. We are also working with the news media
to highlight the upcoming transition in ongoing news coverage.
Specifically, we are coordinating with a variety of media
outlets including newspapers, broadcasters, and working with
various members of the industry on public service announcements
(PSAs).
Our efforts focus primarily on media that target specific at-
risk populations. For example, senior citizens and Hispanic
consumers, among others, are most likely to be
disproportionately impacted by the transition.
Government, Industry, and Consumer Group Partnerships. The
partnerships we have formed, and will continue to form, are a
critical part of our consumer education and outreach efforts.
We rely on these partnerships--which may be with government
agencies, industry or consumer groups--to help us disseminate
DTV education information and to inform us of events and
conferences that are taking place where we can distribute
materials and interact with consumers directly.
We are, of course, coordinating closely with NTIA. The FCC and
NTIA have communicated extensively on the implementation of the
DTV transition and will continue our close coordination as the
transition deadline approaches. We have a Memorandum of
Understanding relating to our duties and responsibilities in
testing the converter boxes under the coupon program. With
respect to consumer education, our shared goal is to ensure
that consumers are able to receive from both agencies
consistent, easy to understand information about what the
transition is, why it is happening, how it may affect them, and
what they need to do to prepared.
We are also working with the U.S. Administration on Aging,
which has a network of over 650 state and area agencies on
aging, tribal elder organizations, and thousands of providers
around the country who work with seniors and their caregivers
on a daily basis. We are not only providing this network with
DTV informational materials that can be distributed nationwide,
but we have also offered to partner with them to conduct joint
presentations on the DTV transition throughout the country.
Similarly, we are working with the Bureau of Indian Affairs
which has agreed to disseminate DTV information packets to
their members through their 50 offices nationwide.
Our government partnerships are not limited to the national
level, however. We have contacted nearly 125 local Chambers of
Commerce covering all 50 states and the District of Columbia as
well as state and local-level consumers affairs and elderly
departments. We have asked these organizations to help us
distribute DTV information materials and link to www.dtv.gov on
their webpage. We intend to continue pursuing such
relationships to reach as many consumers as possible.
Also, since June 2007, the FCC has reached out to over 1,100
organizations, with over 900 of them governmental agencies and
organizations at the Federal, state, tribal and local levels to
request their assistance in educating the consumers they serve
about the DTV transition. As a result of our efforts, we are
forming partnerships with many of these organizations in order
to better inform their constituents about the DTV transition.
For example, we have formed a partnership with the U.S. Postal
Service, and are working with them on displaying DTV
information posters at over 37,000 Post Offices throughout the
Nation and in Puerto Rico.
Another example of how we are coordinating with other entities
is the two advisory committees--the Consumer Advisory Committee
(CAC) and the Intergovernmental Advisory Committee (IAC)--that
we recently chartered and instructed to focus their current
terms on the digital transition. The CAC recently submitted
recommendations to the Commission in our DTV Education
proceeding. Though the work of these committees, the Commission
will gain valuable insights that will further its goal of
ensuring that all consumers are aware of the transition.
Finally, on the Commission has initiated rulemaking proceedings
designed to better educate consumers about the transition. For
example, discussed above, earlier this year the Commission
issued a Labeling Order, which requires manufacturers and
retailers to affix a consumer alert to televisions with analog-
only broadcast tuners. And, we recently initiated a DTV
Education proceeding. This item sought comment on whether to
require the industry to use bill inserts, public service
announcements, and other techniques to educate consumers about
the transition. I hope and expect that the Commission will be
adopt this DTV Education Order imminently.
Question 12. Should the common carrier exemption be removed from
the Federal Trade Commission? What, if any, would be the disadvantage
to consumers if the exemption is removed?
Answer. The common carrier exemption, along with similar exemptions
for banking and other targeted industries, recognizes the unique role
of the FCC in regulating common carriers. Elimination of the exemption
could result in confusion if carriers are required to comply with
potentially conflicting rules and regulations. Such confusion would
benefit neither the industry nor the consumers they serve. That being
said, the FCC and the FTC even now have overlapping areas of interest
and jurisdictions, and frequently coordinate on a variety of issues,
such as the Do Not Call provisions of the Telemarketing Sales Rule,
caller identification or ``caller ID'' spoofing, and the sale of phone
records by data brokers. I agree with Chairman Majoras that ``[w]e have
worked together effectively in the past and will continue to do so.''
\1\
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\1\ http://www.ftc.gov/speeches/majoras/060821pffaspenfinal.pdf at
page 20.
Question 13. The Joint Board has published an important
recommendation that deals with potential revisions to the Federal
Universal Service high-cost fund in a comprehensive way. You attached
your opinion to the Joint Board's recommendation and voted to send it
to the full Commission for its deliberation over the next 12 months.
When do you plan to send it out for comment, and what specific schedule
do you foresee at the Commission on this subject? In other words, is
the Joint Board recommendation on a fast track for review by the
Commission?
Answer. The Commission will put the recommendations out for public
comment. As you note, the Commission must act on the recommendation
within 1 year. Further, the Commission has voted to seek comment on two
Notices of Proposed Rulemaking, one that would require that high-cost
support be based on each carriers' costs in the same way that rural
phone companies' support is based, and one that would explore the use
of reverse auctions for distributing support.
Question 14. On November 1, 2007, the Homeland Security Bureau
released a Further Notice of Proposed Rulemaking related to the
reconfigured 800 MHz band plan on the U.S.-Canada border region in
order to achieve the Commission's goals for band reconfiguration. The
terrain in the Puget Sound area combined with the proximity of densely
populated areas on both sides of the border, makes frequency
coordination and interference more difficult to manage than many other
border areas without this combination of geographic features. How will
the Commission's border region plan minimize such interference? Will
testing be required to validate the plan?
Answer. The Further Notice of Proposed Rulemaking (FNPRM) for the
U.S.-Canadian border area proposes a region-by-region approach that
takes into account the unique terrain of the Puget Sound area. To
prevent cross-border interference between U.S. and Canadian operations,
the proposal calls for U.S. licensees in the border area to be rebanded
to channel assignments on U.S. primary spectrum, while Canadian
licensees will continue to operate on Canadian primary spectrum. In
addition, the band plan proposal for Border Region 5, which includes
Washington State, is based in large part on a prior band plan submitted
by the NPSPAC regional planning committee for Washington (NPSPAC Region
43). Region 43 has also filed comments on the FNPRM proposal, which the
Commission will consider along with comments by other area licensees in
adopting a final band plan. Once the band plan is finalized, the
rebanding process requires the 800 MHz Transition Administrator (TA) to
take geography, system proximity, and other relevant factors into
account in assigning frequencies to rebanding licensees. System testing
is also a typical component of the process where necessary to verify
that the licensee's post-rebanding facilities will match the capability
of its pre-rebanding facilities.
Question 15. There are municipal 800 MHz radio systems operating in
Washington State that serve the entire state (Washington State
Department of Transportation) or communities with populations that
straddle both sides of line, 140 km line south of the U.S.-Canada
border. Will the Commission include an assessment of the impact of any
final border region plan will have on systems with operations that
extend beyond the border region?
Answer. Yes. In adopting a final band plan for the U.S.-Canadian
border area, the Commission will consider the impact of the band plan
on statewide and other systems that operate in both border and non-
border areas. The 800 MHz Transition Administrator (TA) will also take
this issue into account in assigning specific channels to these
licensees.
Question 16. The Boeing Company is an integral part of a public
safety response in areas surrounding their various facilities within
the border region. How do you ensure that any final border region plan
provides interference protection to Boeing equivalent to that provided
to public safety?
Answer. The Commission's orders provide that all licensees,
including Boeing, will receive the same level of interference
protection under the post-rebanding rules that they were afforded prior
to rebanding. Moreover, the new band plan will reduce actual
interference by providing more separation between commercial cellular
systems and other 800 MHz band users than existed previously. Finally,
once the final border area band plan is adopted, the 800 MHz Transition
Administrator (TA) will take Boeing's system configuration and
operational needs into account in assigning replacement channels to
Boeing.
Question 17. After the rebanding in Wave 4 is completed, do you
expect that the affected parties will have access to the same amount of
spectrum as before?
Answer. Yes. The Commission's orders provide that rebanding
licensees will receive comparable spectrum assignments, i.e., the same
number of channels under the new band plan that were assigned to them
under the old band plan. This principle applies to border and non-
border area systems alike.
Question 18. When the Commission adopted and revised the 700 MHz
Service Rules and Band Plan in the Second Report and Order on July 31,
2007, among other things, it consolidated the narrowband frequency
allocation in the 700 MHz public safety band, requiring existing
narrowband public safety licensees to shift their frequencies of
operation and reconfigure their systems. Several public safety
licensees, including Pierce Transit in Washington State, that were in
the midst of deploying their narrowband systems found themselves in an
impossible situation with respect to not being able to deploy the
remainder of their network and also with respect to ensuring there are
adequate fund available to reimburse affected licensees for
reconfiguring and rebanding their existing systems. What is the
timeline for the Commission to address the petitions for
reconsideration submitted by public safety licensees regarding this
issue?
Answer. The time period for oppositions and replies to petitions
for reconsideration of the Second Report and Order expired on October
26, 2007. The Commission is giving careful consideration to Pierce
Transit's petition for reconsideration and the associated record, as
well as to its request for waiver. The Commission has already granted a
partial waiver to the Commonwealth of Virginia on November 14, 2007, to
continue deployment of its system until Virginia's petition for
reconsideration is resolved. In granting that relief, we emphasized
that the prohibition on new narrowband operations after August 30 was
not intended to create hardship or delay systems needed to protect the
safety of life and property. This sentiment will inform our resolution
of the other pending petitions before us, including Pierce Transit's.
Question 19. With regard to Universal Service Fund potential
reforms, you have expressed your preference for a numbers-based
assessment approach as a new contribution methodology. Are you aware of
the potential negative impact that a numbers-based approach could have
on the users of low volume and free services? For example, in my state,
Community Voice Mail provides free essential telephone voice mail
service to the homeless.
Answer. I have urged that the Commission consider assessing
contributions based primarily on working telephone numbers rather than
interstate revenue. You raise concerns that a numbers-based approach
would shift the cost burden to low income people, the elderly, and
other low-volume users. The Commission is considering these concerns,
as well as other options for maintaining a sufficient and sustainable
collection mechanism. The Commission needs to ensure that consumers,
including low income consumers and those in rural and high-cost areas,
have access to quality services at affordable rates.
Question 20. In the event that the FCC moves forward with a
numbers-based contribution approach, will you incorporate limited
relief to allow exemptions for low use services?
Answer. I support reforming the current contribution system and
moving to a more competitively and technology neutral system based on
telephone numbers. Specifically, such an approach would help maintain
the stability of the fund by assessing all technologies used to make a
phone call on a similar basis. Nevertheless, as the Commission reviews
the various proposals to reform the current assessment system, it will
examine the potential impact of any course of action on all consumers.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Hon. Kevin J. Martin
Question 1. In October, I wrote to you expressing concerns about a
proposed new 10,000 watt commercial radio station on the 1700 AM
frequency in Rockland County, New York. If approved, this station would
force off the air eight Travelers Information Stations in New Jersey--
stations that are critical for public safety and emergency management.
Have you had the opportunity to review my letter, and what is the
current status of this proposed station?
Answer. Because your correspondence raised ex parte issues, the
Commission's Office of the General Counsel responded to your letter on
December 10, 2007.
Question 2. There has been recent activity--both at the FCC and in
the courts--regarding the rebanding of the 800 MHz spectrum. When do
you expect the rebanding to be completed?
Answer. The Commission had previously established June 26, 2008, as
the deadline for completion of rebanding in non-border regions.
Although Sprint Nextel has filed an appeal in the D.C. Circuit, which
will be heard later this year, the June 2008 deadline remains in
effect, and we expect a substantial number of licensees to complete the
process by that date. We also anticipate that some public safety
licensees with large and complex systems may require additional time to
complete the rebanding process. In such cases, the Commission will
consider licensee requests for waiver of the deadline, provided that
licensees can show that their requests are reasonable and that they
have been diligent in their rebanding efforts.
______
Response to Written Question Submitted by Hon. Thomas R. Carper to
Hon. Kevin J. Martin
Question. The Federal Communications Commission should be commended
for issuing its recent Notice of Proposed Rulemaking that considers
whether to authorize Big LEO Mobile Satellite Services operators to
provide ancillary terrestrial services on more of their assigned
spectrum. As you are aware, one such operator, Globalstar, and its
partner, Open Range Communications, need this authority in order to
pursue their plan to bring broadband services to more than 500 rural
communities across the country. Given the Commission's stated
commitment to promote the rapid deployment of advanced broadband
services to unserved and underserved areas, will you assure the
Committee that you will do all that it takes to complete this
proceeding in the time required for Globalstar and Open Range to move
forward with their business plan?
Answer. The Commission is committed to promoting the rapid
deployment of advanced broadband services to unserved and underserved
areas. In November 2007, the Commission released a NPRM seeking comment
on the relevant technical issues raised by Globalstar's request for
additional ATC. The NPRM was in response to Globalstar's request that
we initiate a rulemaking to expand the authority for Globalstar to
operate ATC spectrum from 11 GHz to all of the frequencies where
Globalstar is authorized to operate MSS, including those frequencies
Globalstar shares with other users and services. The comment cycle for
the NPRM closed on January 3, 2008. We received comments from nine
parties this past December, and we received reply comments from seven
parties. We are actively reviewing the record now, and will make all
efforts to resolve Commission action on this rulemaking promptly in
order for Globalstar and Open Range to move forward with their business
plan.
______
Response to Written Question Submitted by Hon. Ted Stevens to
Hon. Kevin J. Martin
Question. Kawerak, Inc., a non-profit consortium in Alaska has
requested me to submit this question to the Commission:
Does the Commission have the statutory authority to provide
Universal Service support to non-profit corporation tribal consortiums,
serving remote areas of Alaska, that provide education, welfare,
wellness, law enforcement, natural resources and economic development
services?
Kawerak is one of Alaska's tribal consortiums who provides several
services to remote areas of Alaska, and has expressed concern about
their ineligibility to receive Universal Service support because they
are unable to meet the precise definitions of health care or
educational service providers. Please address the requirements which
these tribal consortiums must meet in order to receive support.
If these tribal consortiums are unable to meet the Commission's
current requirements, please address whether a waiver process is
available for these entities.
Please also describe the specific steps which non-profit
corporation tribal consortiums must take to apply for, and receive,
support from the Universal Service Fund.
Answer. The United States and the Commission have a long history
and tradition of ensuring that rural areas of the country, and in
particular tribal lands, are connected and have similar opportunities
for communications as other areas. Our Universal Service program works
to promote investment in rural and tribal infrastructure and ensure
access to telecommunications services that are comparable to those
available in urban areas today, as well as provide a platform for
delivery of advanced services.
The eligibility criteria for any organization, including Kawerak,
to receive Federal Universal Service support is set forth in the
Telecommunications Act of 1996, as amended (1996 Act).
For the Universal Service Rural Health Care Program, section 254 of
the 1996 Act lists seven different types of entities that are eligible
to receive support. Specifically, the Act states that ``[t]he term
`health care provider' means--
(i) post-secondary educational institutions offering health
care instruction, teaching hospitals, and medical schools;
(ii) community health centers or health centers providing
health care to migrants;
(iii) local health departments or agencies;
(iv) community mental health centers;
(v) not-for-profit hospitals;
(vi) rural health clinics; and
(vii) consortia of health care providers consisting of one or
more entities described in clauses (i) through (vi).''
47 U.S.C. 254(h)(7)(B). The Commission's Universal Service Rural
Health Care Program rules parallel this statutory definition of health
care provider. See 47 C.F.R. 54.601(a)(2).
For the Universal Service schools and libraries (E-Rate) program,
section 254 of the 1996 Act states that elementary and secondary
schools are eligible for support, but states that ``[t]he term
`elementary and secondary schools' means elementary schools and
secondary schools, as defined in . . . the Elementary and Secondary
Education Act of 1965.'' 47 U.S.C. 254(h)(7)(A). That Act in turn
provides that the definition of elementary and secondary schools is
defined ``as determined under State law.'' 20 U.S.C. 7801(18), (38).
Commission staff stands ready to assist Kawerak, and any other
potential rural health care or E-Rate participant, in working within
the confines of the statute and program rules to obtain Universal
Service support. For your information, I have attached an overview of
the funding processes for the rural health care and E-Rate programs.
I understand that Kawerak has been found eligible to receive
Universal Service in the past. Kawerak, as part of a consortium
representing a dozen tribal organizations, received commitments for
over $200,000 in rural health care support from 1999 through 2006. I
expect that Kawerak would continue to be eligible to receive rural
health care Universal Service support in the future. Similarly, I
understand that, the Bering Strait School District, with whom Kawerak
partners, has received over $9 million in E-rate support since the
program's inception.
______
Universal Service Administrative Company
Overview of the Rural Health Care Program Process
Rural health care providers and service providers that participate
in the Rural Health Care Program have certain requirements and
responsibilities that must be met in order to receive support in a
timely manner. Below is an overview of the process.
All health care providers (HCPs) or consortia of HCPs seeking to
participate in the Rural Health Care Program must complete the
Description of Services Requested and Certification Form (Form 465) to
request bids from service providers for services to be used for the
provision of health care. A separate Form 465 must be completed for
each physical location within the consortia that is eligible to receive
support.
When a Form 465 is received from a new applicant, USAC confirms
eligibility. Once USAC reviews a Form 465 and determines it is
complete, it is posted on the USAC website and a letter is sent to the
health care provider to confirm the posting. The posting invites
service providers to bid to provide services. The posting date starts
the 28-day competitive bidding process. All health care providers
expecting support must complete the 28-day posting requirement before
entering into an agreement to purchase services with a service
provider.
A health care provider must consider all bids received and select
the most cost-effective method to meet its requirements. The most cost-
effective method is defined by the FCC as the method of least cost
after consideration of the features, quality of transmission,
reliability, and other factors relevant to choosing a method of
providing the required services.
To be eligible to receive telecommunications support, the selected
carrier must be a ``Common Carrier''. Any telecommunications service
and/or Internet access necessary for the provision of health care is
eligible for support, but equipment charges are not eligible for
support. All Internet service providers are eligible to participate in
the program; however, only the monthly charge is eligible for support.
Once the service providers and services are selected, the health
care provider completes and submits the Funding Request & Certification
Form (Form 466) and/or an Internet Service Funding Request &
Certification Form (Form 466-A). These forms specify the type(s) of
service ordered, the cost, the service provider(s), the terms of any
service agreements, and certifies that the selections were the most
cost-effective offers received.
USAC reviews the Form 466 and/or 466-A packet for accuracy. Upon
approval, USAC mails the health care provider a Funding Commitment
Letter (FCL) and a copy of the Receipt of Service Confirmation Form
(Form 467). A copy of the FCL is also sent to the service provider.
After the service begins from the service provider, the health care
provider submits Form 467 to USAC. Form 467 must be submitted in order
to receive discounted services. USAC cannot process Form 467 unless a
Funding Commitment Letter has been issued.
Once Form 467 is received, reviewed, and approved, USAC will send
the health care provider and its service provider(s) a health care
support schedule. At this point, the service provider can begin
crediting the bill with the monthly recurring support amount or issue a
check for the discount. As soon as the service provider has issued a
credit or check to the health care provider, the service provider
invoices USAC.
USAC will then credit or reimburse the carrier's Universal Service
Fund (USF) account. Those that do not have such an active USF account
and have not been issued a SPIN number by USAC must fill out an FCC
Form 498 and then reimbursement will be issued by check or direct
deposit.
Applicants--Schools and Libraries
Step 1: Determine Eligibility
Federal and state laws determine eligibility of schools, school
districts, and libraries.
Schools
In general, a school is eligible for Schools and Libraries support
if it meets the following eligibility requirements:
Schools must provide elementary or secondary education as
determined under state law.
Schools may be public or private institutional day or
residential schools, or public charter schools.
Schools must operate as non-profit businesses.
Schools cannot have an endowment exceeding $50 million.
In many cases, non-traditional facilities and students may be
eligible.
Eligibility of Head Start, Pre-Kindergarten, Juvenile
Justice, and Adult Education student populations and facilities
depends on state law definitions of elementary or secondary
education.
An Educational Service Agency, which may operate owned or
leased instructional facilities, may be eligible for Schools
and Libraries support if it provides elementary or secondary
education as defined in state law.
Libraries
Libraries must meet the statutory definition of library or library
consortium found in the 1996 Library Services and Technology Act (Pub.
L. 104-208) (LSTA) to meet eligibility requirements for Schools and
Libraries support.
Libraries must be eligible for assistance from a state
library administrative agency under that Act.
Libraries must have budgets completely separate from any
schools (including, but not limited to, elementary and
secondary schools, colleges and universities).
Libraries cannot operate as for-profit businesses.
Step 2: Develop a Technology Plan
The application process for Schools and Libraries support begins
with a technology assessment and a technology plan.
Schools, school districts, and libraries that want to apply for
Schools and Libraries support, commonly referred to as ``E-Rate,'' must
first prepare a technology plan. An approved technology plan sets out
how information technology and telecommunications infrastructure will
be used to achieve educational goals, specific curriculum reforms, or
library service improvements.
A technology plan designed to improve education or library services
should cover the entire funding year (July 1 to June 30) but not more
than 3 years. The plan must contain the following five elements:
Goals and realistic strategy for using telecommunications
and information technology.
A professional development strategy.
An assessment of telecommunication services, hardware,
software, and other services needed.
Budget resources.
Ongoing evaluation process.
The technology plan must be approved by an USAC-certified
technology plan approver before discounted services can begin. The
state is the certified technology plan approver for libraries and
public schools. Non-public schools and other entities that do not
secure approval of their technology plan from their states may locate
an USAC-certified technology plan approver here.
Applicants that seek Schools and Libraries Program support only for
basic telephone service do not need a technology plan.
Step 3: Open a Competitive Bidding Process (Form 470)
Applicants must file the Description of Services Requested and
Certification Form (Form 470) to begin the competitive process and must
ensure an open and fair competitive bidding process for specific
products.
Applicants must file a new Form 470 each funding year for requests
for tariffed or month-to-month services and for new contractual
services. When the Form 470 is filed, USAC will make it available to
interested service providers by posting it to the USAC website.
Applicants must:
Describe specific services or functions for support.
Identify the correct category of services:
telecommunications, Internet access, internal connections, or
basic maintenance of internal connections.
Identify recipients of services for support.
Follow all applicable state and local procurement laws.
Wait 28 days after the Form 470 is posted to the USAC
website or after public availability of your Request for
Proposals (RFP), whichever is later, before selecting a vendor
or executing a contract (see Step 4: Select the Most Cost-
Effective Service Provider).
Applicants may:
Use RFPs or other solicitation methods tailored to specific
needs and circumstances in addition to the required Form 470.
The Form 470 must be completed by the entity that will negotiate
for eligible products and services with potential service providers. A
service provider that participates in the competitive bidding process
as a bidder cannot be involved in the preparation or certification of
the entity's Form 470.
A new Form 470 is not required if an applicant intends to seek
discounts on services provided under a multi-year contract executed
under a posted Form 470 in a prior funding year.
Step 4: Select the Most Cost-Effective Service Provider
Applicants must select the most cost-effective provider of the
desired products or services eligible for support, with price as the
primary factor.
Waiting Period. At the conclusion of the 28-day waiting period
after the Description of Services Requested and Certification Form
(Form 470) is posted on the USAC website, the applicant may select a
vendor for tariffed or month-to-month services or execute a contract
for new contractual services.
Bid Evaluation. Applicants must construct an evaluation for
consideration of bids received in response to the posting of the Form
470 that makes price the primary factor in the selection of a vendor.
Contract Guidance. Applicants may also choose vendors from a State
Master Contract, execute multi-year contracts pursuant to a Form 470,
and enter into voluntary contract extensions, but certain additional
contract requirements apply. In all cases, applicants must comply with
state and local procurement laws.
Document Retention. Applicants must save all documentation
pertaining to the competitive bidding process and vendor selection for
5 years. Applicants must certify and acknowledge on the Form 470 and
the Services Ordered and Certification Form (Form 471) that they may be
audited and that they must retain all records that can verify the
accuracy of information provided.
Step 5: Calculate the Discount Level
An applicant that applies for Schools and Libraries Program support
for eligible services must calculate the discount percentage that it
and the schools or libraries it represents are eligible to receive.
Applicants use the Services Ordered and Certification Form (Form
471) to calculate the discount and begin by listing the recipients of
services for support. FCC rules include a discount matrix that takes
into consideration poverty level and the urban or rural location of the
participating entity. For detailed information about how to calculate
the percentage discount and complete the Block 4 Worksheet of Form 471,
read Form 471 Instructions for the Block 4 Worksheet.
Schools
The primary measure for determining Schools and Libraries
support discounts is the percentage of students eligible for
free and reduced lunches under the National School Lunch
Program (NSLP), calculated by individual school.
A school district applicant calculates its shared discount
by calculating a weighted average of the discounts of all
individual schools included in the school district.
Libraries
Library branches or outlets must obtain and use the NSLP
data for the public school district in which they are located
to calculate the discount.
A library system applicant calculates its shared discount by
calculating an average of the discounts of all library branches
or outlets included in the system.
Consortia
A consortium calculates its shared discount by calculating
the average of the discounts of all eligible libraries and
schools that are included in its membership.
Urban or Rural
Every school or library in the United States is located in
either a rural or an urban area, based on Metropolitan
Statistical Area (MSA) data.
The applicant must determine if the individual school or
library is rural or urban to properly calculate its percentage
discount.
Non-instructional Facilities
Non-instructional facilities that serve educational purposes may be
eligible to receive discounts on telecommunications and Internet access
services (Priority 1 services).
Step 6: Determine the Eligible Services
Applicants may request discounts for eligible products and services
delivered to eligible entities for eligible purposes.
Applicants file a Services Ordered and Certification Form (Form
471) to request discounts on the cost of eligible services to be
delivered to eligible schools, libraries, and consortia of these
entities. Eligibility for discounts requires that the product or
service is eligible and that it is put to an eligible use at an
eligible location by an eligible entity.
Four categories of eligible services have been established by the
Federal Communications Commission (FCC):
Telecommunications Services.
Internet Access.
Internal Connections.
Basic Maintenance of Internal Connections.
Services and products may be eligible, not eligible, or
conditionally eligible for support. The schools and libraries Eligible
Services List provides details about eligible equipment and services
and the conditions under which they are eligible.
Eligibility is based on criteria established by statute and FCC
rules.
Step 7: Submit Application for Support (Form 471)
The Services Ordered and Certification Form (Form 471) is the key
form used to assure that schools and libraries receive appropriate
Universal Service Fund support, comply with eligibility requirements,
and take steps to use the supported services effectively.
What to File
Form 471--Services Ordered and Certification Form
The Form 471:
1. May be filed online or on paper.
2. Must be certified by an authorized person to be considered
complete.
3. Must be postmarked or submitted online prior to the close of
the application filing window for the funding year to be
considered as filed within the window.
Form 471 Item 21 Attachment
Services and products for which discounts are requested must be
described on the Item 21 Attachment. Beginning with Funding Year 2006,
the Item 21 Attachment may be created and submitted online.
Form 471 Item 25 Certification
Applicants must certify that they have secured access to the
resources necessary to pay for:
1. The non-discounted portion of the costs for requested
eligible services within the funding year.
2. The ineligible products and services necessary to make
effective use of the eligible services requested.
After You File
Receipt Acknowledgement Letter
USAC will issue a Form 471 Receipt Acknowledgment Letter (RAL) to
both the applicant and service provider upon successful data entry of
the Form 471 and certification. Applicants should review the RAL and
submit allowable corrections to USAC.
Step 8: Undergo Application Review
Each application is reviewed to ensure that Universal Service Fund
support is committed only for eligible products and services as well as
eligible uses by eligible entities.
Review of All Applications
USAC reviews all Services Ordered and Certification Forms (Forms
471) to verify the accuracy of discount percentages and ensure that
support is committed only for eligible products and services. USAC is
committed to issuing timely Funding Commitment Decision Letters but its
ability to meet that goal depends on efficient processing of
application reviews.
Applicants can help speed up application reviews by:
Submitting a complete Form 471 including required
certifications and Item 21 Attachments for each funding
request.
Responding to requests for additional or clarifying
information within 15 days.
Verifying that USAC has correct contact information.
Selective Reviews
USAC selects some applicants for a Selective Review to ensure that
they are following certain FCC program rules. Applicants are asked to
provide the following information covering all of the billed entity's
Forms 471 for the funding year:
Documentation regarding their competitive bidding and vendor
selection process.
Documentation of their ability to pay their share of the
cost of the products and services eligible for schools and
libraries program support.
Proof that they have obtained the (ineligible) hardware,
software, professional development, electrical capacity or
other retrofitting, and maintenance necessary to make effective
use of the requested discounts.
View a sample Selective Review Information Request. Service
providers may not provide responses to Selective Review Information
Requests.
The result of a Selective Review may be that funding is approved or
denied. The applicant may also receive a Resource Deficiency Advisory
that explains the areas USAC finds to be deficient. Applicants should
consider increasing their level of investment in identified areas since
USAC may follow up in subsequent years regarding the necessary
resources.
Applicants may not receive direct or indirect help from service
providers to pay their non-discounted share.
Step 9: Receive Your Funding Decision
Following application review, USAC issues one or more Funding
Commitment Decision Letters (FCDLs) to both the applicant and the
service provider(s).
Program funding commitment decisions are issued in ``waves,'' or
regular cycles. Generally, funding year commitment waves will run on a
regular bi-weekly schedule until such time that the only remaining
applications are those held for heightened scrutiny.
For all certified, in-window applications, FCC rules of priority
are observed in processing funding requests:
Priority One--all eligible telecommunications and Internet
access services are fully funded first.
Priority Two--eligible requests for internal connections and
basic maintenance of internal connections from applicants with
highest discount levels receive next priority.
Applicants should carefully review their Funding Commitment
Decision Letter (FCDL) for details of approved or denied requests.
Prior to the start of services for which Universal Service Fund support
is approved, the applicant should review its technology plan status and
its status concerning compliance with the Children's Internet
Protection Act (CIPA).
If an applicant believes that its funding request has been
incorrectly reduced or denied, the applicant can appeal the decision to
USAC or to the FCC.
Step 10: Begin Receipt of Services
Before USAC can pay invoices, the billed entity must confirm: the
start date of services, approval of the technology plan, and compliance
with the Children's Internet Protection Act (CIPA).
To help USAC ensure that Universal Service Fund support is paid
only for services that have actually been delivered, applicants must
verify the start date of services and submit a Receipt of Service
Confirmation Form (Form 486).
Technology plans must be approved before services start and before
the applicant submits the Form 486. Applicants must be able to provide
a technology plan approval letter issued by a USAC-certified technology
plan approver. If the approval letter is posted on a website, the
applicant should print and retain a copy.
CIPA certifications are made on either Form 486 or the
Certification by Administrative Authority to Billed Entity of
Compliance with the Children's Internet Protection Act (Form 479)
depending on whether the applicant is the billed entity.
If the applicant is the billed entity, it must certify on
Form 486 that it is in compliance with CIPA or that CIPA does
not apply because funding requests are only for
telecommunications services.
If the applicant is not the billed entity, it must submit
Form 479 to the billed entity; the billed entity, as the
Administrative Authority, then submits Form 486 to USAC with
the CIPA certification. Applicants that are not the billed
entity do not submit Form 479 to USAC.
Applicants should read Form 486 Filing Information, Form 486
Instructions, and Form 479 Instructions for further information
including required filing dates.
Step 11: Invoice USAC
After eligible services have been delivered, service providers and
school and library applicants may submit invoices for Universal Service
Fund (USF) support.
FCC rules require USAC to pay Universal Service support to service
providers and not directly to applicants. However, two invoice methods
and program forms exist:
Service Provider Invoice (SPI) (Form 474)
Service providers may submit Form 474 to USAC seeking payment for
services:
After the service provider provides the services or
equipment to the applicant.
After the billed entity submits the Receipt of Service
Confirmation Form (Form 486) verifying the service start date.
After the service provider has provided a discounted bill to
the billed entity.
Billed Entity Applicant Reimbursement (BEAR) Form (Form 472)
The billed entity and the service provider must jointly submit the
BEAR form:
Following the receipt of discounted eligible services.
After the billed entity submits the Form 486.
After the billed entity has paid the total amount (including
the applicant's non-discount share and the amount of USF
support to be paid by USAC) to the service provider.
Determining Invoice Method
Applicants should work with service providers to include a
provision in contracts or service agreements specifying whether
customer bills will be the total cost of services or only the
customer's non-discount share. Service providers may provide applicants
with discounted bills and submit the SPI to request payment from USAC
for the amount of USF support to be paid. Service providers and
applicants may jointly submit the BEAR when the applicant has paid the
entire cost of services to the service provider. In all cases, USAC
pays support to the service provider.
Service Delivery and Invoice Deadlines
The date of the Funding Commitment Decision Letter determines
deadlines for service delivery and invoices. Under certain conditions,
applicants may request extensions of program deadlines.
______
Response to Written Questions Submitted by Hon. Olympia J. Snowe to
Hon. Kevin J. Martin
Question 1. While the issue of media ownership is not new and the
most recent proceeding has been open for approximately 18 months, only
28 days were provided for the public to comment on your specific
proposal to partially lift the newspaper/broadcast cross-ownership ban,
which has been in place for 32 years. This is deeply troubling due to
the critical nature of this issue and past FCC precedent.
For example, last month, the FCC provided 60 days for public
comment and reply for a proposal on amending pole attachments rules.
Earlier this month, the Commission gave 45 days for public comment and
reply on a rulemaking proposal on indefinitely extend the unanimously
popular Do-Not-Call List registration period. And, in November 2006,
the FCC granted 90 days for public comment and reply on the effects of
communications towers on migratory birds.
Since the FCC has historically given 60-90 days for public comment
and reply on critical proceedings and proposals, isn't it only
appropriate to do the same with the specific proposal you announced
last month? What is the impetus for providing only 28 days for the
public to comment on a specific proposal that was released only last
month? If the Commission delayed its vote on the media ownership
proposal and provided more time for the public to comment on it, what
harm would result?
Answer. While I appreciate your and others' concerns about my
decision to hold a vote on the media ownership Report and Order at the
December 18th meeting, I do not believe that further delaying that
decision would have been appropriate.
Over the past year and a half the Commission has had to grapple
with the most contentious and divisive issue to come before it: the
review of the media ownership rules. The Commission's Media Ownership
Order adopted on December 18, 2007, strikes a balance between
preserving the values that make up the foundation of our media
regulations while ensuring those regulations keep apace with the
marketplace of today.
Section 202(h) of the 1996 Telecommunications Act, as amended,
requires the Commission to periodically review its broadcast ownership
rules to determine ``whether any of such rules are necessary in the
public interest as a result of competition.'' It goes on to read, ``The
Commission shall repeal or modify any regulation it determines to be no
longer in the public interest.''
In 2003, the Commission conducted a comprehensive review of its
media ownership rules, significantly reducing the restrictions on
owning television stations, radio stations and newspapers in the same
market and nationally. Congress and the court overturned almost all of
those changes.
There was one exception. The court specifically upheld the
Commission's determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that ``. . .
reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.''
It has been over 4 years since the Third Circuit stayed the
Commission's previous rules and over 3 years since the Third Circuit
instructed the Commission to respond to the court with amended rules.
It is against this backdrop that the FCC undertook a lengthy,
spirited, and careful reconsideration of our media ownership rules.
First, we provided for a long public comment period of 120 days,
which we subsequently extended. We held six hearings across the
country: one each in Los Angeles, California; Nashville, Tennessee;
Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago, Illinois; and
Seattle, Washington. And, we held two additional hearings specifically
focused on localism in Portland, Maine and in Washington, D.C. The goal
of these hearings was to more fully and directly involve the American
people in the process.
We listened to and recorded thousands of oral comments, and allowed
for extensions of time to file written comments on several occasions.
We've received over 166,000 written comments in this proceeding.
We conducted ten independent studies. I solicited and incorporated
input from all of my colleagues on the Commission about the topics and
authors of those studies. We put those studies out for peer review and
for public comment and made all the underlying data available to the
public.
Although not required, I took the unusual step of publishing the
actual text of the one rule I thought we should amend. Because of the
intensely controversial nature of the media ownership proceeding and my
desire for an open and transparent process, I wanted to ensure that
Members of Congress and the public had the opportunity to review the
actual rule prior to any Commission action.
After engaging in this extensive process and providing the public
with unprecedented opportunities for input, the time had come to
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership
rules which Congress has directed us, by statute, to undertake.
Moreover, I felt strongly that we must provide certainty for a media
industry that has for several years operated in a climate of
uncertainty.
Question 2. Some have suggested that lifting the cross-ownership
ban would improve the dreadfully low percentages of woman and minority-
owned media since a woman or minority-owned newspaper could now buy a
broadcast station or vice versa. However, a June 2006 report by the
Free Press found that woman and minority owners are more likely to own
fewer stations per owner than their white and corporate counterparts--
they are more likely to own just a single station. This singular
ownership also seems to be the case for minority owned newspapers.
The report seems to suggest that financial reasons are behind the
inability of these groups to purchase additional media properties. They
just simply can't afford to expand given certain market and industry
conditions. Data also shows that the woman and minority-owned media
outlets typically are in more rural areas.
If women and minority owners aren't able to expand their media
operations due to financial reasons, and the current proposal only
lifts the cross-ownership ban in the top 20 markets, then how is the
proposal going to adequately address the disparity that exits with
women and minority media ownership?
Answer. I have not suggested that lifting the cross-ownership ban
would increase the percentage of women and minority owned media.
I share your concerns about increasing the opportunities for women
and minorities to own broadcast outlets. On December 18, 2007, the
Commission adopted a range of initiatives intended to enhance
opportunities for broadcast ownership for small businesses, including
women- and minority-owned entities. Many of the actions taken in this
Report and Order were recommended to the Commission by the Advisory
Committee for Diversity in the Digital Age. Among other things, the
item: (1) changes the construction permit deadlines to allow ``eligible
entities,'' defined as entities that meet the Small Business
Administration's criteria as small businesses that acquire expiring
construction permits additional time to build out the facility; (2)
revises the Commission's equity/debt plus attribution standard to
facilitate investment in ``eligible entities''; (3) modifies the
Commission's distress sale policy to allow certain licensees--those
whose license has been designated for a revocation hearing or whose
renewal application has been designated for a hearing on basic
qualifications issues--to sell the station to an ``eligible entity''
prior to the commencement of the hearing; (4) adopts an Equal
Transactional Opportunity Rule that bars race or gender discrimination
in broadcast transactions; (5) adopts a ``zero-tolerance'' policy for
ownership fraud and ``fast-tracks'' ownership-fraud claims; (6)
requires broadcasters renewing their licenses to certify that their
advertising sales contracts do not discriminate on the basis of race or
gender; (7) encourages local and regional banks to participate in SBA-
guaranteed loan programs in order to facilitate broadcast and
telecommunications-related transactions; (8) gives priority to any
entity financing or incubating an ``eligible entity'' in certain
duopoly situations; (9) considers requests to extend divestiture
deadlines in mergers in which applicants have actively solicited bids
for divested properties from ``eligible entities''; and (10) revises
the exception to the prohibition on the assignment or transfer of
grandfathered radio station combinations, permitting assignment or
transfer of grandfathered radio station combinations intact to any
buyer, not just an eligible entity as currently permitted, provided
that such a buyer files an application to assign the excess stations to
an eligible entity, or to an irrevocable divestiture trust for purposes
of ultimate assignment to an eligible entity, within 12 months after
consummation of the purchase of the grandfathered cluster.
Question 3. In its repeal and remand of the FCC's 2003 media
ownership rule changes, the Third Circuit Court of Appeals, in its
Prometheus decision, stated that it ``cannot uphold the Cross-Media
Limits themselves because the Commission does not provide a reasoned
analysis to support the limits that it chose.'' In addition, the court
stated ``our decision to remand the Cross-Media Limits also gives the
Commission an opportunity to cure its questionable notice.'' What do
you believe is the reasoned analysis that supports this change to the
media ownership rules?
Answer. As the Commission noted in the Media Ownership Order in
this proceeding, ``we received many comments from a broad range of
commenters, including broadcasters, newspapers, public interest groups,
unions, and individual citizens. While many commenters believe that
relaxation of the media ownership rules is necessary to promote our
goals and that the current rules must be revised or eliminated under
the statutory standard, many other commenters expressed significant
concerns about the general level and potential consequences of media
consolidation, including concerns that such consolidation results in a
loss of viewpoint diversity and negatively affects competition. In
addition, the Commission conducted or commissioned ten studies and
received numerous other studies in the record of the proceeding. The
Commission also conducted six media ownership hearings around the
country and heard widely divergent testimony from a number of
commenters and speakers at open microphones as to whether the media
ownership rules should be relaxed, retained, or even tightened. We have
carefully reviewed these comments, as well as the studies and the
testimony. Our approach herein is a cautious approach. By modestly
loosening the 32-year prohibition on newspaper/broadcast cross-
ownership, our approach balances the concerns of many commenters that
we not permit excessive consolidation with concerns of other commenters
that we afford some relief to assure continued diversity and investment
in local news programming.''
Based on all of the foregoing, we concluded that the newspaper/
broadcast cross-ownership ban should be modestly relaxed and that our
other media ownership rules should remain unchanged. As the Commission
stated, ``. . . we cannot ignore the fact that the media marketplace is
considerably different than it was when the newspaper/broadcast cross-
ownership rule was put in place more than thirty years ago. Back then,
cable was a nascent service, satellite television did not exist and
there was no Internet. Indeed, the newspaper/broadcast cross-ownership
rule is the only rule not to have been updated in 3 decades, despite
the fact that FCC Chairmen--both Democrat and Republican--have
advocated doing so.''
Consumers have benefited from the emergence of new sources of news
and information. But according to almost every measure newspapers are
struggling. For example, at least 300 daily papers have stopped
publishing over the past thirty years and circulation and advertising
revenues at approximately half of all U.S. dailies has dropped
precipitously in recent years. Permitting cross-ownership can preserve
the viability of newspapers by allowing them to share their operational
costs across multiple media platforms. In the order, the Commission
explained that ``the revised newspaper/broadcast cross-ownership rule
would allow a newspaper to purchase a radio station in the largest 20
cities in the country or a television station in such cities--but not
one of the top four television stations--as long as 8 independent major
voices remain in the market. This relatively minor loosening of the ban
on newspaper/broadcast cross-ownership in markets where there are many
voices and sufficient competition will help strike a balance between
ensuring the quality of local news gathering while guarding against too
much concentration.''
The Commission has applied the positive presumption only in the
largest markets based on the evidence in the record that the twenty
largest markets contain a robust number of diverse media sources and
that the diversity of viewpoints would not be jeopardized by certain
newspaper/broadcast combinations. The record also shows that newspaper/
broadcast combinations can create synergies that result in more news
coverage for consumers. In short, the new rule lifts the complete ban
but does so in a modest manner in order to ensure both that the
Commission's goals of competition, localism, and diversity are not
compromised and that the Commission may achieve the economic benefits
of allowing certain combinations.
The Commission's determination to draw that line at the top twenty
markets is reasonable and well supported by the record, based on an
examination of the media marketplace in the largest DMAs in the
country. The Commission stated in the order that it had ``evaluated the
range of media outlets available in the top 20 DMAs, and concluded that
diversity in those largest markets is healthy and vibrant in comparison
to all other DMAs. For example, while there are at least 10
independently owned television stations in 18 of the top 20 DMAs, none
of the DMAs ranked 21 through 25 have 10 independently owned television
stations. Additionally, while seventeen of the top 20 DMAs have at
least two newspapers with a circulation of at least 5 percent of the
households in that DMA, four of the five DMAs ranked 21 through 25 have
only one such newspaper. Moreover, the top 20 markets, on average, have
15.5 major voices (independently owned television stations and major
newspapers), 87.8 total voices (all independently owned television
stations, radio stations, and major newspapers), and approximately 3.3
million television households. Markets 21 through 30, by comparison,
have, on average, 9.5 major voices, 65.0 total voices, and fewer than
1.1 million television households, representing drops of 38.5 percent,
25.9 percent, and 56.3 percent from the top 20 markets, respectively.
Markets 31 through 40 and 41 through 50 have average numbers of voices
for each category similar to markets 21 through 30, and even fewer
television households on average, 837,800 and 679,200, respectively.
Markets 50 through 210 show even more dramatic drops, with on average,
6.7 major voices, 31.2 total voices, and approximately 231,000
television households, representing drops of 56.4 percent, 61.7
percent, and 90.7 percent from the top 20 markets, respectively. The
diversity in the number and types of traditional media outlets in the
largest markets ensures that the public is well served by antagonistic
viewpoints. Markets outside of the top 20 DMAs do not feature diversity
to such an extent.
We have selected the number eight for the major media voice count
because we are comfortable that assuring that minimum number of major
media voices in the top 20 markets--along with the other unquantified
media outlets that are present in those markets--will assure that these
markets continue to enjoy an adequate diversity of local news and
information sources. As noted above, there are at least 10
independently owned television stations and two major newspapers in the
great majority of the top 20 markets. Further, all of those markets
have at least eight television stations and one major newspaper. As we
do not want to allow a significant decrease in the number of
independently owned major media voices in any of those markets, we will
presume that a merger is in the public interest only if at least eight
major media voices will remain post-merger.''
Question 3a. It doesn't seem that providing only 28 days to have
the public comment on the specific changes to the media ownership rule
that you propose, or only 5 day's notice for the localism and media
ownership hearings in Washington, D.C. and Seattle, WA wouldn't satisfy
the requirements of the court--wouldn't you agree?
Answer. While I appreciate your and others' concerns about my
decision to hold a vote on the media ownership Report and Order at the
December 18th meeting, I do not believe that further delaying that
decision would have been appropriate.
Over the past year and a half the Commission has had to grapple
with the most contentious and divisive issue to come before it: the
review of the media ownership rules. The Commission's Media Ownership
Order adopted on December 18, 2007, strikes a balance between
preserving the values that make up the foundation of our media
regulations while ensuring those regulations keep apace with the
marketplace of today.
Section 202(h) of the 1996 Telecommunications Act, as amended,
requires the Commission to periodically review its broadcast ownership
rules to determine ``whether any of such rules are necessary in the
public interest as a result of competition.'' It goes on to read, ``The
Commission shall repeal or modify any regulation it determines to be no
longer in the public interest.''
In 2003, the Commission conducted a comprehensive review of its
media ownership rules, significantly reducing the restrictions on
owning television stations, radio stations and newspapers in the same
market and nationally. Congress and the court overturned almost all of
those changes.
There was one exception. The court specifically upheld the
Commission's determination that the absolute ban on newspaper/broadcast
cross-ownership was no longer necessary. The court agreed that ``. . .
reasoned analysis supports the Commission's determination that the
blanket ban on newspaper/broadcast cross-ownership was no longer in the
public interest.''
It has been over 4 years since the Third Circuit stayed the
Commission's previous rules and over 3 years since the Third Circuit
instructed the Commission to respond to the court with amended rules.
It is against this backdrop that the FCC undertook a lengthy,
spirited, and careful reconsideration of our media ownership rules.
First, we provided for a long public comment period of 120 days,
which we subsequently extended. We held six hearings across the
country: one each in Los Angeles, California; Nashville, Tennessee;
Harrisburg, Pennsylvania; Tampa Bay, Florida; Chicago, Illinois; and
Seattle, Washington. And, we held two additional hearings specifically
focused on localism in Portland, Maine and in Washington, D.C. The goal
of these hearings was to more fully and directly involve the American
people in the process.
We listened to and recorded thousands of oral comments, and allowed
for extensions of time to file written comments on several occasions.
We've received over 166,000 written comments in this proceeding.
We conducted ten independent studies. I solicited and incorporated
input from all of my colleagues on the Commission about the topics and
authors of those studies. We put those studies out for peer review and
for public comment and made all the underlying data available to the
public.
Although not required, I took the unusual step of publishing the
actual text of the one rule I thought we should amend. Because of the
intensely controversial nature of the media ownership proceeding and my
desire for an open and transparent process, I wanted to ensure that
Members of Congress and the public had the opportunity to review the
actual rule prior to any Commission action.
After engaging in this extensive process and providing the public
with unprecedented opportunities for input, the time had come to
respond to the Third Circuit's remand, which is now more than three-
and-a-half years old, and complete the review of our media ownership
rules which Congress has directed us, by statute, to undertake.
Moreover, I felt strongly that we must provide certainty for a media
industry that has for several years operated in a climate of
uncertainty.
Question 4. In July of this year, the Commission released ten
research studies on media ownership, which were intended to inform the
Commission's comprehensive review of its broadcast ownership policies
undertaken in its rulemaking proceeding. The studies, which were
conducted by outside researchers and by Commission staff, examined a
range of issues that impact diversity, competition, and localism--the
three important policy goals of those rules.
The Consumer Federation of America, Consumers Union and Free Press
jointly filed comments to the FCC in regards to these 10 studies. The
commenters called the studies a ``collection of inconsistent,
incompetent and incoherent pieces of research cobbled together to prove
a foregone conclusion.'' More so, they stated that the peer reviews of
the studies did not follow required procedures and, due to this,
violated Office of Management and Budget guidelines on the
implementation of the Data Quality Act. What is your assessment on the
integrity of how the studies were conducted?
Answer. The Commission, in its Media Ownership Order, rejected the
complaints filed by Free Press, Consumer Federation of America, and
Consumers Union claiming that the Commission violated the Data Quality
Act (``DQA'') and guidelines issued by the Office of Management and
Budget (``OMB'') implementing the DQA. Free Press alleges that the
Commission violated the DQA by failing to give interested parties
sufficient time to ``reproduce'' the results of those studies. The
Commission concluded that ``neither the DQA nor the OMB guidelines
requires a Federal agency to allot time in a rulemaking proceeding for
third parties to reproduce the results of studies released by the
agency. Moreover, the facts belie the allegation that Free Press had
insufficient time to review the studies.''
The Commission ``made available for inspection the bulk of the non-
proprietary data underlying the studies beginning on July 31, 2007, and
released the proprietary data under a Protective Order by September 6,
2007. In response to a request from Free Press, the Media Bureau
extended the deadline for submitting comments on the studies from
October 1 to October 22, 2007, and extended the deadline for reply
comments from October 16 to November 1, 2007. Thus, Free Press had 46
days after September 6 to prepare comments and 10 more days to prepare
reply comments. Free Press took full advantage of the extended comment
period--it filed nearly 2,500 pages of comments on the studies. We find
that Free Press had adequate time to review the data underlying the
studies and to reproduce their results.''
The Commission also ``rejected the complaints filed by Free Press
and other commenters that the Commission failed to comply with the peer
review guidelines promulgated by OMB. The OMB Bulletin provides for the
peer review of disseminations of scientific information containing
`findings or conclusions that represent the official position of one or
more agencies of the Federal Government.' It requires Federal agencies
to ensure that its official disseminations have met rigorous standards
of quality control through a peer review mechanism or to put the public
on notice that the information has not been through a rigorous quality
review. The Bulletin expressly provides that it is intended to improve
the internal management of the Executive Branch and that it does not
create any enforceable legal rights.''
The Commission concluded that ``Free Press incorrectly claims that
the Commission acted contrary to the OMB Bulletin by releasing the 10
media ownership studies prior to completing peer reviews of the
studies. The Commission posted the media ownership studies to its
website on July 31, 2007, shortly after they were completed, in order
to give the public and the peer reviewers access to their contents
expeditiously. The Commission issued a Public Notice that same day
requesting public comment on the studies. The Public Notice
specifically stated that the studies had not yet been peer reviewed;
accordingly, the public was accurately informed that the studies at
that point did not necessarily meet rigorous quality review standards.
In addition, it was clear from the disclaimers on some of the studies
that those particular studies did not represent the agency's official
view. In order to forestall any confusion on this point, the Commission
posted an explanatory disclaimer with regard to each of the studies on
the web page that is the public's primary access point to them, making
it clear that they do not represent the Commission's official views,
and were not being disseminated as such. Furthermore, the Media Bureau
extended the comment period on the studies until November 1, 2007. The
extension of time allowed a total of 58 days from the posting of the
peer reviews on September 4, 2007, and more than 90 days from the
posting of the studies for public review and comment on July 31,
2007.''
Moreover, the Commission noted that ``it accepts ex parte filings
from members of the public past the end of the formal comment period,
which gives parties an opportunity to supplement the record with
additional information. Thus, the public has been afforded ample time
to review and comment on the studies after completion of the peer
reviews.''
Furthermore, the Commission concluded that ``the record clearly
indicates that the public had ample notice of our peer review plans,
although Free Press attempts to make much of the fact that the peer
review plans were not filed on a separate web page. Beginning with the
initial Public Notice announcing the commissioning of the 10 studies on
November 22, 2006, the Commission continuously informed the public of
its peer review process through periodic Public Notices and updates to
its Media Ownership website. The Commission posted on its website the
study topics (November 22, 2006); the completed studies (July 31,
2007); the peer review charge letters (August 28, 2007); and the
completed peer review reports (September 4, 2007). The Commission's
July 31, 2007 Public Notice established a pleading cycle for public
comment on the studies. The peer review charge letters and peer review
reports were made available to the public on the Commission's website
well before the end of the comment period. In addition, charge letters
were posted to the website in advance of the posting of the actual peer
review reports. Accordingly, the public was adequately informed of the
peer review process being conducted, and has had adequate opportunity
to comment on the elements of the FCC's peer review process in this
proceeding.''
The Commission also noted that ``Free Press's complaint does not
raise concerns about the validity of the Commission's peer review
process, and there is no basis for any. The OMB Bulletin expressly
provides that agencies have ``broad discretion'' to use particular peer
review mechanisms suitable to a particular information product. The
Commission has exercised its discretion in a reasonable manner in the
course of this proceeding. All of the studies that the Commission
requested to be conducted were peer reviewed by unaffiliated experts,
and four of them were peer reviewed by multiple reviewers. One study
was revised as a result of the peer review, and the authors of another
study submitted new calculations with their responses to the peer
reviews. Twenty-two quantitative studies submitted by third parties in
the docket were peer reviewed, and the results were posted for further
public comment. The Commission's peer review process has improved the
quality of the studies submitted to the Commission for its information
in this proceeding. Although Free Press would have preferred a far more
elaborate and time-consuming peer review process, this process was not
required under the OMB Bulletin nor would it have improved appreciably
upon the Commission's robust, extended process for independent review
and public comment.''
Question 4a. These groups also performed research, utilizing the
FCC's own data, which actually showed relaxing the newspaper/broadcast
cross-ownership rules resulted in a net loss in the amount of local
news that is produced across local markets by broadcast stations. The
commenters stated ``at the market level, cross-ownership results in the
loss of an independent voice as well as a decline in market-wide news
production.'' Have you all reviewed these comments? At the very least,
these claims raise serious doubts as to the validity of any relaxation
of media ownership rules and begs for closer examination of the data
before you enact any changes to the media ownership rules--wouldn't you
agree?
Answer. The Commission carefully reviewed the comments of the
Consumer Federation of America, Consumers Union, and Free Press
(``CU''). The Commission concluded that ``[d]ue to numerous
difficulties with CU's analysis, we find that we cannot rely on its
conclusions.''
First, ``[i]t is not clear what measure CU used for total quantity
of local news, but it appears that the measure is limited to broadcast
television news, which measures only a portion of local news, and
ignores local news from newspapers, radio, local cable news stations,
and other sources. As a result, CU's measurements are incomplete, and
we cannot rely upon them.''
Second, ``. . . the thrust of CU's argument is that if cross-
ownership does not increase total local news (as CU measures it), the
ban should be maintained. This argument may have been formed because CU
statistical results do not show a statistically significant effect of
cross-ownership. This lack of statistical significance may arise from
CU's choice of specification and measure of local news, and as such may
be unreliable.''
Finally, ``Media General submits a critique of CU's criticisms that
agrees with these findings. In his Econometric Review, Dr. Harold
Furchtgott-Roth states that CU makes several economic and econometric
mistakes that undermine the reliability of its results. First, he
states that CU's decision to examine the effect of cross-ownership by
aggregating to the market level is incorrect. CU's revised regressions
fail to measure total news and diversity of news at the market level.
In addition, he states that one of the strongest predictors of the
quantity of broadcast news in a market would be the number of stations
in the market. That variable, however, is omitted in the specifications
by CU, resulting in regressions that are much less precise. We agree
that it is improper to aggregate to the market level without adjusting
for the number of outlets in the market.''
Question 5. One of the statements being made about the DTV
transition is that ``Television sets connected to cable, satellite or
other pay TV service do not require converters.'' However, it is my
understanding this may not be totally true for certain satellite
subscribers, primarily in rural areas like the town of Presque Isle,
Maine due to the issue of local-into-local service, which is when a
satellite company provides its subscribers with all of the local
broadcast TV stations in that market.
While satellite companies do offer local-into-local in most of the
media markets, it is not available to all 210 media markets--it seems
as if the service is not available to approximately 60 rural markets in
about 30 states.
Is this correct? And if so, what impact will the DTV transition
have on households that subscribe to satellite in areas that do not
have local-into-local service? If they have a TV with an analog tuner
will they also need to purchase a converter box? Is the FCC working
with the satellite companies to make sure they expand the local-into-
local service to cover all 210 media markets before the DTV transition?
If not, wouldn't this be an appropriate thing to do to alleviate any
consumer confusion that would result from inaction?
Answer. Although neither of the two major satellite television
carriers, DIRECTV and DISH Network, offers local-into-local service in
all of Nielsen's 210 Designated Market Areas (``DMAs''), 179 markets
receive local-into-local service and more than 97 percent of U.S.
households are in markets in which satellite-delivered local stations
are available.
DIRECTV offers local-into-local service in 144 DMAs today, and is
in the process of launching local-into-local service in an additional
six markets for a total of 150 DMAs. DISH Network currently provides
local-into-local service in 167 markets.
The reason for less than 100 percent local-into-local service is
that, unlike the statutory cable ``must-carry'' requirements that
require all cable systems throughout the country to carry local
stations, the statutory requirements for satellite carriage give
satellite carriers a choice of whether or not to carry local stations
in a market. Specifically, Congress enacted the Satellite Home Viewer
Improvement Act of 1999 (``SHVIA'') to allow, but not require,
satellite carriers to offer local stations pursuant to a statutory
copyright license. Satellite carriers that choose to use the statutory
copyright license to offer one or more stations in a market must carry
all the stations in the market that request carriage. This is known as
``carry one, carry all.'' In 2004, Congress amended the statute to
require carriage (``must carry'') in Alaska and Hawaii.
We have asked the satellite carriers about their plans for
eventually serving all of the 210 markets and will continue to work
with them as they develop improved technology.
Question 6a. Over the summer it was reported that FCC staff
inspected about 1,100 retail stores around the country, as well as
retailers' websites, to monitor compliance with FCC DTV label rules. As
a result of those inspections, the Commission issued more than 260
citations notifying retailers of violations, which results in about a
76 percent compliance rate.
Obviously, not the best figure, mainly with the holiday season that
we are in the middle of. People buying a new TV may not be aware or
will be misinformed that their new TV will not accept over-the-air
digital signals and therefore need to buy more equipment to accommodate
the transition. Has the FCC performed any additional inspections to
determine if the label compliance rate has improved any?
Answer. We are continuing to inspect retail stores and websites to
assess compliance with our DTV label rules.
As of February 5, 2008, the Commission has conducted 1,688
inspections of retailer stores and websites to assess compliance with
the DTV label rules. Based on our inspections, we believe that retailer
compliance with the DTV label rules has improved since our inspections
began.
We have now issued 309 citations for violations of the DTV label
rules. Additionally, some inspections identified violations by
retailers against which the Commission had already issued a citation.
In those cases, no citation was issued because the violations will be
addressed in a Notice of Apparent Liability for forfeiture. We also
have fourteen NALs on circulation for such violations and released six
more NALs in October.
Most of these violations, however, occurred during the summer
months. More recent inspections have found relatively few problems.
Indeed, we have re-inspected several stores that previously had
violations and found them fully compliant with our rules.
Question 6b. Also has the Commission recorded any consumer
complaints and confusion about DTV versus HDTV? While most high-
definition TVs can receive digital signals not all the can and the
concern is that it might lead to confusion at the retailer or at home.
Answer. Although we have not received any specific complaints on
this issue, we have heard anecdotally at outreach events about some
consumer confusion regarding DTV and HDTV. We let consumers know that
if they want to purchase a new TV, a digital television (also known as
a ``standard definition'' TV) is all that is required, and that these
TVs are comparably priced to similar sized analog televisions.
Question 7. Over the past several months there have been incidents
that have raised serious concern about the phone and cable companies'
power to discriminate against content. In September, Verizon Wireless
arbitrarily chose to block a series of text messages on the grounds
that the subject matter was too controversial. While the carrier, to
its credit, reversed this decision, this illustrates its power as a
content gatekeeper. Then came the news that AT&T reserves the right it
its Terms of Service to discontinue the service of customers that
criticize the company. In October, the Associated Press reported that
Comcast was interfering with the popular file-sharing, peer-to-peer
service BitTorrent.
Senator Dorgan and I have requested that this committee hold a
hearing to consider the issue of content discrimination and investigate
these incidents further to determine if they were based on legitimate
business and network management policies or part of practices that
would be deemed unfair and anti-competitive.
We also wrote you a letter, dated October 14, requesting the
Commission's position on the Verizon Wireless-NARAL text messaging
incident. To this date we have not heard any response from your office.
Do you know the status of that response? Also, do you feel that any of
these events could have been appropriately and effectively addressed by
the FCC's Four Internet Freedom Principles or any other FCC regulation
that is in place?
Answer. A response to the letter sent by you and Senator Dorgan was
transmitted to your office under separate cover. The Commission adopted
an Internet Policy Statement with four policy principles aimed at
protecting consumers' access to the lawful Internet content of their
choice, and ensuring the free flow of information across networks. The
activities attributed to Verizon Wireless, however, involved wireless
text messages rather than access to Internet content. Although neither
Congress nor the Commission has addressed text messaging, I believe
that the principle of ensuring consumer access to content on the
Internet generally applies to providers of text messaging services as
well. For this reason, I have directed the Enforcement Bureau to
initiate an investigation into such practices. In addition, the
Commission has sought public comment on a Petition for Declaratory
Ruling filed by several public interest groups to clarify the
regulatory status of text messaging services, including short-code
based services sent from and received by mobile phones.
Question 8. It was recently disclosed a proposal is circulating
that would reinstate cable system ownership limits at 30 percent of the
national market. Many, including myself, have been long been concerned
about the lack of wireline cable competition and rising price of cable
service.
Specifically, the FCC recently stated that ``the average cost of
cable has almost doubled from 1995 to 2005, increasing 93 percent,
while the cost of other communication services fell. The cable industry
needs more competition and we will continue to act to bring more
competition and its benefits to consumers.''
The initial cable ownership cap stemmed from a FCC change in 1992
as a result of the 1992 Cable Act, which directed the FCC to establish
limits on the number of subscribers a cable operator may serve and on
the number of channels a cable operator may devote to affiliated
programming. What are the pros and cons of implementing a cable
ownership cap to bringing more competition, and benefits or lower
prices to consumers?
Answer. Congress passed the Cable Television Consumer Protection
and Competition Act of 1992 to promote increased competition in the
cable television and related markets. The 1992 Cable Act added
structural rules intended to address the consequences of increased
horizontal concentration and vertical integration in the cable
industry. A principal goal of this statutory framework was to foster a
diverse, robust, and competitive market in the acquisition and delivery
of multichannel video programming.
Congress intended the structural ownership limits of Section 613(f)
to ensure that cable operators did not use their dominant position in
the multichannel video programming distribution (``MVPD'') market, to
impede unfairly the flow of video programming to consumers.
Specifically, Congress directed that ``[i]n prescribing rules and
regulations . . . the Commission shall, among other public interest
objectives . . . ensure that no cable operator or group of cable
operators can unfairly impede, either because of the size of any
individual operator or because of joint actions by a group of operators
of sufficient size, the flow of video programming from the video
programmer to the consumer . . . ensure that cable operators affiliated
with video programmers do not favor such programmers in determining
carriage on their cable systems or do not unreasonably restrict the
flow of the video programming of such programmers to other video
distributor . . . take particular account of the market structure,
ownership patterns, and other relationships of the cable television
industry, including the nature and market power of the local franchise,
the joint ownership of cable systems and video programmers, and the
various types of non-equity controlling interests . . . account for any
efficiencies and other benefits that might be gained through increased
ownership or control . . . make such rules and regulations reflect the
dynamic nature of the communications marketplace . . . not impose
limitations which would bar cable operators from serving previously
unserved rural areas; and . . . not impose limitations which would
impair the development of diverse and high quality video programming.''
Communications Act 613(f)(2)(A)-(G), 47 U.S.C. 533(f)(2)(A)-(G).
Question 8a. Back in 1992, there was little, if any, competition in
the cable industry. Now, we have seen satellite TV providers reach
approximately 30 million subscribers and telephone companies rolling
out digital TV services. How might a 1992 cable ownership cap directive
affect the cable industry in a 2007 market?
Answer. In today's 2007 marketplace, the average cost of cable is
increasing dramatically. The Commission has found, ``overall, cable
prices increased more than 5 percent last year and by 93 percent since
the period immediately prior to Congress's enactment of the
Telecommunications Act of 1996. Expanded basic prices rose more than 6
percent or twice the rate of inflation last year. Prices are 17 percent
lower where wireline cable competition is present. DBS competition does
not appear to constrain cable prices--average prices are the same as or
slightly higher in communities where DBS was the basis for a finding of
effective competition than in noncompetitive communities. Finally,
increases in programming expenses were equivalent to more than half of
the overall increase in prices for the basic and expanded basic
tiers.''
______
Response to Written Question Submitted by Hon. David Vitter to
Hon. Kevin J. Martin
Question. Louisiana has the fifth highest rate of households
without access to a phone in the nation, so payphones remain a vital
communication method in many communities. As I have pointed out before,
payphones were the only way many families were able to communicate
after the hurricanes in 2005. I am told that payphone service providers
in my state will find it difficult to continue to deploy payphones at
current levels if they are not fairly compensated as the rules require.
I understand that payphone service providers are compensated for
their non-coin calls from a rule developed by the FCC. Those rules
require payphone providers to collect from several hundred different
carriers and prepaid card providers, but payphone service providers may
not legally block the phone numbers of providers who do not compensate
them. This policy is good for payphone users, but it requires a
concurrent effort by the FCC to ensure that payphone service providers
are fairly compensated to be able to maintain service.
I have been told that, even after the revised rules from 2004,
payphone service providers are dealing with many carriers and prepaid
payphone card providers who continue to avoid paying the required
compensation. As I understand the situation, the FCC has initiated very
few actions to enforce these payphone compensation rules. Please let me
know what specific actions have been taken within the last year to
rectify the problem of non-payments and what action you may anticipate
will be necessary going forward.
Answer. On September 30, 2003, in the Tollgate Order, the
Commission adopted the current payphone compensation rules to ensure
that payphone service providers (PSPs) are fairly compensated for each
and every completed, payphone-originated call, as required under
section 276 of the Telecommunications Act of 1996. The Tollgate Order
and its implementing rules became effective on July 1, 2004.
On September 13, 2006, the Commission's Wireline Competition Bureau
released a Public Notice reminding carriers of their obligations under
the payphone rules, and also reiterating that it will not hesitate to
take enforcement action, including imposing forfeitures, should
carriers fail to comply with their compensation and reporting
obligations.
The Commission addresses both formal and informal complaints
between industry participants, including compensation disputes between
payphone service providers and carriers, and investigates possible
violations of the Commission's rules and the Communications Act of
1934, as amended, (the Act), including the Commission's payphone
compensation rules.
In February 2007, the Commission issued an order in a formal
complaint proceeding requiring a carrier to pay payphone service
providers and their agents more than $2.7 million in damages plus
prejudgment interest for billing and collection.
Additionally, during this period, 38 informal complaints seeking
payphone compensation were filed. Informal complaints are geared toward
allowing the parties to attempt to resolve disputes among themselves
through negotiations and without resort to formal complaint litigation,
if possible. In that regard, 14 of the informal complaints filed in
2007 have already been resolved by the parties, and a number of others
are currently under active negotiations. Under the Commission's rules
complainants may file formal complaints if the negotiations do not
succeed.
The Commission recognizes the importance of payphones and we are
committed to enforcing the payphone compensation rules. The Commission
must ensure that the mandate of section 276 of the Act, ``to promote
the widespread deployment of payphone services'' by ``ensur[ing] that
all payphone service providers are fairly compensated for each and
every completed intrastate and interstate call using their payphone''
is realized.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Kevin J. Martin
Question 1. The FCC has commissioned 10 economic studies on media
ownership and its effect on news and other programming. According to
these studies, how does cross-ownership effect local content and
political slant? Does this outcome differ by the size of the media
market? In other words, how does the cross-ownership ban impact local
content and political slant in the largest 20 markets compared to
effects in smaller markets around the country? What has been the
experience of markets which had companies grandfathered in under old
media ownership rules?
Answer. The Commission concluded that ``[t]hree Media Ownership
studies analyzed the effects of newspaper/broadcast cross-ownership on
television news coverage and local content.'' Study 6 (``The Effects of
Cross-Ownership on the Local Content and Political Slant of Local
Television News,'' authored by Jeffrey Milyo) examined the effects of
cross-ownership on local news. The study ``concluded that `local
television newscasts for cross-owned stations contain on average about
1-2 minutes more news coverage overall, or 4 to 8 percent more than the
average for non-cross-owned stations.' The author further concluded
that newspaper cross-ownership is also `significantly and positively
associated with both local news coverage and local political news
coverage,' finding that cross-owned stations show 7 to 10 percent more
local news than do non-cross-owned stations. The study author also
found that on average, cross-owned stations broadcast about 25 percent
more coverage of state and local politics. The author also generally
noted that newspaper/broadcast cross-ownership is associated with more
candidate coverage, more candidate speaking time and more coverage of
opinion polls.' '' Study 6 also focused on the political slant of TV
stations and concluded that television stations cross-owned with
newspapers exhibit a slight and statistically insignificant Republican-
leaning slant in content.
The Commission concluded that Study 3 (``Television Station
Ownership Structure and the Quantity and Quality of TV Programming,''
authored by Gregory Crawford) ``analyzed the relationship between the
ownership structure of television stations and quantity and quality of
television programming between 2003 and 2006, finding that cross-owned
television stations broadcast (approximately 3.0 percentage points)
more local news programming''.
The Commission found that ``Study 4.1 (``The Impact of Ownership
Structure on Television Stations' News and Public Affairs Programming''
authored by Daniel Shiman) collected data on the news and public
affairs programming provided by television stations and analyzed the
relationship between the quantity of such programming and the ownership
structure of each television station. After examining the programming
of approximately 1,700 stations between 2002 and 2005, the author
concluded that cross-owned stations provided 11 percent (18 minutes)
more news programming per day than other stations.''
The Commission recognized ``that there is disagreement in the
studies. On balance, however, we conclude that the weight of evidence
indicates that cross-ownership can promote localism by increasing the
amount of news and information transmitted by the co-owned outlets.''
Question 2. The financial troubles and perceived threats to the
viability of newspapers and broadcasts have played a significant role
in the proposed changes of media ownership rules. Some sources contend
that despite declining ad revenues and readership, newspapers remain
profitable. However, others contend that these media outlets have only
been able to remain profitable at the expense of quality and quantity
of news they produce. What do you perceive the financial position of
newspapers to be in today's market? How does this vary based on the
size of the media market? To what extent will these proposed changes
alleviate these troubles?
Answer. The record in the proceeding reveals that newspapers are
struggling and that, across the industry, circulation is down and
advertising revenue is shrinking. Some analysts suggest that newspapers
appear to have entered a period of ``protracted decline.'' In 2006, the
traditional indicators were all negative: circulation fell even faster
than in previous years; industry revenues were flat and, on the print
side, retail, national and automotive classified ads all showed
weakness.
Industry analysts attribute the more recent, steeper declines to
many factors, not one or two. Some news consumers, particularly the
young, have moved online. Only 35 percent of persons aged 18 through 34
read newspapers on a daily basis. ``Free'' dailies (i.e., advertising-
only papers) are a competitive factor, too, especially in larger
cities. The net result is not so much that people are giving up on
newspapers altogether as that they read them less often. Seven-day-a-
week subscribers have become a smaller group; many have switched to
getting the paper a few days a week and skipping others.
The most severe losses in 2006 were in large metropolitan markets
like Los Angeles, Boston, San Francisco and Philadelphia. The top 50
newspapers in circulation lost an average of 3.6 percent daily
circulation, almost 1 percentage point more than the industry average.
In the two previous years, the three national papers had managed to
stay even, but not in 2006. Circulation was off 3.2 percent at The New
York Times, 1.9 percent at The Wall Street Journal, and 1.3 percent at
USA Today.
In adopting the new waiver standard for newspaper/broadcast cross-
ownership, the Commission stated that it continued ``to find evidence
that cross-ownership in the largest markets can preserve the viability
of newspapers without threatening diversity by allowing them to spread
their operational costs across multiple platforms. In doing so, they
can improve or increase the news offered by the broadcaster and the
newspaper. Numerous media owners provide examples of cost savings and
shared resources leading to more local coverage and better quality news
coverage. . . . [T]he record indicates that the largest markets contain
a robust number of diverse media sources and that the diversity of
viewpoints would not be jeopardized by certain newspaper/broadcast
combinations. The record also shows that newspaper/broadcast
combinations can create synergies that result in more news coverage for
consumers.''
Question 3. Chairman Martin: Mr. Chairman your proposal only deals
with the top 20 markets. Was there some clear difference between the
top 20 markets and the remaining markets or was this a more arbitrary
standard? Why are ownership rules not being revised for smaller
markets?
Answer. The Commission has applied the positive presumption only in
the largest markets ``based on the evidence in the record that the
largest markets contain a robust number of diverse media sources and
that the diversity of viewpoints would not be jeopardized by certain
newspaper/broadcast combinations.''
In the Order, the Commission ``found notable differences between
the top 20 markets and all other DMAs, both in terms of voices and in
terms of television households.'' For example, the Order states that
``while there are at least 10 independently owned television stations
in 18 of the top 20 DMAs, none of the DMAs ranked 21 through 25 have 10
independently owned television stations.'' Additionally, the Order
states that ``while 17 of the top 20 DMAs have at least two newspapers
with a circulation of at least 5 percent of the households in that DMA,
four of the five DMAs ranked 21 through 25 have only one such
newspaper.'' Moreover, according to the Order, ``the top 20 markets, on
average, have 15.5 major voices (independently owned television
stations and major newspapers), 87.8 total voices (all independently
owned television stations, radio stations, and major newspapers), and
approximately 3.3 million television households.'' The Commission
states that ``[m]arkets 21 through 30, by comparison, have, on average,
9.5 major voices, 65.0 total voices, and fewer than 1.1 million
television households, representing drops of 38.5 percent, 25.9
percent, and 56.3 percent from the levels in the top 20 markets,
respectively. Markets 31 through 40 and 41 through 50 have average
numbers of voices for each category similar to markets 21 through 30,
and even fewer television households on average, 837,800 and 679,200,
respectively. Markets 50 through 210 show even more dramatic drops
with, on average, 6.7 major voices, 31.2 total voices, and
approximately 231,000 television households.'' The Commission notes
that ``[t]hese figures represent drops of 56.4 percent, 61.7 percent,
and 90.7 percent from the levels in the top 20 markets, respectively.''
The Commission adopted a presumption that it is inconsistent with
the public interest for an entity to own newspaper and broadcast
combinations in markets outside the top 20 DMAs ``to protect
competition and media diversity.'' Indeed, the Commission stated in the
Media Ownership Order that ``diversity has been especially important in
the context of newspaper/broadcast cross-ownership, given the reliance
the public has placed on these media as sources of local news and
information.'' The Order states that ``[t]his reliance may be
particularly acute in markets below the top 20 DMAs.'' Specifically,
the Order states that ``[t]he top 20 DMAs share a robustness in media
and outlet diversity that is not matched in smaller markets.'' The
Commission was not ``certain that the degree of media consolidation
that the largest, more competitive markets can withstand is yet
mirrored in smaller markets, and thus,'' it found in the Order ``that
there should be a presumption against newspaper/broadcast cross-
ownership in markets below the top 20.''
Question 4. The Universal Service Fund is obviously very important
for rural states like South Dakota. What general troubles do you see
arising with the fund and its solvency? What would you recommend to
help alleviate these troubles? What are your thoughts on the
recommendations put forth by the Federal-State Joint Board in November?
Answer. The Commission recently adopted several proposals to reform
the high-cost Universal Service program. It is essential that we take
actions that preserve and advance the benefits of the Universal Service
program.
The United States and the Commission have a long history and
tradition of ensuring that rural areas of the country are connected and
have similar opportunities for communications as other areas. Our
Universal Service program must continue to promote investment in rural
America's infrastructure and ensure access to telecommunications
services that are comparable to those available in urban areas today,
as well as provide a platform for delivery of advanced services.
Changes in technology and increases in the number of carriers that
receive Universal Service support, however, have placed significant
pressure on the stability of the Fund. A large and rapidly growing
portion of the high-cost support program is now devoted to supporting
multiple competitors to serve areas in which costs are prohibitively
expensive for even one carrier. These additional networks don't receive
support based on their own costs, but rather on the costs of the
incumbent provider, even if their costs of providing service are lower.
In addition to recommending an interim cap, the Federal-State Joint
Board on Universal Service (Joint Board) has recognized the problems of
maintaining this identical support rule.
I am supportive of several means of comprehensive reform for the
Universal Service program. I have circulated among my colleagues at the
Commission an Order that adopts the recommendation of the Joint Board
to place an interim cap on the amount of high-cost support available to
competitive eligible telecommunications carriers (ETCs). And we
recently adopted a Notice of Proposed Rulemaking that would require
that high-cost support be based on a carrier's own costs in the same
way that rural phone companies' support is based. I'm supportive of
both measures as a means to contain the growth of Universal Service in
order to preserve and advance the benefits of the fund and protect the
ability of people in rural areas to continue to be connected.
I continue to believe the long-term answer for reform of high-cost
Universal Service support is to move to a reverse auction methodology.
I believe that reverse auctions could provide a technologically and
competitively neutral means of controlling the current growth in the
fund and ensuring a move to most efficient technologies over time.
Accordingly, I am pleased that we adopted a Notice of Proposed
Rulemaking to use reverse auctions to distribute Universal Service
support.
I also support the Joint Board recommendation to revise the current
definition of supported services to include broadband Internet access
service. Congress did not envision that services supported by Universal
Service would remain static. Instead, it views Universal Service as an
evolving level of communications services. With each passing day, more
Americans interact and participate in the technological advances of our
digital information economy. Deployment of these telecommunications and
information technologies support and disseminate an ever increasing
amount of services essential to education, public health and safety. A
modern and high quality communications infrastructure is essential to
ensure that all Americans, including those residing in rural
communities, have access to the economic, educational, and healthcare
opportunities available on the network. Our Universal Service program
must continue to promote investment in rural America's infrastructure
and ensure access to communications services that are comparable to
those available in urban areas, as well as provide a platform for
delivery of advanced services.
The broadband program recommended by the Joint Board is tasked
primarily with disseminating broadband Internet access services to
unserved areas. This is a laudable goal as we work to make broadband
services available to all Americans across the Nation. As proposed, the
program would have limited resources. Additional support for this
broadband program could be made available by requiring competitive ETCs
to demonstrate their own costs and meet the support threshold in the
same manner as rural providers.
I am also pleased that the Joint Board supports reverse auctions as
a mechanism by which the new broadband and mobility funds would be
administered. I continue to support the use of reverse auctions to
determine high-cost Universal Service funding for eligible
telecommunications carriers. I believe that reverse auctions provide a
technologically and competitively neutral means of restraining Fund
growth and prioritizing investment in rural and high-cost areas of the
country.
Question 5. Many people are concerned that the digital TV
transition is not going as smoothly as would be hoped and a number of
steps still need to be taken including the issuance of rules regarding
the processing of construction permit applications and the assignment
of channels to broadcasters. Why have these issues not been resolved
yet? When do you expect them to be resolved? Will this allow the
industry enough time to transition to digital TV?
Answer. With respect to channel assignments, the Commission adopted
the DTV Table of Allotments in August 2007, which provided post-
transition channel assignments for all eligible full-power
broadcasters.
The Commission also recently released the Third DTV Periodic Report
and Order, which mandates strict, final deadlines for stations to
complete construction of digital facilities. In this order, the
Commission made technical adjustments to its rules and policies to
enable broadcasters to take the actions necessary to complete the
conversion from analog to digital. The Commission is doing everything
in its power to ensure that broadcasters successfully transition their
stations to full digital operations.
Question 6. The FCC appears to be reregulating some aspects of
broadcasting which were deregulated under President Reagan and have
helped the broadcast industry remain competitive over the past 25
years. With the influx of new technologies and mediums, why has the FCC
chosen now to begin reregulation? Have there been any specific
detrimental effects that have prompted this? Why has the FCC
increasingly turned to government mandates instead of market based
solutions to help resolve these problems?
Answer. Establishing and maintaining a system of local broadcasting
that is responsive to the unique interests and needs of individual
communities is an extremely important policy goal of the Commission.
Along with competition and diversity, localism is one of the three
goals underlying all of our media ownership rules. In the context of
our media ownership review, I was asked by my colleagues and Members of
Congress to revive the localism proceeding initiated and stopped under
the previous Chairman several years ago.
I completed the remaining two hearings the previous Chairman
committed to holding back in 2003. In addition, my colleagues and I
completed the localism inquiry begun under the previous Chairman.
In order to promote localism, the Commission took two important
steps. First, the Commission adopted an order requiring television
broadcasters to better inform their communities about how the
programming they air serves them. Specifically, television stations
will file a standardized form on a quarterly basis that details the
type of programming that they air and the manner in which they do it.
This form will describe a host of programming information including the
local civic affairs, local electoral affairs, public service
announcements (whether sponsored or aired for free) and independently
produced programming.
Second, the Commission adopted a Report summarizing the record
compiled as a result of its Notice of Inquiry regarding localism and
six field hearings on the subject. Although that record shows that many
broadcasters provide substantial locally oriented programming, it also
contains comments and testimony suggesting that a number of stations
may fail to fully meet their localism obligations, particularly in the
provision of local news, political and other public affairs
programming. In response to these concerns, the Commission also adopted
a Notice of Proposed Rulemaking that includes specific recommendations
as to what broadcasters should be, and most frequently are, doing to
serve the interests and needs of their local communities. For example,
the Commission proposed that each licensee establish a community
advisory group comprised of local leaders with which it will
periodically consult.
Question 7. Earlier this year, the FCC's Office of Engineering
(OET) released a report which shows that allowing unlicensed devices
into the television spectrum may interfere with the television signal
in 80-87 percent of a television station's service area. Additionally,
a July report from the FCC demonstrated that prototypes that utilize
``sensing'' technology did not effectively detect TV signals. Do you
perceive this to be a threat to the DTV transition? If so, what is the
FCC doing to ensure that the DTV transition is not jeopardized by
unlicensed consumer digital devices?
Answer. As we approach the digital transition, the Commission
should keep in mind that one of the top priorities of Congress and the
Commission is ensuring that the DTV transition is successful. Any rules
the Commission establishes to provide for the operation of unlicensed
devices in the TV bands must protect against harmful interference to
the authorized broadcast services that already operate in this
spectrum. These services include full-power TV stations, low-power TV
stations, and wireless microphones. The Commission is developing an
extensive technical record through our pending rulemaking. The Office
of Engineering is currently performing both laboratory and field tests
of several prototype TV band devices to evaluate the interference
potential. Both laboratory testing and field testing of prototype white
space devices will be open to observation by any interested party. I
can assure you that we will thoroughly consider all of the engineering
data, test results (i.e., both laboratory testing and field testing),
and responses submitted in the record before adopting final rules.
______
Response to Written Question Submitted by Hon. Gordon H. Smith to
Hon. Kevin J. Martin
Question. When can we expect to see a decision in the special
access docket? Section 254(a)(2) of the Communications Act requires
that the Commission ``complete any proceeding to implement
recommendations from any Joint Board on Universal Service within 1 year
of receiving such recommendations.'' The Joint Board on Universal
Service delivered its recommended decision on high-cost reform on
November 19, 2007. When will the Commission solicit public comment on
this decision?
Answer. In January 2005, the Commission adopted a Notice of
Proposed Rulemaking, which, among other things, sought comment on the
special access regulatory regime, including whether the Commission
should maintain or modify the Commission's pricing flexibility rules
for special access services. A majority of the Commissioners asked to
seek further comment in this proceeding, and the Commission released a
Public Notice on July 9, 2007, setting an expedited comment cycle for
interested parties to refresh the existing record. Comments were filed
on August 8, 2007, and reply comments on August 15, 2007. After the
Commission received these comments, I provided an options memo to all
of the Commissioners by September 2007. To date, there is no option
that is supported by a majority of Commissioners.
On January 29, 2008, the Commission released a Notice of Proposed
Rulemaking seeking comment on the Joint Board's Recommended Decision.
Comments are due within 30 days of Federal Register publication and
reply comments are due 30 days later.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Hon. Michael J. Copps
Question 1. Last year, a provision to reform the FCC's forbearance
authority was included in the Committee's telecom reform bill.
Specifically, it would have eliminated the ``deemed granted'' language
in Section 10 in order to ensure a fairer process at the FCC. I
recently introduced legislation that will eliminate this provision, so
we can avoid a situation where the agency erases its rules simply by
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
Answer. I certainly do not think it is fair for the FCC to make
wholesale changes to communications policy merely by failing to act on
a forbearance petition. Permitting a forbearance petition to go into
effect pursuant to section 10's ``deemed granted'' provision is akin to
providing industry the pen and giving it the go-ahead to rewrite the
law. I believe Congress entrusted the FCC to implement the law, but it
did not tell us to delegate far-reaching policy changes to the
companies that fall under our jurisdiction. Therefore I believe that S.
2469, ``Protecting Consumers through Proper Forbearance Procedures
Act'' is an essential step to ensuring that far-reaching FCC
forbearance decisions are not made through omission or inaction. I am
also eager to have the Commission complete the rulemaking it currently
has underway to consider changes to the Commission's forbearance
procedures.
Question 2. Earlier this year, the FCC released a Notice of
Proposed Rulemaking examining so-called ``two-way, plug-and-play
standards'' for cable navigation devices. Do you support implementation
of Section 629 in a way that will create a retail market for ``two-way,
plug-and-pay'' devices and allow for greater competition and consumer
choice? Do you believe that FCC oversight is sufficient to ensure that
any standards and specifications are created and changed through a fair
process that treats all affected parties equitably?
Answer. I strongly support implementation of Section 629 in a way
that will create a retail market for two-way ``plug-and-play'' devices
and allow for greater competition and consumer choice. It has now been
almost 12 years since Congress directed the Commission to assure that
equipment used to access video programming and other services offered
by multi-channel video providers is available to consumers at retail.
And yet today consumers cannot walk into their local retailer and
purchase a television set that will receive two-way digital cable
services without renting a set-top box from their local cable operator.
The absence of plug-and-play capability could discourage consumers from
investing in new digital equipment at precisely the time we are
attempting to minimize the legacy analog equipment in the marketplace.
A flourishing market for two-way devices would spur tremendous
innovation and other competitive benefits for consumers.
I also believe that the FCC has the responsibility to ensure that
any standards or specifications we adopt treat all affected parties
equitably, and that we should have mechanisms in place to ensure
continued FCC oversight.
______
Response to Written Question Submitted by Hon. Bill Nelson to
Hon. Michael J. Copps
Question. As you are probably aware, Florida is currently the
largest ``net payer'' state into the Universal Service Fund. Florida
pays in more than $300 million more to the USF than it receives in
disbursements. Getting beyond the idea of a ``cap'' of some sort--which
may raise competitive issues--it seems like one other way of achieving
efficiencies is through more effective targeting of support. How do you
feel about this approach?
Answer. I believe that the Universal Service system needs to be
fundamentally reformed so that the fund is both sustainable and
rational for the future. An important piece of comprehensive reform is
certainly finding more efficient ways for distributing high-cost
support. I also believe that a critical change must be to include
broadband in the Universal Service program. Broadband is essential to
the mission of Universal Service for the 21st century, just as plain
old telephone service was the mission of USF in the 20th century. I'm
pleased that the Joint Board recently agreed with me on a bipartisan
basis and now supports broadband as part of the system. In terms of
targeting the support, I believe that support should first go where it
can do the greatest good. Many of our rural companies are doing a good
job of getting broadband out to most of their territory as best as I
can tell. But we repeatedly hear from companies that they are bringing
broadband out to only 80 percent or 85 percent of their service area
and that it's just not economic to go to the most rural areas.
Therefore, ensuring that support is targeted well so that broadband
goes to these unserved and largely underserved areas is important.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Michael J. Copps
Question 1. A recent GAO report cited that no comprehensive plan
exists for the digital television transition. The GAO stated ``Among
other things, a comprehensive plan can detail milestones and key goals,
which provide meaningful guidance for assigning and coordinating
responsibilities and deadlines and measuring progress. Such planning
also includes assessing, managing, and mitigating risks, which can help
organizations identify potential problems before they occur and target
limited resources''. This week the Commission released a written
response to the GAO report. At this point in time, what do you consider
to be the top five risk factors with respect to American consumers
getting through the digital television transition with minimal
disruption? Which of these risk factors fall under the jurisdiction of
the FCC? How is the FCC managing and mitigating these risks?
Answer. As an initial matter, I would like to clarify that although
a document was released entitled `FCC Response to GAO's Report on the
Digital Television Transition,' I did not see that document before it
was released and do not necessarily endorse the assertions it contains.
In response to your specific questions regarding the DTV
transition, here are five of my major concerns right now:
1. National commitment/coordination. An overarching concern is
that the DTV transition is not yet being treated as the
national priority that it is. I was heavily involved in the Y2K
effort, a comprehensive, public sector-private sector
partnership with accountability, clear lines of authority, and
daily coordination at the highest levels. The DTV transition
needs to be that kind of urgent national priority. Ideally, we
would have an Inter-Agency Task Force headed out of the White
House. Absent that, it seems to me that the FCC is the only
entity in a position to get the job done. Unfortunately, I see
no indication that the FCC will be undertaking such an effort.
2. Consumer education. Consumer awareness of the transition
continues to lag, and we lack a coordinated consumer education
plan--particularly for hard-to-reach communities--that will
ensure that the American people are prepared for the switch-
over. The FCC has certain resources at its disposal and can
compel its licensees and other stakeholders to do much more. We
have an Order before us that would take several positive steps,
which I hope we will act on as soon as possible.
3. Broadcaster build-out. Hundreds of stations are not yet
ready for the transition and many will need major construction
and/or equipment upgrades over the next 13 months. This is an
issue squarely within the FCC's jurisdiction. Recently, we
issued an Order in the Third DTV Periodic Review to provide
broadcasters with the rules of the road for the final build-
out. Had the transition been a higher priority, I believe we
could have adopted these rules and the Final DTV Table of
Allotments much earlier than we did. The additional time would
have permitted a smoother transition for consumers.
4. Test market. The current plan is to turn off every full-
power analog broadcast signal in the country on February 17,
2009, without running a single test market first. A test market
would help us learn which consumer outreach messages worked and
which did not, which populations had particular difficulties,
whether consumers were having converter box installation and/or
reception issues, and on and on. Legally, the FCC may be able
to compel the creation of a test market, but, at this point, I
doubt such a step could be achieved without the cooperation of
all relevant stakeholders. We are exploring the idea both
internally at the FCC and with outside parties.
5. LPTV (including Class A)/TV translator stations. There are
potentially thousands of LPTV and TV translator stations that
will not be turning off their analog signals on February 17,
2009. I am concerned about the challenge of educating those
stations' viewers about what actions they should take and when.
Moreover, in markets with both full-power and LPTV/Class A and/
or translator stations, I am concerned that many viewers of
those stations will install a converter box without an analog
tuner or analog pass-through and thus unwittingly lose access
to their LPTV/Class A and/or translator stations when the
switch-over occurs. The converter box program is within the
jurisdiction of the Commerce Department. A petition has been
filed at the FCC, however, alleging that converter boxes
lacking analog reception capability would violate the All-
Channel Receiver Act.
Question 2. Should the common carrier exemption be removed from the
Federal Trade Commission? What, if any, would be the disadvantage to
consumers if the exemption is removed?
Answer. The decision to have a common carrier exemption applicable
to the Federal Trade Commission is one made by Congress and is part of
the statute governing the Federal Trade Commission. I certainly
understand concerns that as the marketplace changes consumers may be
left unprotected when the FCC chooses not to regulate in a particular
area. I have been one of the leading proponents of stronger consumer
protections. However, I believe that removing the exemption would
disadvantage consumers in a number of respects. Were the common carrier
exemption removed there could be substantial overlap in the
responsibilities of the two Commissions causing significant confusion
for consumers. Particularly problematic would be a situation where the
FCC and the FTC issued contrary or conflicting rules covering the same
subject matter. In addition, were the FTC to have jurisdiction over
telecommunications areas that the FCC currently regulates, industry
stakeholders would be able to forum shop in order to achieve the most
favorable result for them rather than for consumers. The Federal
Communications Commission has approximately 2,000 experts in the field
of communications, many of whom are focused on the regulation of the
telecommunications industry. While a decision on the FTC's common
carrier exemption is ultimately Congress's, I believe that the FCC's
expertise continues to make it the best suited to develop, implement
and promote telecommunications policies that serve consumers and the
public interest.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg
to Hon. Michael J. Copps
Question 1. New Jersey is a net contributor of almost $200 million
a year to the Universal Service Fund (USF). There are many proposals
for reforming USF, including temporary caps and longer-term proposals.
When can I tell my constituents that they will see some action from the
FCC to stop the exponential growth of this Fund?
Answer. There is no question that the need for Universal Service
reform has been contemplated for far too long. That is why, as a member
of both the FCC and the Federal-State Joint Board on Universal Service,
I have been pushing for comprehensive reform of the Universal Service
system. I frankly believe that the Joint Board spent far too much time
over the last eighteen months debating reverse auctions and an interim
cap on high-cost support. If it had focused initially on comprehensive
reform we might be a lot further down the road than we are today. That
said, the Joint Board did release a recommendation for comprehensive
Universal Service reform to the FCC in November 2007. I am disappointed
that the Joint Board recommendation has not yet been put out for
comment by the FCC. I believe the Commission should do so immediately.
The Commission should then take up long-term, comprehensive Universal
Service reform with the Joint Board's recommendation as a starting
point. The fact that we have not done so already is very disappointing
to me and represents a lost opportunity in my book.
Question 2. There has been recent activity--both at the FCC and in
the courts--regarding the rebanding of the 800 MHz spectrum. When do
you expect the rebanding to be completed?
Answer. I am firmly committed to completing the 800 MHz rebanding
process in a way that will (1) eliminate the risk of harmful
interference between public safety and commercial users as quickly as
possible and (2) cause no service interruptions to public safety users
and no diminution in the quality of their radio systems or their
ability to serve and protect the public. In achieving these goals, we
also need to be mindful of the needs of existing commercial users and
take steps to minimize the impact on them as well.
As we approach the mid-2008 deadline, the FCC has received (and
almost certainly will continue to receive) a significant number of
waiver requests from public safety and commercial users in this band. I
look forward to working with the Bureau and my colleagues to make sure
that we resolve these individual requests in a way that is fair to the
parties in each case. At the same time, we also need to be mindful of
the effect of each decision on the rebanding process as a whole. I
believe we will be able to develop a reasonable set of criteria for
deciding individual waiver requests that will move the rebanding
process to completion in the shortest possible time-frame that is
consistent with the principles noted above.
______
Response to Written Question Submitted by Hon. Thomas R. Carper to
Hon. Michael J. Copps
Question. The Federal Communications Commission should be commended
for issuing its recent Notice of Proposed Rulemaking that considers
whether to authorize Big LEO Mobile Satellite Services operators to
provide ancillary terrestrial services on more of their assigned
spectrum. As you are aware, one such operator, Globalstar, and its
partner, Open Range Communications, need this authority in order to
pursue their plan to bring broadband services to more than 500 rural
communities across the country. Given the Commission's stated
commitment to promote the rapid deployment of advanced broadband
services to unserved and underserved areas, will you assure the
Committee that you will do all that it takes to complete this
proceeding in the time required for Globalstar and Open Range to move
forward with their business plan?
Answer. I am a long-time supporter of allowing satellite providers
to develop ancillary terrestrial component (ATC) operations. I am also
dedicated to making sure that Americans who live in rural areas have
access to high-quality, low-cost broadband services. Indeed, for
several years I have been calling for a more active government role in
expanding broadband penetration in rural areas, including through the
use of grant programs such as the Rural Utilities Service (RUS).
Accordingly, I am extremely excited by the possibility that ATC
operations in the Big LEO band can bring WiMax-based wireless broadband
to rural areas across the Nation. And I am firmly committed to
resolving our NPRM in time for these companies to move forward with
their plans. Indeed, I was comfortable supporting the item released in
November 2007--which modified the Big LEO bandplan as well as sought
comment on Globalstar's ATC petition--only after receiving assurances
from the Bureau and the Chairman's office that it would be possible to
act on this NPRM before the deadlines imposed by the financing process
would expire. I look forward to receiving a draft item in early 2008
that will allow the Commission to resolve these issues in a way that
allows the broadest possible ATC authorization consistent with
protecting other users of the band and adjacent bands.
______
Response to Written Question Submitted by Hon. Ted Stevens to
Hon. Michael J. Copps
Question. Kawerak, Inc., a non-profit consortium in Alaska has
requested me to submit this question to the Commission:
Does the Commission have the statutory authority to provide
Universal Service support to non-profit corporation tribal consortiums,
serving remote areas of Alaska, that provide education, welfare,
wellness, law enforcement, natural resources and economic development
services?
Kawerak is one of Alaska's tribal consortiums who provides several
services to remote areas of Alaska, and has expressed concern about
their ineligibility to receive Universal Service support because they
are unable to meet the precise definitions of health care or
educational service providers. Please address the requirements which
these tribal consortiums must meet in order to receive support.
If these tribal consortiums are unable to meet the Commission's
current requirements, please address whether a waiver process is
available for these entities.
Please also describe the specific steps which non-profit
corporation tribal consortiums must take to apply for, and receive,
support from the Universal Service Fund.
Answer. Universal Service is one of the pillars of the
Telecommunications Act of 1996. Consistent with the statute, my
overriding objective has been to bring the best, most accessible and
cost-effective communications system in the world to all Americans,
including those who live in rural and urban areas and on tribal lands,
those with low incomes and those with disabilities. It is essential
that entities that provide these types of services and who are eligible
for Universal Service support receive such support.
With regard to the specific questions concerning Kawerak, Inc.'s
eligibility under the Universal Service program, the Commission is
guided by Section 254(h)(7) of the Communications Act, as amended,
which defines the types of entities that are eligible for support under
the Schools and Libraries and Rural Health Care Programs. With regard
to the Schools and Libraries Program, the Commission relies upon the
operative state law in Alaska in determining whether an entity meets
the definition of an elementary or secondary school.\1\ The FCC's rules
specifically allow for eligible schools and libraries to form
consortia.\2\ Therefore, if a non-profit corporation tribal consortium
meets the definition of elementary or secondary schools pursuant to
Alaska law it appears that the consortium would be eligible for Federal
Universal Service support.
---------------------------------------------------------------------------
\1\ See 47 U.S.C. 254(h)(7)(A), providing that ``elementary and
secondary schools'' is defined by section 9101 of the Elementary and
Secondary Education Act of 1965, as amended. Section 9101 of the ESEA
is now codified, as amended, in 20 U.S.C. 7801, which provides that
the definition of elementary and secondary schools is based upon state
law. See also 47 CFR 54.501 (concerning eligibility for services
under to the Schools and Libraries Program).
\2\ 47 CFR 54.501(d).
---------------------------------------------------------------------------
With regard to the Rural Health Care Program, section 254(h)(7)(B)
provides that a `` `health care provider' means--(i) post-secondary
educational institutions offering health care instruction, teaching
hospitals, and medical schools; (ii) community health centers or health
centers providing health care to migrants; (iii) local health
departments or agencies; (iv) community mental health centers; (v) not-
for-profit hospitals; (vi) rural health clinics; and (vii) consortia of
health care providers consisting of one or more entities described in
clauses (i) through (vi).'' (emphasis added). Thus, it appears that the
Commission has the statutory authority to provide Universal Service
support pursuant to the Rural Health Care program to a non-profit
corporation tribal consortium that meets the definition of a health
care provider in section 254(h)(7)(B).
The Universal Service Administrative Company (USAC) is responsible
for administering the Universal Service program. Detailed guidance on
the process for applying for and receiving support under the Schools
and Libraries Program can be found at http://www.usac.org/sl/. Similar
information concerning the Rural Health Care Program can also be found
at http://www.usac.org rhc/. My office would also be pleased to assist
your office or Kawerak, Inc. in obtaining any additional information it
may need concerning these issues.
______
Response to Written Questions Submitted by Hon. Olympia J. Snowe to
Hon. Michael J. Copps
Question 1. While the issue of media ownership is not new and the
most recent proceeding has been open for approximately 18 months, only
28 days were provided for the public to comment on your specific
proposal to partially lift the newspaper/broadcast cross-ownership ban,
which has been in place for 32 years. This is deeply troubling due to
the critical nature of this issue and past FCC precedent.
For example, last month, the FCC provided 60 days for public
comment and reply for a proposal on amending pole attachments rules.
Earlier this month, the Commission gave 45 days for public comment and
reply on a rulemaking proposal on indefinitely extending the
unanimously popular Do-Not-Call List registration period. And, in
November 2006, the FCC granted 90 days for public comment and reply on
the effects of communications towers on migratory birds.
Since the FCC has historically given 60-90 days for public comment
and reply on critical proceedings and proposals, isn't it only
appropriate to do the same with the specific proposal you announced
last month?
Answer. I agree that the public should have been given at least 60-
90 days to comment on the Chairman's proposal. I also believe that the
Commission should have fully considered those comments before reaching
any tentative conclusions. Instead, not only was the public comment
period truncated, but the Chairman circulated a draft decision 2 weeks
before the public comments were even due.
Question 1a. What is the impetus for providing only 28 days to the
public to comment on a specific proposal that was released only last
month?
Answer. I do not know. This is best answered by the Chairman.
Question 1b. If the Commission delayed its vote on the media
ownership proposal and provided more time for the public to comment on
it, what harm would result?
Answer. I do not believe that any harm would have resulted from
providing the public additional time to comment. To the contrary, I
believe that additional time would have permitted a far more measured
and rational process than we had and ultimately a better result.
Question 2. Some have suggested that lifting the cross-ownership
ban would improve the dreadfully low percentages of woman and minority-
owned media since a woman or minority-owned newspaper could now buy a
broadcast station or vice versa. However, a June 2006 report by the
Free Press found that woman and minority owners are more likely to own
fewer stations per owner than their white and corporate counterparts--
they are more likely to own just a single station. This singular
ownership also seems to be the case for minority owned newspapers.
The report seems to suggest that financial reasons are behind the
inability of these groups to purchase additional media properties. They
just simply can't afford to expand given certain market and industry
conditions. Data also shows that the woman and minority-owned media
outlets typically are in more rural areas.
If women and minority owners aren't able to expand their media
operations due to financial reasons, and the current proposal only
lifts the cross-ownership ban in the top 20 markets, then how is the
proposal going to adequately address the disparity that exits with
women and minority media ownership?
Answer. I do not believe that the new rule will measurably improve
the dismal state of women and minority media ownership in this country.
To the contrary, the new rule contemplates that big newspaper owners
can start targeting the smaller TV and radio stations in a market--the
very stations that women and minorities would be more likely to target
as an entry point into broadcasting. The new rule will serve to drive
up prices for these stations, making entry by women and minorities that
much more difficult.
Question 3. In its repeal and remand of the FCC's 2003 media
ownership rule changes, the Third Circuit Court of Appeals, in its
Prometheus decision, stated that it ``cannot uphold the Cross-Media
Limits themselves because the Commission does not provide a reasoned
analysis to support the limits that it chose.'' In addition, the Court
stated ``our decision to remand the Cross-Media Limits also gives the
Commission an opportunity to cure its questionable notice.'' What do
you believe is the reasoned analysis that supports this change to the
media ownership rules?
Answer. I do not believe that the FCC majority's new rule was
supported by the record or sound policy judgments. We were told that
permitting newspapers to merge with a broadcast station in the same
city will give them access to a revenue stream that will let them
better fulfill their newsgathering mission. At the same time, we are
also assured, our rules will require ``independent news judgment'' (at
least among consolidators outside the top 20 markets). I do not believe
that we can have our cake and eat it too--the economic benefits of
consolidation without the reduction of voices that one would ordinarily
expect when two news entities combine.
To the extent that the two merged entities remain truly
``independent,'' then there won't be the cost savings that were
supposed to justify the merger in the first place. On the other hand,
if independence merely means maintaining two organizational charts for
the same newsroom, then we won't have any more reporters on the ground
keeping an eye on government. The likely result, in my view, is that
the two entities' newsrooms will be almost completely combined, with
round after round of job cuts in order to cut costs. More consolidation
will mean more lost jobs. That is the real economic justification for
media consolidation within a single market.
The news isn't so good for other businesses in the consolidated
market, either. At the end of the day, the combined entity is going to
have a huge advantage in producing news--and the other stations will
make a reasonable calculation to substantially reduce their investment
in the business. This is why experts have been able to demonstrate--in
the record before the FCC, using the FCC's own data--that cross-
ownership leads to less total newsgathering in a local market. And that
has large and devastating effects on the diversity and vitality of our
civic dialogue.
Finally, I think reports of the imminent death of traditional
newspapers are decidedly premature. The truth remains that the profit
margins for the newspaper industry last year averaged around 17.8
percent; the figure is even higher for broadcast stations. As the head
of the Newspaper Association of America put it in a Letter to the
Editor of The Washington Post in 2007: ``The reality is that newspaper
companies remain solidly profitable and significant generators of free
cash-flow.''
Were newspapers momentarily discombobulated by the rise of the
Internet? Probably so. Are they moving now to turn threat into
opportunity? Yes, and with signs of success. Far from newspapers being
gobbled up by the Internet, we ought to be far more concerned with the
threat of big media joining forces with big broadband providers to take
the Internet we know down the same road of consolidation and control by
the few that has already inflicted such heavy damage on our traditional
media.
Question 3a. It doesn't seem that providing only 28 days to have
the public comment on the specific changes to the media ownership rule
that you propose, or only 5 day's notice for the localism and media
ownership hearings in Washington, D.C. and Seattle, WA wouldn't satisfy
the requirements of the court--wouldn't you agree?
Answer. Yes. The proceeding was moving at a measured pace that was
marred by an unseemly rush to judgment over the second half of 2007.
Not only were there significant procedural problems such as those you
identify, but we failed to take meaningful action on localism and
minority and female ownership before once again relaxing our structural
ownership rules for Big Media.
Question 4. In July of this year, the Commission released ten
research studies on media ownership, which were intended to inform the
Commission's comprehensive review of its broadcast ownership policies
undertaken in its rulemaking proceeding. The studies, which were
conducted by outside researchers and by Commission staff, examined a
range of issues that impact diversity, competition, and localism--the
three important policy goals of those rules.
The Consumer Federation of America, Consumers Union and Free Press
jointly filed comments to the FCC in regards to these 10 studies. The
commenters called the studies a ``collection of inconsistent,
incompetent and incoherent pieces of research cobbled together to prove
a foregone conclusion.'' More so, they stated that the peer reviews of
the studies did not follow required procedures and, due to this,
violated Office of Management and Budget guidelines on the
implementation of the Data Quality Act. What is your assessment on the
integrity of how the studies were conducted?
Answer. I have serious concerns about the way the studies were
formulated, commissioned, and peer reviewed. For instance, I believe
that the studies should have been subject to peer review before they
were released publicly, not afterwards. I also am deeply concerned
about some of the evidence uncovered by consumer groups pursuant to a
FOIA request that raised questions about whether the studies were
formulated with a pre-determined result in mind.
Question 4a. These groups also performed research, utilizing the
FCC's own data, which actually showed relaxing the newspaper/broadcast
cross-ownership rules resulted in a net loss in the amount of local
news that is produced across local markets by broadcast stations. The
commenters stated ``at the market level, cross-ownership results in the
loss of an independent voice as well as a decline in market-wide news
production.''
Have you all reviewed these comments? At the very least, these
claims raise serious doubts as to the validity of any relaxation of
media ownership rules and begs for closer examination of the data
before you enact any changes to the media ownership rules--wouldn't you
agree?
Answer. I did indeed review the record and found the comments very
illuminating. They demonstrated that the FCC-commissioned studies may
have focused on the wrong questions. To me, the more important question
is not whether a particular combination produces more local news, but
the effect of the combination on the total amount of local news in the
market.
Question 5. One of the statements being made about the DTV
transition is that ``Television sets connected to cable, satellite or
other pay TV service do not require converters.'' However, it is my
understanding this may not be totally true for certain satellite
subscribers, primarily in rural areas like the town of Presque Isle,
Maine due to the issue of local-into-local service, which is when a
satellite company provides its subscribers with all of the local
broadcast TV stations in that market.
While satellite companies do offer local-into-local in most of the
media markets, it is not available to all 210 media markets--it seems
as if the service is not available to approximately 60 rural markets in
about 30 states.
Is this correct? And if so, what impact will the DTV transition
have on households that subscribe to satellite in areas that do not
have local-into-local service? If they have a TV with an analog tuner
will they also need to purchase a converter box?
Answer. It is correct that not all 210 media markets have
satellite-delivered local-into-local service. Because the two providers
sometimes provide service to different markets, I believe that
approximately 182 of the 210 markets have local-into-local service from
one service or the other. Subscribers who do not subscribe to local-
into-local service and currently receive broadcast signals with an
analog off-air tuner will need a converter box to receive full-power
stations after the transition date.
Question 5a. Is the FCC working with the satellite companies to
make sure they expand the local-into-local service to cover all 210
media markets before the DTV transition? If not, wouldn't this be an
appropriate thing to do to alleviate any consumer confusion that would
result from inaction?
Answer. In the recent sale of DIRECTV to Liberty, I supported a
condition that would have required DIRECTV to provide local-into-local
service to all markets within a reasonable time period. Unfortunately,
that condition was not adopted. In our recent Order on DTV Consumer
Education, my colleagues did adopt my proposal that DBS operators take
specific steps to inform those subscribers without local-into-local
service of their options for the coming switch-over to DTV.
Question 6. Over the summer it was reported that FCC staff
inspected about 1,100 retail stores around the country, as well as
retailers' websites, to monitor compliance with FCC DTV label rules. As
a result of those inspections, the Commission issued more than 260
citations notifying retailers of violations, which results in about a
76 percent compliance rate.
Obviously, not the best figure, mainly with the holiday season that
we are in the middle of. People buying a new TV may not be aware or
will be misinformed that their new TV will not accept over-the-air
digital signals and therefore need to buy more equipment to accommodate
the transition. Has the FCC performed any additional inspections to
determine if the label compliance rate has improved any?
Answer. I must defer to the Chairman's response on the further
investigative activities of the Enforcement Bureau.
Question 6a. Also has the Commission recorded any consumer
complaints and confusion about DTV versus HDTV? While most high-
definition TVs can receive digital signals not all the can and the
concern is that it might lead to confusion at the retailer or at home.
Answer. I defer to the Chairman's response on consumer complaints
received on this issue. I do agree that the distinction between DTV and
HDTV is a continuing source of confusion for many consumers. I believe
that the lack of a coordinated DTV public-private partnership could
lead to a consumer backlash the likes of which our country has seldom
seen.
Question 7. Over the past several months there have been incidents
that have raised serious concerns about the phone and cable companies'
power to discriminate against content. In September, Verizon Wireless
arbitrarily chose to block a series of text messages on the grounds
that the subject matter was too controversial. While the carrier, to
its credit, reversed this decision, this illustrates its power as a
content gatekeeper. Then came the news that AT&T reserves the right in
its Terms of Service to discontinue the service of customers that
criticize the company. In October, the Associated Press reported that
Comcast was interfering with the popular file-sharing, peer-to-peer
service BitTorrent.
Senator Dorgan and I have requested that this Committee hold a
hearing to consider the issue of content discrimination and investigate
these incidents further to determine if they were based on legitimate
business and network management policies or part of practices that
would be deemed unfair and anti-competitive.
We also wrote you a letter, dated October 14, requesting the
Commission's position on the Verizon Wireless-NARAL text messaging
incident. To this date we have not heard any response from your office.
Do you know the status of that response?
Answer. I understand that your October 14th letter was to Chairman
Martin and therefore I am unable to address the status of his response.
I am deeply concerned, however, by the regulatory policies that confer
such content and conduit control on a few huge network providers.
Question 7a. Also, do you feel that any of these events could have
been appropriately and effectively addressed by the FCC's Four Internet
Freedom Principles or any other FCC regulation that is in place?
Answer. The FCC's Internet Policy Statement of 2005, better known
as the Four Internet Freedom Principles, has been essential toward
protecting the openness of the Internet. As you may know, I played an
important role in their adoption. In addition, with the Commission's
reclassification of wireless Internet services as a Title I service it
became clear that wireless services fall squarely under the protections
afforded by these principles (though the FCC declined my suggestion to
make this implication explicit).
The Commission has initiated an investigation into allegations that
Verizon Wireless's and Comcast's operation of their networks with
regard to the NARAL text messaging and BitTorrent's file sharing
applications, respectively, are violations of the Four Principles. The
Commission recently held a hearing at Harvard Law School concerning
whether these activities are considered reasonable network management
pursuant to these principles. The Commission also plans to hold a
similar hearing at Stanford Law School shortly. Whether the Commission
is able to effectively address these allegations in accordance with the
Four Principles remains to be seen. While I am hopeful that we will be
successful in this endeavor, I do believe that it is time to update the
Commission's principles to ensure that the FCC can address the many
complicated network management issues that are likely to arise.
Specifically, the time has come at the FCC for a specific
enforceable principle of nondiscrimination. This principle should allow
for reasonable network management, but make crystal clear that
broadband network operators cannot shackle the promise of the Internet.
After establishing a nondiscrimination principle, the next step is
admittedly more difficult. The FCC's job is to figure out when and
where the line is drawn between discrimination and reasonable network
management. That's why the Commission should also establish a
systematic, expeditious, case-by-case approach for adjudicating claims
of discrimination. That way, over time, we would develop a body of case
law that would provide clear rules of the road for those who operate on
the edge of the network, namely consumers and entrepreneurs, and those
who operate the networks.
I certainly appreciate your leadership on this issue and welcome
any further guidance that you wish to offer to ensure that the FCC
protects the openness of the Internet for years to come.
Question 8. It was recently disclosed a proposal is circulating
that would reinstate cable system ownership limits at 30 percent of the
national market. Many, including myself, have been long been concerned
about the lack of wireline cable competition and rising price of cable
service.
Specifically, the FCC recently stated that ``the average cost of
cable has almost doubled from 1995 to 2005, increasing 93 percent,
while the cost of other communication services fell. The cable industry
needs more competition and we will continue to act to bring more
competition and its benefits to consumers.''
The initial cable ownership cap stemmed from a FCC change in 1992
as a result of the 1992 Cable Act, which directed the FCC to establish
limits on the number of subscribers a cable operator may serve and on
the number of channels a cable operator may devote to affiliated
programming. What are the pros and cons of implementing a cable
ownership cap to bringing more competition, and benefits or lower
prices to consumers?
Answer. The structural ownership limits of Section 613(f) were
intended to ensure that cable operators did not use their dominant
position in the multichannel video programming distribution market to
impede unfairly the flow of video programming to consumers. At the same
time, Congress recognized that multiple system ownership could provide
benefits to consumers by allowing efficiencies in the administration,
distribution, and procurement of programming, and by providing capital
and a ready subscriber base to promote the introduction of new
services.
I believe that the 30 percent limit recently adopted by the
Commission represents a careful balance between (1) ensuring that no
cable operator, because of its size, is able to unfairly impede the
flow of video programming to consumers; and (2) ensuring that cable
operators are able to expand and benefit from the economies of size
necessary to encourage investment in new video programming and the
deployment of other advanced services.
Question 8a. Back in 1992, there was little, if any, competition in
the cable industry. Now, we have seen satellite TV providers reach
approximately 30 million subscribers and telephone companies rolling
out digital TV services. How might a 1992 cable ownership cap directive
affect the cable industry in a 2007 market?
Answer. We have revised the cable ownership calculation over the
years to reflect marketplace developments. Most significantly, we now
count all MVPD subscribers--including satellite TV subscribers and
telcos--towards the overall number of subscribers in the market for
purposes of calculating the horizontal limit. In other words, a cable
operator can control subscribers accounting for 30 percent of all MVPD
subscribers, not just 30 percent of cable subscribers. In addition, to
the extent that new entrants are taking market share from incumbent
cable operators, it will make it less likely that the limits will be
breached, and, to the extent that these new entrants are competing
cable systems (like some telcos) the cable limits would apply to them
as well.
______
Response to Written Questions Submitted by Hon. Gordon H. Smith to
Hon. Michael J. Copps
Question 1. The Commission's Regulatory Flexibility Analysis for
the November 30 must-carry order says that ``Every effort will be made
to minimize the impact of any adopted proposals on cable operators.''
How much will it cost for every 552 megahertz cable system to file and
prosecute a waiver through the FCC? Would you support a blanket dual
carriage waiver for 552 megahertz cable systems?
Answer. I do not know the precise cost of filing and prosecuting
such a waiver request with the Commission. As I stated when the must-
carry decision was made last fall, I would have preferred to grant some
accommodation to small cable systems as a whole rather than
establishing a waiver process and seeking further comment. I hope that
the Commission will now act quickly on the record developed in the
general rulemaking.
Question 2. Section 254(a)(2) of the Communications Act requires
that the Commission ``complete any proceeding to implement
recommendations from any Joint Board on Universal Service within 1 year
of receiving such recommendations.'' The Joint Board on Universal
Service delivered its recommended decision on high-cost reform on
November 19, 2007. Do you support putting the Joint Board
recommendation out for public comment?
Answer. I believe the Federal-State Joint Board for Universal
Service's recommended decisions should always be put out for public
comment, including the Joint Board's most recent recommendation on
high-cost reform. While I would have preferred for the recommendation
to be put out for public comment more quickly, I am pleased that the
Commission issued a Notice of Proposed Rulemaking on January 29, 2008
that seeks comment on the recommendation. Comments are due to the
Commission on April 3, 2008, and reply comments are due on May 5, 2008.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Michael J. Copps
Question 1. The FCC has commissioned 10 economic studies on media
ownership and its effect on news and other programming. According to
these studies, how does cross-ownership effect local content and
political slant? Does this outcome differ by the size of the media
market? In other words, how does the cross-ownership ban impact local
content and political slant in the largest 20 markets compared to
effects in smaller markets around the country? What has been the
experience of markets which had companies grandfathered in under old
media ownership rules?
Answer. I believe that the Commission's research process in the
recent media ownership proceeding was fundamentally flawed, from the
framing of the issues, to the commissioning of the studies, to the peer
review process, to the truncated period for public comment. These flaws
are well documented in the record. Indeed, some public interest groups
used the FCC's raw data to run their own analyses and reached very
different conclusions than the studies officially commissioned by the
FCC. With that background, I believe that several studies--e.g., 3, 4
and 6--purport to address the questions you raise. I believe that these
studies must be read in conjunction with the peer reviews and public
comment questioning their usefulness.
Question 2. The financial troubles and perceived threats to the
viability of newspapers and broadcasts have played a significant role
in the proposed changes of media ownership rules. Some sources contend
that despite declining ad revenues and readership, newspapers remain
profitable. However, others contend that these media outlets have only
been able to remain profitable at the expense of quality and quantity
of news they produce. What do you perceive the financial position of
newspapers to be in today's market? How does this vary based on the
size of the media market? To what extent will these proposed changes
alleviate these troubles?
Answer. I believe the reports of the imminent death of traditional
newspapers is decidedly premature. Profit margins for the newspaper
industry last year averaged around 17.8 percent. As the head of the
Newspaper Association of America put it in a Letter to the Editor of
The Washington Post last July: ``The reality is that newspaper
companies remain solidly profitable and significant generators of free
cash-flow.''
I do not believe that the changes adopted will improve either
broadcast or newspaper service to the public. To the contrary, in this
era of consolidation, cutting jobs is often the first thing a merged
entity does in order to increase profit margins. In the final analysis,
the real winners of the Commission's misguided decision are businesses
that are in many cases quite healthy, and the real losers are going to
be all of us who depend on the news media to learn what's happening in
our communities and to keep an eye on local government.
Question 3. The Universal Service Fund is obviously very important
for rural states like South Dakota. What general troubles do you see
arising with the fund and its solvency? What would you recommend to
help alleviate these troubles? What are your thoughts on the
recommendations put forth by the Federal-State Joint Board in November?
Answer. I believe that the Universal Service system needs to be
comprehensively reformed so that the Fund is both sustainable and
rational for the future. Unless the mission of the Universal Service
Fund (USF) is reformed and its contribution and distribution mechanisms
are updated, its sustainability and its ability to achieve its goals
are likely to be jeopardized.
There are a variety of ways to promote Universal Service and at the
same time ensure the sustainability and integrity of the fund. I
believe much would be accomplished if the Commission were to include
broadband on both the distribution and contribution side of the ledger;
eliminate the Identical Support rule; and increase its oversight and
auditing of the high-cost fund. Additionally, Congressional
authorization to permit the assessment of Universal Service
contributions on intrastate as well as interstate revenue would be a
valuable tool for ensuring that contributors are not unfairly burdened.
That being said, the Joint Board made an assortment of
recommendations of its own. I agreed with some of them and not with
others. In my view, the most important part of the Recommendation is
its inclusion of broadband as part of USF for the 21st century. I
believe the recommendation merits further action by the Commission, and
therefore, I supported the Recommendation and the Commission's Notice
of Proposed Rulemaking that put the Recommendation out for public
comment.
Question 4. Many people are concerned that the digital TV
transition is not going as smoothly as would be hoped and a number of
steps still need to be taken including the issuance of rules regarding
the processing of construction permit applications and the assignment
of channels to broadcasters. Why have these issues not been resolved
yet? When do you expect them to be resolved? Will this allow the
industry enough time to transition to digital TV?
Answer. Since the December 13, 2007 hearing, the Commission has at
least taken further action on the two specific issues you raise. At the
end of 2007, the Commission issued an Order in the Third DTV Periodic
Review proceeding establishing rules for broadcasters' final build-out
of DTV facilities. More recently, the Commission adopted an Order on
Reconsideration regarding the final DTV Table of Channel Allotments.
I am troubled by the tardiness of these decisions and whether they
will result in a smooth DTV transition on February 17, 2009. Had we
acted earlier, we could have established a more measured and orderly
switch-over process and avoided many of the difficult trade-offs and
compressed schedules we were ultimately compelled to adopt. Concern
over a lack of real progress for the DTV transition is, I believe, why
Chairman Inouye and Chairman Dingell called for the White House to
establish a Federal Inter-Agency DTV Task Force. I continue to believe
that a coordinated, private sector-public sector partnership is
essential to prepare the American people for the transition, now less
than a year away.
Question 5. The FCC appears to be re-regulating some aspects of
broadcasting which were deregulated under President Reagan and have
helped the broadcast industry remain competitive over the past 25
years. With the influx of new technologies and mediums, why has the FCC
chosen now to begin re-regulation? Have there been any specific
detrimental effects that have prompted this? Why has the FCC
increasingly turned to government mandates instead of market based
solutions to help resolve these problems?
Answer. The Communications Act contemplates a quid pro quo between
the public and the Nation's broadcasters. We allow broadcasters to use
as much as half a trillion dollars of spectrum--for free. In return, we
require that they serve the public interest: devoting at least some
airtime for worthy programs that inform viewers, support local arts and
culture, and educate our children--in other words, that aspire to
something beyond just minimizing costs and maximizing revenue.
At one time, the FCC actually enforced this bargain by requiring a
thorough review of a licensee's performance every 3 years before
renewing the license. But since the 1980s, that process has been
whittled down to essentially a rubber stamp renewal every 8 years with
virtually no substantive review.
At bottom, I believe that the consolidation we have seen and the
decision to treat broadcasting as just another business have not
produced a media system that does a better job serving most Americans.
Quite the opposite. Rather than reviving the news business, it has led
to less localism, less diversity of opinion and ownership, less serious
political coverage, fewer jobs for journalists, and the list goes on.
These are the concerns I`ve heard from Americans across the country. I
hope we can address them, not with hyper-regulatory solutions, but with
solutions that use 21st century tools to better serve the public
interest.
Question 6. Earlier this year, the FCC's Office of Engineering
(OET) released a report which shows that allowing unlicensed devices
into the television spectrum may interfere with the television signal
in 80-87 percent of a television station's service area. Additionally,
a July report from the FCC demonstrated that prototypes that utilize
``sensing'' technology did not effectively detect TV signals. Do you
perceive this to be a threat to the DTV transition? If so, what is the
FCC doing to ensure that the DTV transition is not jeopardized by
unlicensed consumer digital devices?
Answer. The DTV transition is one of my top priorities and I would
not do anything to jeopardize that effort. FCC testing of ``white
spaces'' devices continues and will guide my decision-making. Again,
however, I am committed to protecting existing spectrum users from
harmful interference. Moreover, as a practical matter, it is highly
unlikely that any ``white spaces'' devices could be on the market by
February 17, 2009. Even if testing were over (which it is not), the
design and manufacturing cycle would extend well past next February.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Hon. Jonathan S. Adelstein
Question 1. Last year, a provision to reform the FCC's forbearance
authority was included in the Committee's telecom reform bill.
Specifically, it would have eliminated the ``deemed granted'' language
in Section 10 in order to ensure a fairer process at the FCC. I
recently introduced legislation that will eliminate this provision, so
we can avoid a situation where the agency erases its rules simply by
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
Answer. I share your concerns about the Commission's use of Section
10 forbearance authority and believe that the public is best served
when the Commission adopts orders addressing such petitions rather than
letting them become ``deemed granted.'' Congress has given the
Commission a powerful tool in our Section 10 forbearance authority, but
the Commission must wield it responsibly.
In many forbearance proceedings, I have worked with my colleagues
to support regulatory relief where the record reflects the development
of competition and includes evidence to satisfy the substantive
standard of Section 10. I am concerned, however, about the Commission's
approach to forbearance, including allowing a complex and controversial
forbearance petition to grant without issuing an order. Allowing
petitions to grant by operation of law, and without disclosing a shred
of analysis, does not best serve the public interest. Moreover, this
approach inappropriately ignores Congress's directive to consider the
specific substantive standards set out in Section 10 and raises serious
questions about the scope, effect, and validity of its actions.
I supported the recent action by the Commission to issue a Notice
of Proposed Rulemaking on the need for procedural rules to guide its
consideration of forbearance petitions. I have urged the Commission to
adopt procedural rules for forbearance petitions, such as requiring
parties to include in their original petitions detailed information
about the services subject to the petition and a detailed analysis of
how such proposals satisfy the statutory test. Procedural rules can
provide transparency and predictability to all interested participants
and can restore confidence in Commission processes. While only Congress
can address the continued applicability of the ``deemed grant''
provision of Section 10, I am pleased that the Commission has taken at
least an initial step toward improving its processes, and I will
continue to encourage my colleagues to complete this proceeding as
expeditiously as possible.
The Court of Appeals for the District of Columbia recently rejected
a challenge to the ``deemed grant'' of a far-reaching, industry-filed
petition, effectively foreclosing judicial review of such cases.\1\ The
court concluded that the ``deemed grant'' is an act of Congress rather
than of the FCC and, therefore, is not reviewable agency action. Thus,
the current approach to forbearance has effectively permitted
petitioners to write the terms of their relief, to amend their request
multiple times during the course of the Commission's consideration, to
obtain that relief without the Commission issuing an order, and to
evade judicial review. Such an approach raises serious Constitutional
questions and does not best serve the public interest.
---------------------------------------------------------------------------
\1\ Sprint Nextel Corp. v. FCC, 06-1111 (Dec. 7, 2007).
Question 2. Earlier this year, the FCC released a Notice of
Proposed Rulemaking examining so-called ``two-way, plug-and-play
standards'' for cable navigation devices. Do you support implementation
of Section 629 in a way that will create a retail market for ``two-way,
plug-and-pay'' devices and allow for greater competition and consumer
choice? Do you believe that FCC oversight is sufficient to ensure that
any standards and specifications are created and changed through a fair
process that treats all affected parties equitably?
Answer. I support the implementation of section 629 to create a
retail market for ``two-way, plug-and-play'' devices and allow for
greater competition, more consumer choice and higher quality products
and services. Congress intended to create a competitive market for
navigation devices by ensuring that consumers have the opportunity to
buy navigation devices from sources other than their video provider.
Thus, the goal is to create a national, competitive market for
navigation devices which would give consumers the option of going to
their electronics retailer to choose a set-top box with innovative
features.
Under section 629, Congress directed the Commission to adopt
regulations to assure the commercial availability of navigation
devices, such as converter boxes and interactive communications
equipments, ``in consultation with appropriate industry standard-
setting organizations.'' The Commission has sufficient oversight
authority to ensure that standards and specifications are created and
changed through a fair process. However, FCC oversight alone may not be
sufficient to achieve the goals of section 629. The honest and full
support of the affected industries is essential to ensure that MVPD
delivery systems support the commercial navigation device and that the
commercial device preserves the integrity of the MVPD's suite of
offerings. Continued Congressional oversight may be necessary to
encourage good faith negotiations among the parties. Also, guidance
from Congress is always helpful during our deliberation.
The development of technological standards and specifications is
indeed complicated. Accordingly, the two-way, plug-and-play NPRM
specifically seeks comment on the Commission's oversight role in the
development of standards and specifications for enhanced CableCARD,
OCAP, and all-MVPD solutions. I look forward to reviewing the comments
carefully, and discussing further action with my colleagues to advance
the public interest.
______
Response to Written Questions Submitted by Hon. Byron L. Dorgan to
Hon. Jonathan S. Adelstein
Question 1. At the last FCC open meeting in November, you made some
strong statements regarding how the FCC operates. For example, with
respect to a certain annual report, you pointed out that the Chairman
cherry-picked only the data that justified the outcome desired, while
suppressing other data. You made clear your view that decisions should
be objective and based on the facts, not outcome-driven for political
expediency.
This is not the first time you have raised these concerns. With
respect to the media ownership proceeding, you state that studies were
suppressed, and others were structured and conducted with the goal of
facilitating consolidation.
I am deeply troubled to learn that the Chairman of this Commission
operates in this way, and share your view that this undermines the
Commission's credibility. Can you elaborate on how the culture of this
FCC impacts its policy decisions?
Answer. You raise key concerns about the problems with process and
transparency that have affected the Commission recently. While it is
true that roughly 95 percent of the items that the Commission addresses
are resolved on a unanimous and bipartisan basis, a smaller number of
high profile proceedings have been problematic. The issues can be hard,
but as a Commission, we all need to do a better job in working together
to improve the FCC decision-making process.
More specifically, we need to encourage a greater deal of
transparency at the FCC. The GAO already has commented on the agency's
lack of openness with regard to access to information on the timing of
Commission votes. As a rule, greater openness by the Commission will
inspire greater confidence and better decisionmaking. So we must take
specific action to eliminate any unnecessary barriers to information
and ensure it flows even-handedly to all parties, including public
interest groups. Publication by the Chairman of the circulate list is a
good first step. I also have called for the publication of the list of
our so-called ``white copy'' items--those items that are identified by
the Chairman's office for consideration 3 weeks prior to a Commission
open meeting.
I also believe that the agency's culture will be improved and the
Commission will be well served by encouraging greater dialogue between
Commissioners and career staff. Many times, the agency staff simply is
steeped in an issue, with unparalleled and independent expertise. It
would be invaluable to allow the staff to more freely share their
independent perspective with the Commissioners to improve the
decisionmaking process. I want to see our staff encouraged to provide
feedback and critical thought on all FCC decisions and to provide
advice to the Commissioners upon request.
Question 2. You say the FCC must not move forward with issuing new
media ownership rules until it creates an independent minority
ownership task force that is empowered to perform an accurate census on
minority and female owners and then analyze the impact of policy
decisions on minority ownership. Tell me why this is so important. What
has the FCC failed to do in order to promote female and minority
ownership?
Answer. As the gatekeeper of the public airwaves, the Commission
has a solemn obligation to ensure that all Americans have equal access
and opportunity to own, operate and control broadcast outlets. Indeed,
the founding charter of the FCC requires us to protect the public
interest. We have traditionally relied on the importance of promoting
competition, localism and diversity. It requires us to take affirmative
steps to prevent discrimination on the basis of race, gender, religion,
and nationality. It also requires us to take affirmative steps to
promote diversity of ownership because, in America, ownership is the
key to having your voice heard. And if these statutory mandates are not
sufficient, in section 257 of the Communications Act, Congress
specifically encourages us to develop and promote policies that favor
the diversity of media voices.
Despite this clear and unequivocal mandate to facilitate ownership
and participation by new entrants, women and people of color, the
Commission has been hesitant to act. And even when we've acted, it has
not been in a comprehensive and sustained manner. Piecemeal, short-term
measures will not improve the number of women and minority
broadcasters, especially when the Commission continues to relax our
media ownership rules.
Women make up over half of the U.S. population, and minorities make
up over a third. But women and people of color own broadcast stations
at roughly one-tenth of their level of representation in the
population. In radio, women and people of color own approximately 6
percent and 8 percent of stations, respectively. Media consolidation
only takes outlets further out of the reach of women and people of
color, and further from the local communities and their values. That's
why we needed to first implement improvements to diversity and localism
before we considered loosening the media ownership rules.
As you are aware, on December 18, 2007 and over my objection, the
Commission relaxed the newspaper/broadcast cross-ownership rule in all
markets. This decision will take broadcast TV stations further beyond
the reach of women and minority owners. As Free Press has shown, an
examination of FCC data reveals that women and people of color,
respectively, own about 6 percent and 3 percent of TV stations. Rather
than improving the opportunities for women and people of color to
purchase local TV stations, the FCC has substantially raised the
barrier of entry--decreasing further the likelihood of diversifying the
ownership class of TV stations.
Under the revised newspaper/broadcast cross-ownership rule, in the
top 20 markets, there is a high presumption in favor of permitting the
dominant local newspapers to purchase a local TV station that is not
among the top four ranked stations in the market. The main problem is
that these are likely the only stations that a women or minority would
have an opportunity to purchase. Instead of promoting women and
minority ownership, the FCC has taken affirmative steps to impede it.
Rather than limiting opportunities for women and people of color,
the FCC--to begin--should attempt to improve the regulatory climate by:
(1) staying any relaxation of the broadcast media structural rules; (2)
adopting a definition of ``eligible entity'' that will truly provide
women and minority owned broadcast businesses with targeted regulatory
relief; (3) developing an accurate census of women- and minority-owned
stations; (4) conducting a longitudinal study of the effects of our
media ownership rules on women and minority ownership; and (5) creating
an independent, bipartisan panel to review Commission rules, propose
reform measures, and monitor the Commission's progress over time.
These initial steps are critical because over the years, it has
been standard operating procedure for the FCC to neglect its statutory
obligation to promote diversity of ownership. For instance, as the
Commission nears completion of an item addressing women and minority
ownership, so much time has gone by that it has had to start all over
again. Such was the case when the Commission made a good faith attempt
to respond to the Supreme Court's decision in Adarand v. Pena. In 2000,
the Commission developed a series of empirical studies to determine the
impact of Commission policy on women and minority businesses. Since
that time however, the Commission has done nothing more than to
``refresh the record.''
Also, as the Commission knows all too well, there is no accurate
census of women- and minority-owned stations. A study commissioned by
the FCC has found, ``the data currently being collected by the FCC is
extremely crude and subject to a large enough degree of measurement
error to render it essentially useless for any serious analysis.'' We
do not even have enough data to determine which owners or stations will
actually benefit or be harmed. For safe measure, we should not act in
an area of such sensitivity until we can clearly ascertain the actual
impact. An independent panel would provide an effective means of
addressing this data shortfall.
______
Response to Written Question Submitted by Hon. Bill Nelson to
Hon. Jonathan S. Adelstein
Question. As you are probably aware, Florida is currently the
largest ``net payer'' state into the Universal Service Fund. Florida
pays in more than $300 million more to the USF than it receives in
disbursements. Getting beyond the idea of a ``cap'' of some sort--which
may raise competitive issues--it seems like one other way of achieving
efficiencies is through more effective targeting of support. How do you
feel about this approach?
Answer. Among the highest priorities for the FCC is implementing
and directing Universal Service as intended by Congress in Section 254
of the Act. The FCC is actively engaged in re-examining almost every
aspect of our Federal Universal Service policies, from the way that we
conduct contributions and distributions, to our administration and
oversight of the fund. Each of these proceedings has a potential impact
on the contribution burdens of individual consumers. As reflected in
your question, one of the central challenges is preserving and
advancing Universal Service in the broadband age, while remaining
mindful that it is consumers who ultimately fund Universal Service
contributions.
Congress and the Commission recognized early on that the economic,
social, and public health benefits of the telecommunications network
are increased for all subscribers by the addition of each new
subscriber. Federal Universal Service continues to play a vital role in
meeting our commitment to connectivity, helping to maintain high levels
of telephone penetration, and increasing access for our Nation's
schools and libraries. Ensuring the vitality of Universal Service will
be particularly important as technology continues to evolve, and as our
Nation confronts the critical broadband infrastructure challenge.
I note that the Federal-State Joint Board on Universal Service
(Joint Board) recently issued a Recommended Decision that seeks to
address long-term reform issues facing the high-cost Universal Service
support system. The Joint Board addressed the targeting of Universal
Service support in a number of contexts, including questions about
which services should be supported, whether the fund should support one
or multiple providers in a given area, whether funds should be
distributed on a more granular level, and whether to direct funds to
unserved, underserved, or high cost areas more generally. I note that
the Joint Board was not able to reach consensus on all of these issues,
or even recommendations on some issues, but I appreciate the Joint
Board's analysis and numerous recommendations. Indeed, I hope that the
Commission will seek comment quickly on the Joint Board's considered
input, and I look forward to carefully reviewing the record developed
in response to this set of proposals.
I also believe that it is important that the Commission conduct its
stewardship of Universal Service with the highest of standards. We must
be active in our oversight and aggressively combat any evidence of
waste, fraud and abuse. As we move forward with these issues, I look
forward to any guidance from Congress regarding this important program.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Jonathan S. Adelstein
Question 1. A recent GAO report cited that no comprehensive plan
exists for the digital television transition. The GAO stated ``Among
other things, a comprehensive plan can detail milestones and key goals,
which provide meaningful guidance for assigning and coordinating
responsibilities and deadlines and measuring progress. Such planning
also includes assessing, managing, and mitigating risks, which can help
organizations identify potential problems before they occur and target
limited resources''. This week the Commission released a written
response to the GAO report. At this point in time, what do you consider
to be the top five risk factors with respect to American consumers
getting through the digital television transition with minimal
disruption? Which of these risk factors fall under the jurisdiction of
the FCC? How is the FCC managing and mitigating these risks?
Answer. As I have testified at DTV transition hearings before the
Senate Commerce Committee and the Special Committee on Aging, I believe
the top five risk factors with respect to American consumers
transitioning to digital television with minimal disruption include:
(1) the lack of a comprehensive plan; (2) the lack of a coordinated
message; (3) the lack of Federal, state, local and tribal government
coordination; (4) the lack of an established grassroots campaign; and
5) the lack of Federal resources.
1. As GAO found, no one appears to be in charge of the
transition. And because there is no one in charge, there is no
strategic plan. This falls under the jurisdiction of the FCC
and NTIA, but I believe the FCC has the requisite expertise and
staff to lead this national effort.
I continue to be concerned that there is no established
structure to coordinate the national DTV transition. No one is
ultimately responsible for vetting, prioritizing and
implementing ideas from both the public and private sectors
into a comprehensive and coherent plan. Poor long-term planning
and the continued lack of a national, Federal and internal FCC
coordination plan have left the FCC in the unfortunate position
of playing catch-up. Rather than being proactive--anticipating
problems and concerns, and developing an effective strategy--
we've been reactive.
2. Another risk factor is the lack of a coordinated message
sent by the government and companies to the public. I am
concerned that there is no coordinated message, and that the
most vulnerable, over-the-air viewers will not have the proper
information and technical assistance necessary. I have
advocated that the FCC, NTIA and other relevant Federal
agencies develop a Federal DTV Task Force. This multi-agency
task force, accountable to Congress, would clarify the message
and develop benchmarks and a timeline. Beyond coordinating
government efforts at all levels--as well as our own internal
efforts--the task force can convene joint meetings with the
private sector coalition to ensure a coherent, consistent
message across all channels. And it can help to coordinate the
many public-private assistance efforts needed for at-risk
communities. With a coherent message, the task force could work
with other Federal agencies to integrate DTV educational
information into many points of contact with consumers.
3. A third risk factor is the lack of coordination between all
levels of government--Federal, state, local and tribal. While
there is not a comprehensive plan or a coordinated message, the
lack of coordination between all levels of government is
perhaps the factor that should be easiest to correct because it
is within our own control. The opportunity cost of the failure
to leverage the resources and experience of state and local
governments is enormous, as these entities are in the best
position to reach every household and to provide targeted
assistance, such as disseminating DTV transition information in
the appropriate foreign language, connecting with local service
delivery organizations, and offering technical assistance to
senior citizens and other vulnerable populations.
4. The lack of an established grassroots campaign is another
risk. This campaign should target communities with the highest
concentration of the most vulnerable, over-the-air viewers. It
needs to establish timelines for training and outreach to
ensure people who need help can get it. This can fall under the
jurisdiction of the FCC as well as NTIA but, as the GAO
reported, the FCC is uniquely qualified to take the reins on
this plan. We not only need to get the word out, but we need an
implementation plan that helps seniors, those with disabilities
and others who need direct intervention in setting up their
boxes, antennae or other issues.
In my own outreach, I have found the broadcasters, cable
operators, and consumer electronics manufacturers and retailers
eager to develop a meaningful partnership with the Federal
Government. For instance, after my criticism of the cable
industry's first round of PSAs, the industry sought my guidance
in developing future PSAs. The cable industry was receptive to
all of my suggestions, including a technical correction. But
rather than the ad hoc approach of individual Commissioners
reviewing scripts, it would have been preferable for an FCC DTV
education specialist to work with each industry as they are
developing PSAs based on a clear message vetted by the
Commission and other agencies involved. To my knowledge, the
Commission has not even asked to look at them. I am not
suggesting we dictate the message verbatim, but rather that we
offer suggestions to help coordinate it. Our industry partners
are very receptive to such a cooperative approach.
5. The final risk factor is the lack of resources appropriated
to educate the public about the DTV transition. More resources
are needed to expand the scope and depth of our efforts, but it
is not solely a matter of funding to raise the awareness of
Americans, particularly at-risk groups such as the elderly,
low-income families, rural residents, and people with
disabilities, minority groups and non-English speakers. First,
it is a matter of coordination and prioritization. Then, it is
a matter of implementation. The United Kingdom spent much more
money for a much smaller population in order to educate their
public than we are appropriating currently.
Question 2. Should the common carrier exemption be removed from the
Federal Trade Commission? What, if any, would be the disadvantage to
consumers if the exemption is removed?
Answer. The Federal Trade Commission Act (FTCA) exempts common
carriers subject to the Communications Act from FTCA's prohibitions on
unfair or deceptive acts and practices and unfair methods of
competition. Whether to end this exemption is ultimately a question for
Congress, but I continue to believe that the FCC must do more to
prioritize the interests of consumers and that consumers would benefit
from additional oversight.
Proponents of lifting the common carrier exemption have argued that
changes in the telecommunications marketplace, industry structure, and
the dismantling of traditional regulatory protections leave consumers
inadequately protected. For example, traditional common carriers are
increasingly offering bundles of services, some of which may be subject
to the FTC's jurisdiction under the FTCA, others of which may not. On
the other hand, opponents of removing the exemption have argued that
such an approach could lead to duplicative regulation. This overlap has
the potential to create confusion for providers and consumers, and may
increase the likelihood of forum shopping. In addition, the FCC has
developed a vital understanding of the rapidly evolving
telecommunications market that positions it well to address consumer
protection issues raised with respect to communications issues. As
Congress considers this question, I would encourage it to examine
potential areas of overlap and consider whether there are certain areas
that would particularly benefit from structured coordination among
agencies.
At the FCC, I have been particularly concerned that recent
decisions regarding broadband Internet access services have left
consumers in legal limbo. Through the Communications Act, Congress
codified a broad set of consumer protection obligations for
telecommunications services that the FCC has now side-stepped with its
current approach to broadband services. It is regrettable that, 2 years
after exercising the blunt instrument of reclassification, the
Commission has not significantly advanced the discussion of safeguards
for broadband consumers, even though we have an open docket concerning
Consumer Protection in the Broadband Age. The Commission must do more
to assess the experiences and expectations of broadband consumers, who
deserve our attention.
This is not to suggest that we regulate reflexively or append
legacy approaches where they do not belong. It is imperative, however,
that as consumers continue to demand greater access to broadband
technology, the FCC must keep apace of consumers' experiences and
expectations to ensure they are afforded the appropriate protections.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg
to Hon. Jonathan S. Adelstein
Question 1. New Jersey is a net contributor of almost $200 million
a year to the Universal Service Fund (USF). There are many proposals
for reforming USF, including temporary caps and longer-term proposals.
When can I tell my constituents that they will see some action from the
FCC to stop the exponential growth of this Fund?
Answer. As reflected in your question, one of the central
challenges is preserving and advancing Universal Service in the
broadband age, while remaining mindful that it is consumers who must
pay Universal Service contributions. The FCC is actively engaged in re-
examining almost every aspect of our Federal Universal Service
policies, from the way that we conduct contributions and distributions,
to our administration and oversight of the fund. Each of these
proceedings has a potential impact on the contribution burdens of
individual consumers. While I cannot predict when the FCC will act on
these proceedings, I can assure you that I will work with my colleagues
to ensure timely decisions that implement Section 254 as Congress
intended.
Congress and the Commission recognized early on that the economic,
social, and public health benefits of the telecommunications network
are increased for all subscribers by the addition of each new
subscriber. Federal Universal Service continues to play a vital role in
meeting our commitment to connectivity, helping to maintain high levels
of telephone penetration, and increasing access for our Nation's
schools and libraries. Ensuring the vitality of Universal Service will
be particularly important as technology continues to evolve, and as our
Nation confronts the critical broadband infrastructure challenge.
I note that the Federal-State Joint Board on Universal Service
(Joint Board) recently issued a Recommended Decision that seeks to
address long-term reform issues facing the high-cost Universal Service
support system. I hope that the Commission will seek comment quickly on
the Joint Board's considered input, and I look forward to carefully
reviewing the record developed in response to this set of proposals.
Finally, I also believe that it is important that the Commission
conduct its stewardship of Universal Service with the highest of
standards. We must be active in our oversight and aggressively combat
any evidence of waste, fraud and abuse. As we move forward with these
issues, I look forward to any guidance from Congress regarding this
important program.
Question 2. The ``UHF discount'' rule allows UHF stations to count
only 50 percent of the households in a local designated market area
(DMA) for purposes of the national television ownership cap. With the
transition to digital television, is there any justification for
maintaining the UHF discount? What effect does this have on media
consolidation?
Answer. The original justification of the UHF discount rule was to
account for the deficiencies in over-the-air UHF reception in
comparison to VHF reception. An analog UHF signal has a shorter range
than an analog VHF signal, so the rule discounted the audience reach of
UHF stations by half to compensate for the fact that fewer households
in the market could receive a quality over-the-air UHF signal. However,
after the DTV transition, all TV signals from full-power commercial and
non-commercial stations will be the same--digital. Also, since 85
percent of household subscribe to cable or satellite video service, and
therefore do not rely on over-the-air transmission for TV service, the
underlying justification for the UHF discount no longer exists.
Perpetuating the UHF discount does indeed effect media
consolidation because it distorts the audience reach of broadcast
stations for purposes of the 39 percent national TV audience cap. Using
the UHF discount, one company could control the news and information
that 80 percent of U.S. households receive on a daily and hourly basis.
As I have stated repeatedly, such concentration of power and control of
information could harm our democracy, which relies upon the free
exchange of ideas from multiple sources. Central to our American
democracy is the ``uninhibited marketplace of ideas,'' where everyone
is able to exchange and share music, news, information and
entertainment programming over the public airwaves. As the Supreme
Court has observed, ``it is the right of the public to receive suitable
access to social, political, esthetic, moral and other ideas and
experiences.'' That right is enshrined in the First Amendment to the
U.S. Constitution.
Broadcast television continues to have a powerful influence over
our culture, political system, and the ideas that inform our public
discourse. Study after study has shown that broadcasting is still the
dominant source of not just local news and information, but also
entertainment programming. The broadcast industry still produces,
disseminates, and ultimately controls the news, information, and
entertainment programs that most inform the discourse, debate, and the
free exchange of ideas that is essential to our participatory
democracy. Our failure to assess accurately the reach of TV broadcast
stations would be a failure to protect the interests of the American
people and to execute faithfully the directive of Congress.
______
Response to Written Question Submitted by Hon. Thomas R. Carper to
Hon. Jonathan S. Adelstein
Question. The Federal Communications Commission should be commended
for issuing its recent Notice of Proposed Rulemaking that considers
whether to authorize Big LEO Mobile Satellite Services operators to
provide ancillary terrestrial services on more of their assigned
spectrum. As you are aware, one such operator, Globalstar, and its
partner, Open Range Communications, need this authority in order to
pursue their plan to bring broadband services to more than 500 rural
communities across the country. Given the Commission's stated
commitment to promote the rapid deployment of advanced broadband
services to unserved and underserved areas, will you assure the
Committee that you will do all that it takes to complete this
proceeding in the time required for Globalstar and Open Range to move
forward with their business plan?
Answer. S. 2332I am very pleased that we have initiated a
proceeding to consider spectrum authorizations and technical rules for
ancillary terrestrial services (ATC) in the Big LEO bands. I will work
with my colleagues to complete this proceeding as quickly as possible.
As you indicate, this item seeks comment on expanding the L-band and S-
band spectrum in which Globalstar may operate ATC. I continue to
strongly advocate the need to promote opportunities to expand wireless
connectivity, as well as to reach our rural communities with broadband
access. I firmly believe that broadband is the key to economic growth
for these underserved areas in this digital information age. The
opportunities for rural areas that have seized the broadband initiative
are enormous. I will continue to advocate and encourage ``spectrum
facilitation''--whether technical, economic or regulatory--to get
spectrum into the hands of operators seeking to provide broadband
services to underserved areas as quickly as possible.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Hon. Deborah Taylor Tate
Question 1. Last year, a provision to reform the FCC's forbearance
authority was included in the Committee's telecom reform bill.
Specifically, it would have eliminated the ``deemed granted'' language
in Section 10 in order to ensure a fairer process at the FCC. I
recently introduced legislation that will eliminate this provision, so
we can avoid a situation where the agency erases its rules simply by
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
Answer. As a Commissioner, my preference is always to vote on an
item and issue a decision. During my tenure, only one petition has been
deemed granted by operation of law, and that occurred because there
were only four Commissioners at the time resulting in a 2-2 vote on the
order circulated by the Chairman.
On November 30, 2007, the Commission issued an NPRM to consider
procedures governing its review of petitions requesting forbearance
from regulation including: format and content of forbearance petitions,
notice and comment rules (such as default comment periods and time
limits on ex parte filings) and participation of state commissions, as
well as other parties, in forbearance proceedings. The Commission also
sought public comment on whether forbearance is an effective means for
the Commission to make changes to its regulations.
Question 2. Earlier this year, the FCC released a Notice of
Proposed Rulemaking examining so-called ``two-way, plug-and-play
standards'' for cable navigation devices. Do you support implementation
of Section 629 in a way that will create a retail market for ``two-way,
plug-and-pay'' devices and allow for greater competition and consumer
choice? Do you believe that FCC oversight is sufficient to ensure that
any standards and specifications are created and changed through a fair
process that treats all affected parties equitably?
Answer. I have always believed that competition is in the best
interest of consumers. Where competition flourishes, we see faster
development of new and improved technologies, as well as lower prices,
which benefit consumers. Yes, I believe FCC oversight is sufficient to
ensure a fair and equitable resolution, if FCC action is required.
Section 629 mandates that the FCC consult with appropriate industry
standard-setting organizations to adopt regulations for converter
boxes. As the Commission did when setting the standard for
unidirectional devices, we will again consult with the appropriate
industry standard-setting organization, the Society of Cable Television
Engineers (``SCTE''), if faced with the decision on the standards for
two-way devices. I hope the various industry parties will be able to
reach consensus on an industry standard.
______
Response to Written Questions Submitted by Hon. Byron L. Dorgan to
Hon. Deborah Taylor Tate
Question 1. On December 18 the FCC held a vote on a major change to
the nations' media ownership rules, despite substantial concern here in
the Senate. The Commerce Committee passed S. 2332, the Media Ownership
Act of 2007, on December 4. We have over 20 bipartisan cosponsors. We
asked you to delay this vote to consider important issues of localism
and minority ownership and allow a proper period of comment on the
rules. Why was it so important to move ahead on December 18 despite
this opposition? Why could you not delay this vote beyond December 18?
Answer. To my knowledge, the Commission has always followed APA
guidelines, which includes the opportunity for public notice and
comment. The course leading up to our decision on the media ownership
rules was the most thorough, open, and public I have been part of in my
twenty-plus years of government service. It began in 2003 with the
release of our 2002 Biennial Review Order, and culminated in a single,
limited change to one aspect of our media ownership rules in December
2007. In reaching this decision, we held hearings all across the
country over the past 18 months. We sought and received comment from
academics, economists, media industry representatives, artists, public
interest groups, and individual laypersons. We commissioned ten media
studies and put those studies out for multiple peer reviews. This
procedure was twice as long as the prior media ownership review. In the
end, we kept all of our rules in place, except for the newspaper/
broadcast cross-ownership ban, which we relaxed only in the top 20,
most media-rich markets in the country. I would suggest this is a minor
change--not a major one. Therefore, in light of the remand by the U.S.
Court of Appeals for the Third Circuit in 2004, which directed the
Commission to act, and the lengthy procedure we undertook, I was
prepared to vote on the date the Chairman set our meeting.
Question 2. Chairman Martin says the FCC provided a lengthy public
comment period of 120 days, which was extended to 167 days. The FCC
also held six hearings and finished the two localism hearings. But how
could the public be expected to adequately comment on your proposed
rules if the Commission issued the proposed rules at the end of the
process?
Answer. To my knowledge, in advance of any rulemaking, it has been
the practice of the Commission to issue a broad Notice of Proposed
Rulemaking, seeking public comment on how our policies should be
crafted, analyze the comments received, and then draft rules. To draft
rules first, and seek comment later, would seem to actually remove the
public from the process. To seek comment, then draft rules, and then
seek comment again, would seem to create a revolving door in which the
FCC would be constantly analyzing comments without ever taking action.
In its order, the U.S. Court of Appeals for the Third Circuit made
clear that ``the APA's notice obligations are not supposed to result in
a notice-and-comment `revolving door.' '' We began this process with
the release of our Biennial Review Order on July 2, 2003, and completed
it on December 18, 2007. During those 4 years we held hearings, sought
comment, commissioned studies, and conducted peer reviews. Though not
required to do so, in the spirit of openness and transparency, the
Chairman shared his proposed rule change with the public on November
13, 2007, 5 weeks before the December 18 vote. While I am certainly
willing to work with Congress to amend our rulemaking procedures, I
believe the Commission followed established protocol, in accordance
with APA requirements.
Question 3. The FCC held six hearings across the country at a cost
of more than $200,000. I worry that the $200,000 was totally wasted as
you ignored the input of the public on December 18. They testified
against consolidation. You didn't hear people coming out and saying
they wanted the newspaper to own the television station. You heard
massive opposition to consolidation. Chairman Martin has said that the
FCC didn't hear people constantly sounding off against cross-ownership,
but why would you hear that--the Chairman never told them what rules he
was concentrating on. How could the FCC vote on a rule to relax the
cross-ownership ban having heard the massive opposition to
consolidation?
Answer. I found these hearings to be extremely valuable and I
appreciate the thousands of citizens who participated. In response to
the concerns expressed regarding cross-ownership, we did not relax the
ban on radio ownership; we did not relax the ban on television
ownership; we did not relax the ban on radio/television cross-
ownership; and we did not relax the ban on dual network ownership. With
regard to the ban on newspaper/broadcast cross-ownership, we only
modified the rule in the top 20 designated market areas, places like
Los Angeles, New York, and Chicago, which have the largest number of
media outlets in the country. Further, it is incorrect to suggest that
every comment we heard was in opposition to cross-ownership. The record
also includes comments from those who felt that local news would
improve in quality and quantity as a result of the resource-sharing
opportunities created by a newspaper and broadcaster being under common
ownership.
Question 4. The Media Ownership Act of 2007 requires the FCC to
seek 90 days of comment on specific proposed changes to its broadcast
ownership rules; complete a separate rulemaking on localism, with a
study at the market level and 90 days of comment on localism, prior to
rule changes being issued for comment; and convene an independent panel
to make recommendations on increasing the ownership of broadcast media
by women and minorities. Why should the FCC not have postponed the
December 18 vote to take care of these tasks?
Answer. The most recent media ownership rulemaking process began in
July 2003, with the release of the 2002 Biennial Review Order, and over
the last 18 months has included a series of nationwide hearings in
which we heard from thousands of laypersons and experts, and
commissioned ten media studies. Regarding the localism rulemaking
specifically, we held six nationwide hearings and are continually
adopting orders like the enhanced disclosure order, which requires
broadcast stations to make their public files available online, and the
localism order which seeks comment on a variety of measures to help
ensure the availability of local news. Regarding the diversity order,
we currently have a committee in place, the FCC Advisory Committee for
Diversity in the Digital Age, chaired by the first Hispanic FCC
Commissioner, Henry Rivera, and comprised of numerous members of
diverse communities. They, along with the Minority Media and
Telecommunications Council and the National Association of Black-Owned
Broadcasters, developed a list of proposals, a dozen of which we have
already adopted, to increase involvement by women and minorities in the
media industry. Those proposals include: (1) extending construction
permit deadlines, (2) modifying our equity/debt plus attribution rule,
(3) strengthening our distress sale policy, (4) adopting a policy
banning racial or gender-based discrimination in broadcast
transactions, (5) adopting a zero tolerance policy for ownership fraud,
(6) requiring nondiscrimination provisions in advertising sales
contracts, (7) conducting longitudinal studies on minority and women
ownership trends, (8) encouraging local and regional bank participation
in SBA guaranteed loan programs, (9) offering duopoly priority for
companies that finance or incubate an eligible entity, (10) extending
divestiture deadlines in certain mergers, (11) holding an ``Access to
Capital Conference'', and (12) creating a guidebook on diversity. All
of these proposals will be implemented expeditiously, and as new
proposals are presented we will continue to consider those as well. I
personally have attended the National Association of Broadcasters'
Education Foundation, which offers women and minorities the opportunity
to develop professional business skills that will assist them in
accessing managerial and ownership positions in the media industry. I
have also attended the Hispanic Broadcasters Association Financing and
Capitalization Seminar, worked with the National Association of Black-
Owned Broadcasters, and attended the Rainbow/Push Coalition's Wall
Street Project. Improving the staggeringly low rate of female and
minority ownership will continue to be one of my top personal and
professional goals. The FCC has and continues to show great dedication
to increasing local news and to diversity in media ownership. Of course
we can always do more, but I believed it was important to act on the
recommendations before us.
Question 5. Should the Chairman have put out his proposed media
ownership rules in a New York Times op-ed and then in an FCC press
release? Do you believe they should have been issued in the Federal
Register?
Answer. As a former state PUC Chairman, I know the difficulties
associated with this type of leadership position. Regarding the
issuance of the proposed rule change, see Answer #2 above.
Question 6. You have heard concerns that the Chairman's proposal
opens up cross-ownership to much more than the top 20 markets. I don't
agree with any cross-ownership at all. Not in the top 30, not in the
top 20. I think I'm saying the same thing as the 1,000 people who came
to the hearing in Los Angeles and the 1,100 people who turned out in
Seattle. Why are we not being heard?
Answer. I appreciate the thousands of citizens who attended our six
public hearings and their comments certainly had an impact on me. In
response to their concerns, the Commission did not relax the radio
ownership limit; did not relax the television ownership limit; did not
relax the radio/television cross-ownership limit; and did not relax the
dual network ownership ban. We modified the rule regarding newspaper/
broadcast cross-ownership only in the top 20, most media-rich markets.
This modest change reflects our understanding of, and appreciation for,
the public comments we received. In addition, we also considered the
media studies and the public comments that demonstrate that local news
actually increases where resource-sharing occurs, and this supported
our decision to adopt the minor change to our rules.
Question 7. Recently concerns about unfair discrimination have been
raised in relation to Verizon Wireless blocking the text messaging
service of the pro-choice group, NARAL. Verizon Wireless quickly
corrected the problem, but the fact that it happened raises major
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the
FCC asking for your views on this issue. I have not received a
response. Can you tell me your views?
Answer. Before I arrived at the Commission, on August 5, 2005, the
Commission adopted a policy statement that outlines four principles to
encourage broadband deployment and preserve and promote the open and
interconnected nature of public Internet: (1) consumers are entitled to
access the lawful Internet content of their choice; (2) consumers are
entitled to run applications and services of their choice, subject to
the needs of law enforcement; (3) consumers are entitled to connect
their choice of legal devices that do not harm the network; and (4)
consumers are entitled to competition among network providers,
application and service providers, and content providers. All of these
principles are subject to reasonable network management. I support the
Commission's four principles regarding Internet policy, and believe
that consumers should have access to lawful content of choice that does
not harm the network. Internet providers have the right to mange their
networks in order to serve their customers as long as they do not
engage in unlawful discrimination.
On March 22, 2007, the Commission launched an inquiry into
broadband market practices, including the relationships between
broadband providers, content and application providers, and consumers.
Also, several groups filed a petition with the Commission on December
11, 2007, requesting that the Commission prohibit wireless carriers
from blocking text messages sent by any company, nonprofit group or
political campaign. I will closely evaluate the records in these
proceedings.
______
Response to Written Question Submitted by Hon. Bill Nelson to
Hon. Deborah Taylor Tate
Question. As you are probably aware, Florida is currently the
largest ``net payer'' state into the Universal Service Fund. Florida
pays in more than $300 million more to the USF than it receives in
disbursements. Getting beyond the idea of a ``cap'' of some sort--which
may raise competitive issues--it seems like one other way of achieving
efficiencies is through more effective targeting of support. How do you
feel about this approach?
Answer. As part of comprehensive long term reform of the Universal
Service Fund I support more effective targeting of support to ensure
that the funds are being deployed efficiently and effectively to high
cost areas.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Deborah Taylor Tate
Question 1. Do you believe that the newspaper industry is
profitable today?
Answer. I believe this is a very market-specific analysis. Some
newspapers may be profitable, but unfortunately we have seen that many
are not, resulting in the bankruptcy of many papers and a resulting
loss of voices in some markets. This is why it is so important that any
cross-ownership waivers, outside the top 20 largest media markets, are
decided on a case-by-case basis. In 2007 alone, The Boston Globe fired
24 of its news staffers, including two Pulitzer Prize-winning
reporters; the Minneapolis Star Tribune fired 145 employees, including
50 from their newsroom; The Rocky Mountain News fired 20; the Detroit
Free Press and The Detroit News announced cuts of 110 employees; and
the San Francisco Chronicle planned to cut 25 percent of its newsroom
staff. Given the incredible technological convergence, newspapers are
looking for ways in which to compete in the digital age and survive
given the impact of the Internet and as our studies indicate, cross-
ownership actually results in more local news through efficiencies and
resource-sharing.
Question 2. A recent GAO report cited that no comprehensive plan
exists for the digital television transition. The GAO stated ``Among
other things, a comprehensive plan can detail milestones and key goals,
which provide meaningful guidance for assigning and coordinating
responsibilities and deadlines and measuring progress. Such planning
also includes assessing, managing, and mitigating risks, which can help
organizations identify potential problems before they occur and target
limited resources''. This week the Commission released a written
response to the GAO report. At this point in time, what do you consider
to be the top five risk factors with respect to American consumers
getting through the digital television transition with minimal
disruption? Which of these risk factors fall under the jurisdiction of
the FCC? How is the FCC managing and mitigating these risks?
Answer. First, I would like to refer you to the ``FCC Written
Response to the GAO Report on DTV'' (``Written Response'') (http://
hraunfoss.fcc.gov/edocs_public/attach
match/DOC-278883A2.pdf), which outlines in minute detail the steps the
Commission is taking to prepare for the DTV transition. We have already
executed a number of significant initiatives, such as requiring
labeling of analog-only television sets, enforcing penalties against
retailers who fail to notify consumers about the risk of purchasing
analog-only sets, and completing three periodic reviews of the rules
for broadcasters as they prepare for the DTV transition. There are
numerous other benchmarks in the Written Response that we continue to
work toward. I believe this Report is a thorough and comprehensive
analysis of the issues remaining before the Commission. Thanks to the
appropriation of funds we received 2 weeks ago, the Commission will be
able to conduct more targeted education efforts to prepare Americans
for the transition. Second, I personally mention the DTV transition and
the informational website, www.dtv.gov, in every speech I give, whether
DTV-related or not. Additionally, I have spoken at numerous meetings
convened by the FCC's Consumer and Governmental Affairs Bureau, which
focused on specific segments of the population, such as seniors and
non-English speakers. I also participated in a panel discussion hosted
by the Intergovernmental Advisory Committee, which brought together
Governors, state and local officials, and tribal leaders from across
the country. Additionally, I participated in the NTIA set-top box kick-
off at the Department of Commerce, where vendors were on hand to
demonstrate the types of boxes that will be available to consumers
through the NTIA coupon program. I have worked with Jonas Hafstrom, the
Swedish Ambassador, and Magnus Harviden, Sweden's Counselor for Science
and Technology, to learn about the successful DTV transition recently
completed in their country. The FCC's International Bureau coordinated
a live teleconference to gain further insights on Sweden's transition
as well. Despite all of the FCC's current efforts, the process can
always improve. In an effort to be responsive to your question, here
are five areas which may pose some risk, but which are largely
addressed in the aforementioned Written Response.
1. Targeted outreach. Educational efforts are within the
jurisdiction of the FCC, and as I stated, we are conducting
forums. I am pleased that we recently received a $2.5 million
appropriation which will help us target those likely to be most
affected by the transition, such as the elderly and non-English
speakers.
2. Additional collaboration with non-traditional organizations.
Volunteer groups, like the Boy Scouts and Girl Scouts, and
other non-profit organizations, may offer assistance to those
most affected by the transition.
3. Increased intergovernmental and industry interaction.
Regular update and planning meetings between the groups
responsible for the transition could be facilitated by the FCC.
4. Technical issues. We recently issued the Third Periodic
Review of the Rules and Policies Affecting the DTV Conversion.
The Commission will continue to work with broadcasters on
issues arising in the future, as we approach February 17, 2009.
5. Consumer issues not within the FCC's jurisdiction. Congress
may want to consider how other associations could improve DTV
education efforts. For example, electronics manufacturers could
be encouraged to have a clear, conspicuous link on their
websites, in which consumers can input the model number of
their particular set, and determine whether it is analog or
digital. The set-top box coupon program, being administered by
the NTIA, is a critical component of the DTV transition.
Question 3. Should the common carrier exemption be removed from the
Federal Trade Commission? What, if any, would be the disadvantage to
consumers if the exemption is removed?
Answer. Obviously technological advances are blurring
telecommunications, content and information space. This platform
convergence may call for different types of oversight and regulation
especially as economic regulation is reduced. In certain situations
where the market pressure and competition do not provide enough
consumer protection there may be a need for more regulation--not just
from different Federal agencies, but also at the state and local level.
Certainly, whether or not to remove the exemption is within the purview
of Congress. Currently the Commission's Consumer and Governmental
Affairs Bureau (CGB) develops and implements the Commission's consumer
policies and is responsible for responding to consumer inquiries and
complaints. CGB provides informal mediation and resolution of
individual informal consumer inquiries and complaints consistent with
controlling laws and Commission regulations, and in accordance with the
Bureau's delegated authority. CGB receives, reviews and analyzes
complaints and responses to informal consumer complaints; maintains
manual and computerized files that provide for the tracking and
maintenance of informal consumer inquiries and complaints; mediates and
attempts to settle unresolved disputes in informal complaints as
appropriate; and coordinates with other Bureaus and Offices to ensure
that consumers are provided with accurate, up-to-date information.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg
to Hon. Deborah Taylor Tate
Question 1. New Jersey is a net contributor of almost $200 million
a year to the Universal Service Fund (USF). There are many proposals
for reforming USF, including temporary caps and longer-term proposals.
When can I tell my constituents that they will see some action from the
FCC to stop the exponential growth of this Fund?
Answer. Thank you for underscoring the exponential growth of the
USF and for your support of the Commission taking action. As Federal
Chair of the Federal-State Joint Board on Universal Service I was
pleased that within the last year the Joint Board made both short term
and long term recommendations for reform of the Fund. Several decisions
are currently circulating at the Commission to address USF reform and I
hope that the Commission can act as soon as possible.
Question 2. There has been recent activity--both at the FCC and in
the courts--regarding the rebanding of the 800 MHz spectrum. When do
you expect the rebanding to be completed?
Answer. While the original 800 MHz rebanding was addressed prior to
my arrival at the Commission, I am deeply committed to better, more
efficient utilization of the spectrum, especially as it relates to the
availability of spectrum for use by public safety. This process did not
begin as promptly as envisioned. Nevertheless, the rebanding of the 800
MHz band is progressing. To address some of the previous delays, in
September the Commission issued rules requiring any non-border licensee
to request a waiver in the event it will not complete rebanding by June
26, 2008. The Commission made clear that it would consider waivers on a
case-by-case basis and would not give blanket waivers to licensees that
failed to reband on schedule. Currently, the Commission is considering
additional guidelines for licensees that intend to file waiver
requests, in order to further expedite this process.
______
Response to Written Question Submitted by Hon. Thomas R. Carper to
Hon. Deborah Taylor Tate
Question. The Federal Communications Commission should be commended
for issuing its recent Notice of Proposed Rulemaking that considers
whether to authorize Big LEO Mobile Satellite Services operators to
provide ancillary terrestrial services on more of their assigned
spectrum. As you are aware, one such operator, Globalstar, and its
partner, Open Range Communications, need this authority in order to
pursue their plan to bring broadband services to more than 500 rural
communities across the country. Given the Commission's stated
commitment to promote the rapid deployment of advanced broadband
services to unserved and underserved areas, will you assure the
Committee that you will do all that it takes to complete this
proceeding in the time required for Globalstar and Open Range to move
forward with their business plan?
Answer. In 2006, the Commission authorized Globalstar to provide
Ancillary Terestrial Component (ATC) service in 11 megahertz of the
Mobile Satellite Services (MSS) band in which it is licensed to
operate. In a subsequent petition, Globalstar requested authorization
to provide ATC service in all of the MSS spectrum in which it is
licensed to operate, either exclusively or on a shared basis. In
response to this petition, the Commission released in November of 2007
a Notice of Proposed Rulemaking (NPRM) seeking comment on whether
Globalstar should be authorized to provide ATC service in additional
spectrum. This is an important issue. The opportunity for Globalstar to
partner with Open Range Communications to provide rural broadband
service, which your question addresses, is precisely the type of
benefit that may result from such authorization, in the event this may
be granted without causing harmful interference to authorized licensees
in adjacent bands. The Commission's prompt attention to this matter is
consistent with its focus on advancing policies that promote broadband
service to all Americans, including those in rural and isolated areas.
Further, as a former state official in a state with a large rural
population, expanding the availability of broadband service beyond the
largest cities is a priority for me. While the comment period for the
NPRM has not closed, I am committed to completing this proceeding
promptly upon review of the record.
______
Response to Written Questions Submitted by Hon. Ted Stevens to
Hon. Deborah Taylor Tate
Question 1. Does the Commission have the statutory authority to
provide Universal Service support to non-profit corporation tribal
consortiums, serving remote areas of Alaska, that provide education,
welfare, wellness, law enforcement, natural resources and economic
development services?
Answer. To help promote telecommunications service nationwide, the
Commission, as directed by Congress in section 254 of the
Communications Act of 1934, as amended by the Telecommunications Act of
1996 (47 U.S.C. 254. See also Telecommunications Act of 1996, Pub. L.
104-104, 110 Stat. 56 (1996) (the Act)) and with the help of the
Universal Service Administrative Company (USAC), administers the
Federal Universal Service Fund.
The Federal Universal Service Fund pays for four programs. They
are:
Lifeline/Link-Up. This program provides discounts on monthly
service and initial telephone installation or activation fees
for primary residences to income-eligible consumers. For
additional information see our consumer fact sheet at
www.fcc.gov/cgb/consumerfacts/lllu.html.
High-Cost. This program supports companies that provide
telecommunications services in areas where the cost of
providing service is high.
Schools and Libraries. This program helps support classrooms
and libraries in using the vast array of educational resources
available through the telecommunications network, including the
Internet. For additional information see our consumer fact
sheet at www.fcc.gov/cgb/consumerfacts/usp_Schools.html.
Rural Health Care. This program helps link health care
providers located in rural areas to urban medical centers so
that patients living in rural America will have access to the
same advanced diagnostic and other medical services that are
enjoyed in urban communities. For additional information see
our consumer fact sheets at www.fcc.gov/cgb/consumerfacts/
usp_RuralHealthcare
.html and www.fcc.gov/cgb/consumerfacts/
RuralHealthProgram.html.
The Commission has statutory authority to provide Universal Service
funds to the extent that a non-profit corporation tribal consortium
meets the eligibility requirements for a program.
Question 2. Kawerak is one of Alaska's tribal consortiums who
provides several services to remote areas of Alaska, and has expressed
concern about their ineligibility to receive Universal Service support
because they are unable to meet the precise definitions of health care
or educational service providers. Please address the requirements which
these tribal consortiums must meet in order to receive support.
Answer.
Schools and Libraries Program
Federal and state laws determine eligibility of schools, school
districts, and libraries. The following Internet link provides an
overview of the Schools and Libraries Program: http://
www.universalservice.org/sl/about/overview-program.aspx.
The Schools and Libraries Program of the Universal Service Fund,
commonly known as ``E-Rate,'' is administered by the Universal Service
Administrative Company (USAC) under the direction of the Commission,
and provides discounts to assist most schools and libraries in the
United States to obtain affordable telecommunications and Internet
access.
The Schools and Libraries Program supports connectivity--the
conduit or pipeline for communications using telecommunications
services and/or the Internet. Funding is requested under four
categories of service: telecommunications services, Internet access,
internal connections, and basic maintenance of internal connections.
Discounts for support depend on the level of poverty and the urban/
rural status of the population served and range from 20 percent to 90
percent of the costs of eligible services. Eligible schools, school
districts and libraries may apply individually or as part of a
consortium.
Applicants must provide additional resources including end-user
equipment (e.g., computers, telephones, etc.), software, professional
development, and the other elements that are necessary to utilize the
connectivity funded by the Schools and Libraries Program.
In general, a school is eligible for Schools and Libraries support
if it meets the following eligibility requirements:
Schools must provide elementary or secondary education as
determined under state law.
Schools may be public or private institutional day or
residential schools, or public charter schools.
Schools must operate as non-profit businesses.
Schools cannot have an endowment exceeding $50 million.
In many cases, non-traditional facilities and students may be
eligible.
Eligibility of Pre-Kindergarten, Juvenile Justice, and Adult
Education student populations and facilities depends on state
law definitions of elementary or secondary education.
An Educational Service Agency, which may operate owned or
leased instructional facilities, may be eligible for Schools
and Libraries support if it provides elementary or secondary
education as defined in state law.
Libraries must meet the statutory definition of library or library
consortium found in the 1996 Library Services and Technology Act (Pub.
L. 104-208) (LSTA) to meet eligibility requirements for Schools and
Libraries support.
Libraries must be eligible for assistance from a state
library administrative agency under that Act.
Libraries must have budgets completely separate from any
schools (including, but not limited to, elementary and
secondary schools, colleges and universities).
Libraries cannot operate as for-profit businesses.
Rural Health Care Program
Health care providers (HCPs) participating in the Rural Health Care
Program must be eligible and must select eligible services and
providers in order to receive discounts. The following Internet link
provides an overview of the eligibility requirements: http://
www.usac.org/rhc/health-care-providers/step01/
Before beginning the application process, it is important to
confirm eligibility. In general, participants in the program must be
rural and public or non-profit health care providers of the types
listed below.
Post-secondary educational institutions offering health care
instruction, teaching hospitals, or medical schools.
Community health centers or health centers providing health
care to migrants.
Local health departments or agencies including dedicated
emergency departments of rural for-profit hospitals.
Community mental health centers.
Not-for-profit hospitals.
Rural health clinics including mobile clinics.
Consortia of HCPs consisting of one or more of the above
entities.
Part-time eligible entities located in otherwise ineligible
facilities.
If an applicant is not clearly one of these entities, they can
contact USAC's Customer Service Support Center at 1-800-229-5476 for
assistance in determining eligibility.
In 2004, the Commission expanded the definition of ``Rural'' for
participants in the Rural Health Care Program. To determine if a
location is considered rural, a potential applicant can select Rural
Health Care Search Tools on the left side of this Internet link: http:/
/www.usac.org/rhc/health-care-providers/step01/rural-eligibility-
search.aspx.
Health care providers are permitted to apply to receive reduced
rates for a variety of telecommunications services under the Rural
Health Care Program. Health care providers may seek support for
multiple telecommunications services of any bandwidth and for monthly
Internet service charges.
Examples of Eligible Telecommunications Services and Charges
Examples of eligible telecommunications services and charges
include, but are not limited to:
Mileage-Related Charges
T3 or DS3
T1
Fractional T1
ISDN (Integrated Services Digital Network)
Frame Relay
ATM (Asynchronous Transfer Mode)
Off-Premise Extension
Satellite Service
Centrex
Dedicated Private Line
Foreign Exchange Line
Network Reconfiguration Service
Direct Inward Dialing
One-time (Installation) Charges
Wireless or microwave services
DSL (digital subscriber line)
The Rural Health Care Program supports these services up to the
maximum allowable distance (MAD). The applicant is responsible for the
cost of services beyond the MAD.
Examples of Ineligible Telecommunications Equipment and Charges
Telecommunications equipment does not qualify for support under the
Rural Health Care Program. The following examples are not eligible:
Computers
Fax machines
Video cameras
Telephones, cellular phones, pagers, handheld devices
Maintenance charges
Franchises, zone charges, and surcharges
The Rural Health Care Program does not support the cost of
construction or infrastructure build-out for the installation of
telecommunications services. For example, if a wall must be removed, a
street dug up, or a cable laid, these costs would not be eligible for
support.
Examples of Eligible Internet Services and Charges
Eligible Internet services are limited to the following:
Monthly Internet access charges
E-mail
Web hosting
Examples of Ineligible Internet Services and Charges
Equipment and certain Internet services do not qualify for support
under the Rural Health Care Program. The following items are not
eligible:
Caching
Filtering content
Training
Servers
Web casting
Equipment and wiring
Maintenance
Question 3. If these tribal consortiums are unable to meet the
Commission's current requirements, please address whether a waiver
process is available for these entities.
Answer. Under 47 C.F.R. 1.3 the Commission's rules may be waived
for good cause shown.
Question 4. Please also describe the specific steps which non-
profit corporation tribal consortiums must take to apply for, and
receive, support from the Universal Service Fund.
Answer.
Schools and Libraries Program
An overview of the application process can be found at the
following Internet links: http://www.universalservice.org/sl/about/
overview-process.aspx; http://
www.universalservice.org/_res/documents/about/pdf/brochures/sl-
overview-brochure.pdf.
The Internet page referenced provides links to the application
process, from Technology Plan through Invoicing and summarizes the
process schools and libraries follow to apply for and receive support.
Each of the steps in this process--preparing a technology plan, opening
the competitive process, seeking discounts on eligible services,
confirming the receipt of services, and invoicing for services--is
covered in more detail in the steps below. For additional details
applicants should refer to form instructions and the guidance materials
posted on the USAC website.
Step 1 Determine Eligibility
Step 2 Develop a Technology Plan
Step 3 Open a Competitive Bidding Process
Step 4 Select a Service Provider
Step 5 Calculate the Discount Level
Step 6 Determine Your Eligible Services
Step 7 Submit Your Application for Program Support
Step 8 Undergo Application Review
Step 9 Receive Your Funding Decision
Step 10 Begin Receipt of Services
Step 11 Invoice USAC
Rural Health Care Program
Rural health care providers and service providers that participate
in the Rural Health Care Program have certain requirements and
responsibilities that must be met in order to receive support. Below is
an overview of the process.
All health care providers (HCPs) or consortia of HCPs seeking to
participate in the Rural Health Care Program must complete the
Description of Services Requested and Certification Form (Form 465) to
request bids from service providers for services to be used for the
provision of health care. A separate Form 465 must be completed for
each physical location within the consortia that is eligible to receive
support.
When a Form 465 is received from a new applicant, USAC confirms
eligibility. Once USAC reviews a Form 465 and determines it is
complete, it is posted on the USAC website and a letter is sent to the
health care provider to confirm the posting. The posting invites
service providers to bid to provide services. The posting date starts
the 28-day competitive bidding process. All health care providers
expecting support must complete the 28-day posting requirement before
entering into an agreement to purchase services with a service
provider.
A health care provider must consider all bids received and select
the most cost-effective method to meet its requirements. The most cost-
effective method is defined by the Commission as the method of least
cost after consideration of the features, quality of transmission,
reliability, and other factors relevant to choosing a method of
providing the required services.
To be eligible to receive telecommunications support, the selected
carrier must be a ``Common Carrier.'' Any telecommunications service
and/or Internet access necessary for the provision of health care is
eligible for support, but equipment charges are not eligible for
support. All Internet service providers are eligible to participate in
the program; however, only the monthly charge is eligible for support.
Once the service providers and services are selected, the health
care provider completes and submits the Funding Request & Certification
Form (Form 466) and/or an Internet Service Funding Request &
Certification Form (Form 466-A). These forms specify the type(s) of
service ordered, the cost, the service provider(s), the terms of any
service agreements, and certifies that the selections were the most
cost-effective offers received.
USAC reviews the Form 466 and/or 466-A packet for accuracy. Upon
approval, USAC mails the health care provider a Funding Commitment
Letter (FCL) and a copy of the Receipt of Service Confirmation Form
(Form 467). A copy of the FCL is also sent to the service provider.
After the service begins from the service provider, the health care
provider submits Form 467 to USAC. Form 467 must be submitted in order
to receive discounted services. USAC cannot process Form 467 unless a
Funding Commitment Letter has been issued.
Once Form 467 is received, reviewed, and approved, USAC will send
the health care provider and its service provider(s) a health care
support schedule. At this point, the service provider can begin
crediting the bill with the monthly recurring support amount or issue a
check for the discount. As soon as the service provider has issued a
credit or check to the health care provider, the service provider
invoices USAC.
USAC will then credit or reimburse the carrier's Universal Service
Fund (USF) account. Those that do not have such an active USF account
and have not been issued a SPIN number by USAC must fill out an FCC
Form 498 and then reimbursement will be issued by check or direct
deposit.
______
Response to Written Questions Submitted by Hon. Gordon H. Smith to
Hon. Deborah Taylor Tate
Question 1. The Commission's Regulatory Flexibility Analysis for
the November 30 must-carry order says that ``Every effort will be made
to minimize the impact of any adopted proposals on cable operators.''
How much will it cost for every 552 megahertz cable systems to file and
prosecute a waiver through the FCC? Would you support a blanket dual
carriage waiver for 552 megahertz cable systems?
Answer. I am very mindful of the cost of overly burdensome
regulation, especially on small cable operators. That is why I urged
the Commission to seek comment on the effect of our dual carriage order
on small cable operators. In that Order we solicited ``further
proposals for means to minimize the impact on small cable operators,
whether they be alternative rules, ameliorated timetables, or any other
approaches that would conform to the requirements of the statute.'' I
will carefully consider the comments submitted.
Question 2. You appeared before the Senate last year and predicted
that the Federal high-cost fund would grow by $280 million per year if
all of the CETC petitions at the FCC were granted. Can you tell me how
you arrived at this number?
Answer. The numbers in my testimony were based on those of Chairman
Martin as originally presented at the en banc hearing hosted by the
Federal-State Joint Board on Universal Service on February 20, 2007 (a
copy of the testimony and accompanying charts are located at http://
hraunfoss.fcc.gov/edocs_public/attach
match/DOC-271011A1.pdf and http://hraunfoss.fcc.gov/edocs_public/
attachmatch
/DOC-271011A2.pdf). Following the en banc, the Joint Board issued a
Recommended Decision recommending an emergency interim cap on the CETC
portion of the High Cost Fund (a copy of which is located at http://
hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07J-1A1.pdf). To the
extent you would like more information on the methodology used, I would
be happy to forward your request to the appropriate Commission staff.
Question 3. Section 254(a)(2) of the Communications Act requires
that the Commission ``complete any proceeding to implement
recommendations from any Joint Board on Universal Service within 1 year
of receiving such recommendations.'' The Joint Board on Universal
Service delivered its recommended decision on high-cost reform on
November 19, 2007. Do you support putting the Joint Board
recommendation out for public comment?
Answer. Yes. On January 29, 2008, the Commission issued an NPRM
requesting comments from the public. I look forward to receiving input
from the public on the Joint Board recommendations and working with my
colleagues on comprehensive long-term reform.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Deborah Taylor Tate
Question 1. The FCC has commissioned 10 economic studies on media
ownership and its effect on news and other programming. According to
these studies, how does cross-ownership effect local content and
political slant? Does this outcome differ by the size of the media
market? In other words, how does the cross-ownership ban impact local
content and political slant in the largest 20 markets compared to
effects in smaller markets around the country? What has been the
experience of markets which had companies grandfathered in under old
media ownership rules?
Answer. Study #3 (``Television Station Ownership Structure and the
Quantity and Quality of TV Programming,'' by Gregory S. Crawford)
found:
Our strongest findings are for Local News: television stations
owned by a parent that also owns a newspaper in the area offer
more local news programming.
This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A4.pdf.
Study #4 (``The Impact of Ownership Structure on Television
Stations' News and Public Affairs Programming,'' by Daniel Shiman)
found:
Stations cross-owned with a newspaper provided 11 percent (18
minutes) more news programming per day. Each additional co-
owned station in the same market is associated with 15 percent
(24 minutes) more per day of news programming.
This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A5.pdf.
Study #6 (``The Effects of Cross-Ownership on the Local Content and
Political Slant of Local Television News,'' by Professor Jeffrey Milyo)
found:
This within-market comparison reveals that cross-owned
newspaper/television combinations devote more time to news, as
well as several categories of local news. Further, these cross-
owned stations do not have a political slant that is any
different from other major network affiliated stations in the
same market, at least when slant is measured by candidate
speaking time, candidate coverage or partisan issue coverage.
This study can be found at: http://hraunfoss.fcc.gov/edocs_public/
attachmatch/DA-07-3470A7.pdf.
Question 2. The financial troubles and perceived threats to the
viability of newspapers and broadcasts have played a significant role
in the proposed changes of media ownership rules. Some sources contend
that despite declining ad revenues and readership, newspapers remain
profitable. However, others contend that these media outlets have only
been able to remain profitable at the expense of quality and quantity
of news they produce. What do you perceive the financial position of
newspapers to be in today's market? How does this vary based on the
size of the media market? To what extent will these proposed changes
alleviate these troubles?
Answer. I believe this is a very market-specific analysis. Some
newspapers may be profitable, but unfortunately we have seen that many
are not, resulting in the bankruptcy of many papers and a resulting
loss of voices in some markets. In light of this, and in an effort to
respond to the heart of the Third Circuit's concerns, the Commission
will approach all markets outside the top 20 on a case-by-case basis,
analyzing the specifics of each particular market area. As for the
impact of market size, one can look to the changes in newspapers in
several markets in 2007. For example, The Boston Globe fired 24 of its
news staffers, including two Pulitzer Prize-winning reporters; the
Minneapolis Star Tribune fired 145 employees, including 50 from their
newsroom; The Rocky Mountain News fired 20; the Detroit Free Press and
The Detroit News announced cuts of 110 employees; and the San Francisco
Chronicle planned to cut 25 percent of its newsroom staff. Given the
incredible technological convergence, newspapers are looking for ways
in which to compete in the digital age and survive given the impact of
the Internet. As studies 3, 4, and 6 indicate, cross-ownership actually
results in efficiencies and resource-sharing which allow these
businesses to continue and to provide more local news. These studies
can be found at http://www.fcc.gov/ownership/studies.html.
Question 3. The Universal Service Fund is obviously very important
for rural states like South Dakota. What general troubles do you see
arising with the fund and its solvency? What would you recommend to
help alleviate these troubles? What are your thoughts on the
recommendations put forth by the Federal-State Joint Board in November?
Answer. Being from the rural state of Tennessee, I understand
firsthand that the Universal Service Program is an important program at
the heart of rural America. Its purpose, to connect all Americans, has
over the years permitted people to be connected even in rural and
remote parts of our Nation at reasonable rates. That is why it is so
critical that we adopt policies that will ensure the long-term
sustainability of the Fund. As I have stated on many occasions, high-
cost support to competitive eligible telecommunications carriers
(CETCs) has been rapidly increasing in recent years, jeopardizing the
viability of the fund. That is why I support the Federal-State Joint
Board on Universal Service's Recommended Decision recommending an
emergency interim cap on the CETC portion of the High Cost Fund. As you
are aware, on November 20, 2007 the Joint Board also issued a
Recommended Decision to address the long-term reform issues facing the
high-cost Universal Service support system. A copy of my Statement
issued with the release of the Recommended Decision can be found at
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07J-4A3.pdf. I
look forward to reviewing the comments and look forward to working with
my colleagues on comprehensive long term reform.
Question 4. Many people are concerned that the digital TV
transition is not going as smoothly as would be hoped and a number of
steps still need to be taken including the issuance of rules regarding
the processing of construction permit applications and the assignment
of channels to broadcasters. Why have these issues not been resolved
yet? When do you expect them to be resolved? Will this allow the
industry enough time to transition to digital TV?
Answer. On August 6, 2007, the Commission released the Seventh
Report and Order and Eighth Further Notice of Proposed Rule Making In
the Matter of Advanced Television Systems and their Impact Upon
Television Broadcast Service, which specified channel assignments for
nearly all of the 1,800 full power stations. (The Further Notice
addressed 13 stations that filed too late to be included in the
Report.) On December 31, 2007, the Commission released the Third
Periodic Review of the Rules and Policies Affecting DTV Conversion.
That Order resolves many of your concerns, including the procedures,
rules, and forms for processing applications. Currently, the Media
Bureau is working on the 8th Report and Order and the Order on
Reconsideration of the 7th Report and Order. I am also committed to the
completion of our DTV Education Order which reinforces the need for
industry, government, and broadcasters to work together. In conjunction
with these Orders, the FCC has also undertaken its own educational
efforts, including: (1) hosting workshops targeting specific segments
of the population, such as seniors, minority/non-English speakers, and
rural and tribal consumers, (2) participating in over 90 events and
conferences across the country disseminating over 50,000 packets of DTV
literature, (3) holding national DTV awareness sessions, (4) attending
NTIA set-top box kick-off program and DTV Federal Agency Partners
events, (5) charging two FCC Committees, the Intergovernmental Advisory
Committee and the Consumer Advisory Committee, with focusing on DTV
issues and convening meetings of their respective members on this
subject, (6) conducting eight meetings with representatives of
disability advocacy groups to discuss best outreach practices and
educational techniques, (7) establishing a website, www.dtv.gov, which
offers Americans 24-hour-a-day information on the transition, including
educational materials for local governments and community groups, (8)
participating in AARP's national convention, (9) participating in the
2007 annual meeting of La Raza, and (10) enforcing FCC rules against
retailers who fail to properly label analog-only television sets.
Further, with the $2.5 million recently authorized by Congress for DTV
education, the Commission will continue to target the most at-risk
populations. In addition to our domestic partnerships, the FCC is
reaching out to other countries that have already completed their own
DTV transitions. I recently met with Swedish Ambassador, Jan Eliasson,
to discuss Sweden's DTV transition which is nearly complete. Next week
the FCC will participate in a teleconference with representatives from
the UK to discuss that country's plans for its DTV transition, set to
begin fall 2008. I believe we can learn a great deal from those that
have gone before us in this technological revolution. On a personal
note, I have spoken to groups at the FCC focusing on educating seniors,
minorities/non-English-speakers, and state and local government
leaders, and I continue to include information on the DTV transition in
every speech I give. I have done interviews with groups like Retirement
Living TV whose audiences are most likely to be affected by the
transition. There has also been overwhelming support for education and
outreach through industry initiatives. The National Association of
Broadcasters has pledged $1 billion for outreach materials and
advertisements. The National Cable and Telecommunications Association
has already begun a $200 million television ad campaign that includes
public service announcements in English and Spanish. Electronics
retailers are participating by offering in-store, point-of-sale
educational materials to their customers, in addition to labeling all
analog-only television sets in accordance with our FCC mandate. It is
my firm belief that by working with our industry and government
partners we can achieve a successful DTV transition on February 17,
2009.
Question 5. The FCC appears to be reregulating some aspects of
broadcasting which were deregulated under President Reagan and have
helped the broadcast industry remain competitive over the past 25
years. With the influx of new technologies and mediums, why has the FCC
chosen now to begin reregulation? Have there been any specific
detrimental effects that have prompted this? Why has the FCC
increasingly turned to government mandates instead of market-based
solutions to help resolve these problems?
Answer. As a Commissioner, my first responsibility is to enforce
the laws that Congress passes. I support market-based solutions;
however, I agree that regulation may be necessary where there is a
clear market failure. It is important to maintain a balance between
adopting policies that serve the public interest and giving
broadcasters the flexibility to develop successful business models. For
example, in an effort to improve localism, the Commission adopted an
order which requires broadcasters to post their public inspection files
online. This requires a modest amount of effort by most broadcasters,
and results in the public having easier and broader access to the
public files, which they are entitled to access under 47 C.F.R.
73.3526. In an effort to reduce the burdens on broadcasters, the rule
does not apply to those that do not maintain a website, and it allows
those that do to simply link to the FCC's website for portions of the
required information. Given the staggeringly low rate of female and
minority involvement in the media industry, the Commission carefully
weighed more than forty proposals submitted by the Minority Media and
Telecommunications Council, the FCC's Diversity Committee, and the
National Association of Black-Owned Broadcasters, and selected twelve
that appear not only to hold the most potential for promoting
diversity, but also impose a relatively small burden on the broadcast
community. Certainly I am committed to the continued dedication of
broadcast resources for news, entertainment, and most importantly,
emergency alerts. I have always been a proponent of market-based
solutions.
Question 6. Earlier this year, the FCC's Office of Engineering
(OET) released a report which shows that allowing unlicensed devices
into the television spectrum may interfere with the television signal
in 80-87 percent of a television station's service area. Additionally,
a July report from the FCC demonstrated that prototypes that utilize
``sensing'' technology did not effectively detect TV signals. Do you
perceive this to be a threat to the DTV transition? If so, what is the
FCC doing to ensure that the DTV transition is not jeopardized by
unlicensed consumer digital devices?
Answer. In October 2006, the Commission issued its First Report and
Order on Unlicensed Operations in the TV Broadcast Bands. That Order
prohibited unlicensed operations in the TV ``white spaces'' until after
the DTV transition on February 17, 2009. Last year, the Commission
tested early prototypes of ``white spaces'' devices, completing Phase I
in July 2007. The first prototype devices submitted to the Commission
did not effectively detect TV signals; however, the provider of one of
the devices stated that the device was not functioning properly. In
October 2007, the Commission's Office of Engineering and Technology
(OET) announced that Phase II tests would be conducted and invited
interested parties to submit prototype devices. In January 2008, OET
issued another public notice announcing that it had received four TV
white space prototype devices for testing and publishing a test plan.
Tests began January 24 and are open to the public. The Commission is
developing a complete record in its rulemaking proceeding, and
conducting further tests of TV white space prototypes, so that whatever
rules may ultimately be adopted will avoid any detrimental impact to
the DTV and other radio services operating in this spectrum. For more
information and the schedule of testing, see http://www.fcc.gov/oet/
projects/tvbanddevice/Welcome.html.
No decision will be rendered until after the final testing is
completed and a report is issued. Regardless of the outcomes of this
testing, I remain committed to a seamless DTV transition on February
17, 2009.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Hon. Robert M. McDowell
Question 1. Last year, a provision to reform the FCC's forbearance
authority was included in the Committee's telecom reform bill.
Specifically, it would have eliminated the ``deemed granted'' language
in Section 10 in order to ensure a fairer process at the FCC. I
recently introduced legislation that will eliminate this provision, so
we can avoid a situation where the agency erases its rules simply by
failing to vote. Do you believe that it's fair for the FCC to make far-
reaching changes without even issuing a decision?
Answer. As Section 10 of the Communications Act is currently
written, action on a forbearance petition requires a majority of
Commissioners to act to deny the request. The Commission is bound by
the statutory provisions governing forbearance petitions. If, in the
opinion of Congress, the operation of this statute is causing an
undesired result, then it could certainly modify that provision. I
believe that requiring an up-or-down vote would fall into this
category.
I was recused from each of the forbearance petitions that the
Commission has acted on since my swearing in as a Commissioner on June
1, 2006 through May 31, 2007, due to my ethics agreement with the
Office of Government Ethics as filed with the Senate Commerce Committee
and by virtue of my former employer's participation in those
forbearance proceedings. However, since my one-year recusal period has
expired, I have acted on all of the forbearance petitions that have
been due for a vote. I believe all forbearance petitions should have an
up or down vote. It is preferable that they not go into effect as the
result of a ``deemed granted'' situation.
On November 27, 2007, the Commission took an important step to
bring clarity to the uncertainty surrounding the forbearance petition
process by initiating a rulemaking proceeding. Only Congress can amend
Section 10, which is simple and clear in its mandate; but the
Commission can take steps to improve its implementation. And that is
what we are doing by initiating this rulemaking. It is also appropriate
to examine the effect that forbearance petitions have on our broader
rulemaking responsibilities. I will review the comments filed in this
proceeding, as well as evaluate our forbearance regulations, so that we
can implement rules that we find are necessary to improve the
forbearance process.
Question 2. Earlier this year, the FCC released a Notice of
Proposed Rulemaking examining so-called ``two-way, plug-and-play
standards'' for cable navigation devices. Do you support implementation
of Section 629 in a way that will create a retail market for ``two-way,
plug-and-play'' devices and allow for greater competition and consumer
choice? Do you believe that FCC oversight is sufficient to ensure that
any standards and specifications are created and changed through a fair
process that treats all affected parties equitably?
Answer. Yes, I support implementation of Section 629 in a way that
will create a retail market for ``two-way, plug-and-play'' devices and
allow for greater competition and consumer choice. Our mandate from
Congress in Section 629 directs the Commission to adopt regulations to
``assure the commercial availability'' to MVPD consumers of navigation
devices from manufacturers, retailers, and other vendors not affiliated
with any MVPD. The goal of the statute is to promote competition in the
market for set-top boxes and televisions so that consumers will have
options beyond their MVPDs for innovative products and features. For
years the cable and consumer electronics industries also have been
negotiating technical solutions for two-way navigation devices. I am
examining the industry proposals advocating DCR-Plus and ``Tru2Way'' or
the Open Cable platform while considering whether there is a solution
that can apply to all MVPDs.
In the meantime, I am hopeful that the private sector will reach a
resolution to this challenge. I am confident that the technology exists
to develop a two-way plug-and-play solution and I have urged market
rivals to work together to forge agreements. While the Commission can
set standards and specifications, the parties would do a better job of
choosing the appropriate technology than the government would. In the
one-way context, the separated security cable card solution endorsed by
the Commission was overtaken by the possibility of downloadable
security shortly after the Commission's 1998 order. I hoped that
another government-mandated, soon-to-be-obsolete solution would not be
the answer to the two-way debate. The marketplace, through consumer
choices and privately-negotiated agreements, should be permitted do its
job. However, should the market fail, the FCC should be ready to
prescribe narrowly-tailored solutions.
______
Response to Written Questions Submitted by Hon. Byron L. Dorgan to
Hon. Robert M. McDowell
Question 1. On December 18, the FCC held a vote on a major change
to the nations' media ownership rules, despite substantial concern here
in the Senate. The Commerce Committee passed S. 2332, the Media
Ownership Act of 2007, on December 4. We have over 20 bipartisan
cosponsors. We asked you to delay this vote to consider important
issues of localism and minority ownership and allow a proper period of
comment on the rules. Why was it so important to move ahead on December
18 despite this opposition? Why could you not delay this vote beyond
December 18?
Answer. I respect the Committee's concerns about process, but I
also think it is important to note that this media ownership proceeding
has been unprecedented in scope and thoroughness. The proceeding began
at my very first open meeting as a Commissioner, 18 months ago. We
gathered and reviewed over 130,000 initial and reply comments and
extended the comment deadline once. We released a Second Further Notice
in response to concerns that our initial notice was not specific enough
about proposals to increase minority and female ownership of stations.
We gathered and reviewed even more comments and replies in response to
the Second Notice. We traveled across our great nation to hear directly
from the American people during six field hearings on ownership in: Los
Angeles and El Segundo, Nashville, Harrisburg, Tampa-St. Pete, Chicago,
and Seattle. We held two additional hearings on localism, in Portland,
Maine and here in our Nation's capital. In those hearings, we have
heard from 115 expert panelists on the state of ownership in those
markets and we've stayed late into the night, or early into the next
morning, to hear from concerned citizens who signed up to speak.
We also commissioned and released for public comment ten economic
studies by respected economists from academia and elsewhere. These
studies examine ownership structure and its effect on the quantity and
quality of news and other programming on radio, TV and in newspapers;
on minority and female ownership in media enterprises; on the effects
of cross-ownership on local content and political slant; and on
vertical integration and the market for broadcast programming. We
received and reviewed scores more comments and replies in response.
Some commenters did not like the studies and their critiques are part
of the record.
These issues, and public comment on them, were examined thoroughly
and carefully prior to our adoption of the order at the December 2007
FCC Open Meeting. All of the concepts adopted in our December 18 order
received years of public scrutiny, debate and comment. I cannot
remember any proceeding where the Commission has solicited as much
comment and given the American people as much opportunity to be heard.
Question 2. Chairman Martin says the FCC provided a lengthy public
comment period of 120 days, which was extended to 167 days. The FCC
also held six hearings and finished the two localism hearings. But how
could the public be expected to adequately comment on your proposed
rules if the Commission issued the proposed rules at the end of the
process?
Answer. The Commission considered all of the comments submitted
during the course of the proceeding. Most of the comments filed toward
the end of the process reiterated points already made earlier in the
proceeding. The points made were considered once again. Moreover, prior
to the start of this extensive proceeding, the Commission had
considered these same media ownership issues in our 2001 rulemaking
focused on the newspaper/broadcast cross-ownership ban and in the 2002,
1998 and 1996 media ownership reviews required by Congress.
Question 3. The FCC held six hearings across the country at a cost
of more than $200,000. I worry that the $200,000 was totally wasted as
you ignored the input of the public on December 18. They testified
against consolidation. You didn't hear people coming out and saying
they wanted the newspaper to own the television station. You heard
massive opposition to consolidation. Chairman Martin has said that the
FCC didn't hear people constantly sounding off against cross-ownership,
but why would you hear that--the Chairman never told them what rules he
was concentrating on. How could the FCC vote on a rule to relax the
cross-ownership ban having heard the massive opposition to
consolidation?
Answer. A point that gets lost in the emotion surrounding the media
ownership debate is that Congress enacted a statute that contains a
presumption in favor of modifying or repealing the ownership rules as
competitive circumstances change. Section 202(h) states that we must
review the rules and ``determine whether any of such rules are
necessary in the public interest as the result of competition. The
Commission shall repeal or modify any regulation that it determines to
be no longer in the public interest.'' This section appears to upend
the traditional administrative law principle requiring an affirmative
justification for the modification or elimination of a rule, and it is
crucial for everyone involved in this debate to recognize this
important presumption. It is also important to remember that Section
202(h) is the most recent set of codified instructions we have from
Congress and is our legal mandate unless Congress changes the law. We
also have a duty to pursue the noble public policy goals of
competition, diversity and localism. In adopting our media ownership
order, we met these legal and policy requirements.
At our field hearings on media ownership and localism, we heard
from citizens from all walks of life, who presented their opinions as
viewers, listeners, readers, businesspeople, and consumers regarding
whether broadcasters and newspapers are providing their local
communities with needed local news and information. We heard from
citizens who oppose media consolidation, but we also heard from those
who see the benefits of cross-ownership, those who valued the service
broadcasters and newspapers provide, as well as those who have
jettisoned traditional media and turned to new media and the Internet
for content.
The record shows a dramatic change in competitive circumstances for
media companies in recent years. Since the newspaper/broadcast cross-
ownership ban was established in 1975, at least 300 daily newspapers
have shut their doors. Newspaper circulation and advertising revenues
continue to decline year after year, while online readership and
advertising revenues have surged. As a result of economic losses,
newspapers have cut costs and sliced into the heart of the news-
gathering operation: the newsroom and its reporters, resulting in a
diminished capacity to cover news. We have five national broadcasting
networks, hundreds of cable channels cranking out a multitude of video
content produced by independent voices, two vibrant satellite TV
companies, telephone companies offering video, cable overbuilders,
satellite radio, the Internet and its millions of websites and
bloggers, a plethora of wireless devices operating in a robustly
competitive wireless market place, iPods, Wi-Fi, and much more. And
that's not counting the myriad new technologies and services that are
coming over the horizon such as those resulting from our Advanced
Wireless Services auction of last year, or the upcoming 700 MHz
auction, which starts next month. Certainly, more voices and more
delivery platforms exist today than when the media ownership rules were
established.
The energy, creativity, capital and growth of the private sector
have been focused on areas that are less regulated than traditional
media. Companies such as Disney, Citadel, Clear Channel and Belo
actually have been shedding broadcast radio and television properties
to raise capital for new ventures. The Hollywood writers' strike is all
about the concept of following the eyeballs and ad dollars to new media
and getting fairly compensated as a result. Over one-third of Americans
go online to get their news. YouTube alone requires more bandwidth than
the entire Internet did in 2000. Unregulated new media's numbers are
growing. Heavily-regulated traditional media's numbers are shrinking.
These developments led a majority of the Commission to determine
that a modest and narrowly-tailored deregulation of the newspaper/
broadcast cross-ownership ban is necessary in the public interest as
the result of competition.
Question 4. The Media Ownership Act of 2007 requires the FCC to
seek 90 days of comment on specific proposed changes to its broadcast
ownership rules; complete a separate rulemaking on localism, with a
study at the market level and 90 days of comment on localism, prior to
rule changes being issued for comment; and convene an independent panel
to make recommendations on increasing the ownership of broadcast media
by women and minorities. Why should the FCC not have postponed the
December 18 vote to take care of these tasks?
Answer. I respectfully submit that Section 202(h), with its
presumption in favor of modifying or repealing the media ownership
rules as competitive circumstances change, is the Commission's legal
mandate unless Congress changes the law. We worked hard to follow that
mandate. In addition, at the December Open Meeting, we adopted an order
containing several proposals aimed at promoting minority and female
ownership of broadcast properties, as well as a report and notice of
proposed rulemaking regarding a comprehensive set of issues raised in
the localism proceeding. I hope that these actions address many of the
concerns raised about minority and female ownership and localism.
Question 5. Should the Chairman have put out his proposed media
ownership rules in a New York Times op-ed and then in an FCC press
release? Do you believe they should have been issued in the Federal
Register?
Answer. After publishing the New York Times piece, the Chairman
agreed to the requests of some Commissioners to make the proposed
changes to the newspaper/broadcast cross-ownership rule available for
public comment. Those comments were considered prior to the adoption of
the media ownership order in December. It is the Chairman's prerogative
and responsibility to conduct the proceeding procedurally as he deems
appropriate. Again, overall, this proceeding has been the most
comprehensive and thorough proceeding the Commission has conducted in
recent memory. I am supportive of the results.
Question 6. You have heard concerns that the Chairman's proposal
opens up cross-ownership to much more than the top 20 markets. I don't
agree with any cross-ownership at all. Not in the top 30, not in the
top 20. I think I'm saying the same thing as the 1,000 people who came
to the hearing in Los Angeles and the 1,100 people who turned out in
Seattle. Why are we not being heard?
Answer. We have heard and considered the voices of not only Members
of Congress, but also citizens from across the country who came to our
hearings to speak to us. We must also consider the voices of everyone
who submitted comments either at hearings or in the written record,
including those who disagree with the premise of this question. Despite
a strong de-regulatory statutory presumption mandated by Congress and
an order from the Third Circuit essentially giving a green light to
lifting the newspaper/broadcast cross-ownership ban altogether, the
order we adopted is quite modest. The order creates a presumption in
favor of lifting the ban only in the top twenty media markets where
there is tremendous competition in the traditional media sector. Even
then we only allow a combination outside of the top four TV stations
and only when at least eight independent major media voices remain in
that market. Outside of the top twenty markets, our rule establishes a
negative presumption against permitting the combination. This test is
not pocked with loopholes as some have suggested; quite the contrary.
In my opinion, our order balances the competing views and the evidence
of market developments appropriately, in favor of modest deregulation.
Question 7. Recently concerns about unfair discrimination have been
raised in relation to Verizon Wireless blocking the text messaging
service of the pro-choice group, NARAL. Verizon Wireless quickly
corrected the problem, but the fact that it happened raises major
alarms. On October 16, 2007, Senator Snowe and I sent a letter to the
FCC asking for your views on this issue. I have not received a
response. Can you tell me your views?
Answer. I have reviewed your letter to Chairman Martin of October
16, 2007. I would expect that he will provide an analysis of existing
Constitutional, legal and regulatory issues surrounding this issue
pursuant to your request. In the meantime, I join you in giving credit
to Verizon Wireless for promptly admitting its mistake with regard to
the NARAL text-messaging campaign and fixing the error within hours. I
understand that this situation involves a business-to-business
transaction for the purchase of short codes, which are short telephone
numbers that are purchased through a short code administrator and are
used for addressing messages sent to mobile phones. On the one hand, it
is important that we ensure that consumers are able to send and receive
text messages. On the other hand, we must be equally vigilant in
protecting consumers from unwanted SPAM messages, which may be false,
misleading, or offensive, and I understand that short codes are a
meaningful tool for this purpose. Similarly, we must allow carriers to
have the freedom to manage their networks to ensure that they are able
to function properly in order to meet ever-increasing consumer
expectations. I will continue to monitor developments in this area to
ensure the public interest is being served in a fair and balanced
manner.
______
Response to Written Question Submitted by Hon. Bill Nelson to
Hon. Robert M. McDowell
Question. As you are probably aware, Florida is currently the
largest ``net payer'' state into the Universal Service Fund. Florida
pays in more than $300 million more to the USF than it receives in
disbursements. Getting beyond the idea of a ``cap'' of some sort--which
may raise competitive issues--it seems like one other way of achieving
efficiencies is through more effective targeting of support. How do you
feel about this approach?
Answer. I have consistently maintained that the Universal Service
system is in dire need of comprehensive reform. As I approach this
crisis, I will follow five principles when considering all reforms to
Universal Service. We must: (1) slow the growth of the Fund; (2)
permanently broaden the base of contributors; (3) reduce the
contribution burden for all, if possible; (4) ensure competitive
neutrality; and (5) eliminate waste, fraud and abuse. I am in favor of
considering all options to reform the Universal Service High Cost Fund,
including those disbursement mechanisms that would target support. We
have a number of proposals before us. On January 9, 2008, the
Commission adopted rulemaking proceedings seeking comment on the
elimination of the identical support rule and utilization of reverse
auctions. In addition, we have received the Federal-State Joint Board
recommendations for permanent reform. I support seeking comment on the
Joint Board's reform measures as soon as possible, so that we can
consider all the options to reform the system more comprehensively. We
have a terrific opportunity before us.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Robert M. McDowell
Question 1. Do you believe that the newspaper industry is
profitable today?
Answer. The great weight of the data available to us shows that
while some newspapers are profitable, the industry as a whole is in
decline. Consumers now have more choices and more control over what
they read, watch and listen to than ever. As a result of this multitude
of voices competing for consumer's attention, at least 300 daily
newspapers have shut their doors since the cross-ownership ban went
into effect because people are looking elsewhere for their content.
Newspaper circulation has declined year after year. Since this past
spring, average daily circulation has declined 2.6 percent. In the six-
month period ending September 2007, circulation declined for 700 daily
newspapers across the country. Of the top 25 papers in daily
circulation, only four showed gains. Also, newspapers' share of
advertising revenue has shrunk while advertising for unregulated online
entities has surged. Advertising revenues, which currently account for
slightly more than 80 percent of the industry's total revenues, are
predicted by SNL Kagan to decline through at least 2011.
As gross revenue declines year after year, publishers cut costs to
retain margins. After a while, such cost-cutting slices into the heart
of the news-gathering operation: the newsroom and its reporters. As a
result, the ability to cover more news diminishes. In recent years, we
have witnessed a sharp reduction in the number of professional
journalists employed in the newspaper industry. In 2006, the industry
employed approximately 3,000 fewer full-time newsroom staff people than
it had at its peak of 56,400 in 2000. In 2007, job cuts due to economic
losses were announced by several major newspapers, including, to name
only a few, The Boston Globe (24 newsroom staff cut in 2007, including
two Pulitzer Prize-winning journalists), The Minneapolis Star Tribune
(50 newsroom staff cut in 2007), Los Angeles Times (70 newsroom staff
cut in 2007) and The San Francisco Chronicle (25 percent newsroom staff
reduction in 2007, equal to about 100 jobs). Other newspapers have
substantially reduced or wholly abandoned news bureaus. These
developments have substantial consequences for the public interest.
Question 2. A recent GAO report cited that no comprehensive plan
exists for the digital television transition. The GAO stated ``Among
other things, a comprehensive plan can detail milestones and key goals,
which provide meaningful guidance for assigning and coordinating
responsibilities and deadlines and measuring progress. Such planning
also includes assessing, managing, and mitigating risks, which can help
organizations identify potential problems before they occur and target
limited resources''. This week the Commission released a written
response to the GAO report. At this point in time, what do you consider
to be the top five risk factors with respect to American consumers
getting through the digital television transition with minimal
disruption? Which of these risk factors fall under the jurisdiction of
the FCC? How is the FCC managing and mitigating these risks?
Answer. The Commission currently is considering a proposal
circulated by Chairman Martin regarding what types of consumer
education efforts the Commission should require of broadcasters, MVPDs,
manufacturers and retailers, including public service announcements,
notices in billing statements, the content of such announcements and
notices, as well as reporting of such efforts to the Commission. The
proposal implements rules suggested by Congressmen Dingell and Markey
in a letter to Chairman Martin dated May 24, 2007. In considering each
of these proposals, I am keeping in mind the comprehensive voluntary
consumer education campaigns that the broadcasting, MVPD and consumer
electronics industries have commenced. I hope we can strike the proper
balance to provide guidance regarding consumer education to these
industries without micro-managing their efforts and while giving them
the flexibility they need to communicate with their customers
effectively. I am also analyzing whether the Commission has the
jurisdiction to require certain elements of this proposal and how the
First Amendment limits our authority in this regard.
Question 3. Should the common carrier exemption be removed from the
Federal Trade Commission? What, if any, would be the disadvantage to
consumers if the exemption is removed?
Answer. Congress intended for the FCC to have jurisdiction over
common carriers, pursuant to Sections 214 and 310(d) of the
Communications Act, as amended, rather than the FTC. Should Congress
choose to amend this regulatory and jurisdictional structure, the
Commission will implement Congress's directives. However, the FCC has a
74-year history of being the expert agency with purview over common
carriers in pursuit of the public interest.
______
Response to Written Question Submitted by Hon. Frank R. Lautenberg
to Hon. Robert M. McDowell
Question. New Jersey is a net contributor of almost $200 million a
year to the Universal Service Fund (USF). There are many proposals for
reforming USF, including temporary caps and longer-term proposals. When
can I tell my constituents that they will see some action from the FCC
to stop the exponential growth of this Fund?
Answer. I have consistently maintained that the Universal Service
High Cost Fund is in dire need of reform and that we must take steps to
slow the uncontrolled growth of the Fund. We have a number of specific
proposals before us. With regard to interim measures, we have a
Federal-State Joint Board proposal to adopt an interim cap on CETCs,
capped at 2007 levels. Already, the Commission adopted a condition in
both the October 26, 2007, Alltel Transfer of Control Order and the
November 15, 2007, AT&T-Dobson Order, which subjects those wireless
carriers to an interim cap. As a result of this action, a majority of
the CETC portion of the Fund is now capped. With regard to more
permanent reform, soon we will release two notices of proposed
rulemaking (NPRM) that seek comment on the elimination of the identical
support rule and adoption of reverse auctions. Also, the Joint Board
has provided a recommendation for long-term reform. I hope that we will
seek comment on the Joint Board's permanent reform measures quickly and
within the same general time-frame as the other two NPRMs, so that we
can consider all the options to reform the system more comprehensively.
We have a terrific opportunity before us.
______
Response to Written Question Submitted by Hon. Thomas R. Carper to
Hon. Robert M. McDowell
Question. The Federal Communications Commission should be commended
for issuing its recent Notice of Proposed Rulemaking that considers
whether to authorize Big LEO Mobile Satellite Services operators to
provide ancillary terrestrial services on more of their assigned
spectrum. As you are aware, one such operator, Globalstar, and its
partner, Open Range Communications, need this authority in order to
pursue their plan to bring broadband services to more than 500 rural
communities across the country. Given the Commission's stated
commitment to promote the rapid deployment of advanced broadband
services to unserved and underserved areas, will you assure the
Committee that you will do all that it takes to complete this
proceeding in the time required for Globalstar and Open Range to move
forward with their business plan?
Answer. Yes. I have a keen interest in this proceeding and will
review and consider Chairman Martin's draft order as soon as it is
circulated.
______
Response to Written Question Submitted by Hon. Ted Stevens to
Hon. Robert M. McDowell
Question. Kawerak, Inc., a non-profit consortium in Alaska has
requested me to submit this question to the Commission: Does the
Commission have the statutory authority to provide Universal Service
support to non-profit corporation tribal consortiums, serving remote
areas of Alaska, that provide education, welfare, wellness, law
enforcement, natural resources and economic development services?
Kawerak is one of Alaska's tribal consortiums who provides several
services to remote areas of Alaska, and has expressed concern about
their ineligibility to receive Universal Service support because they
are unable to meet the precise definitions of health care or
educational service providers. Please address the requirements which
these tribal consortiums must meet in order to receive support.
If these tribal consortiums are unable to meet the Commission's
current requirements, please address whether a waiver process is
available for these entities. Please also describe the specific steps
which non-profit corporation tribal consortiums must take to apply for,
and receive, support from the Universal Service Fund.
Answer. Eligibility for Universal Service support is prescribed in
the Communications Act of 1934, as amended (the Act). Specifically,
Section 214(e)(1) of the Act states that ``a common carrier designated
as an eligible telecommunications carrier'' is eligible to receive
Universal Service support. Section 214(e)(2) provides that state
commissions shall designate eligible telecommunications carriers for
service areas in the state.
With regard to health care providers, Section 254(h)(1)(A) of the
Act requires telecommunications carriers to provide telecommunications
services that are necessary for the provision of health care services
to any public or nonprofit ``health care provider'' that serves rural
areas in a state at rates that are similar to those in urban areas of
the state. The term ``health care provider'' is defined in Section
254(h)(7)(B) of the Act to mean:
(i) post-secondary educational institutions offering health
care instruction, teaching hospitals, and medical schools;
(ii) community health centers or health centers providing
health care to migrants;
(iii) local health departments or agencies;
(iv) community mental health centers;
(v) not-for-profit hospitals;
(vi) rural health clinics; or
(vii) consortia of health care providers consisting of one or
more entities described in (i) through (vi).
With regard to educational service providers, Section 254(h)(1)(B)
of the Act provides that telecommunications carriers are required to
provide its Universal Services to ``elementary schools, secondary
schools, and libraries'' for educational purposes at rates that are
less than those charged to other parties. The term ``elementary and
secondary schools'' is defined in Section 254(h)(7)(B) as those terms
are defined in the Elementary and Secondary Education Act of 1965, 20
U.S.C. 8801.
Eligibility to receive Universal Service support as an ``eligible
telecommunications provider,'' a ``health care provider,'' or an
``elementary or secondary school'' is determined by statute, as set
forth above. The Commission cannot waive those statutory definitions.
An individual applicant, including a non-profit corporation tribal
consortium, would have to apply for funds and demonstrate that it meets
the statutory eligibility requirements.
I understand that Commission records indicate that Kawerak, Inc.
has received $106,671 in Rural Health Care Fund disbursements for
Funding Years 1999 and 2003-2005. In addition, the Bering Straits
School District, of which Kawerak is a part, has received $9,277,426 in
Schools and Libraries Fund disbursements for Funding Years 1998-2006.
______
Response to Written Questions Submitted by Hon. Gordon H. Smith to
Hon. Robert M. McDowell
Question 1. You have indicated you would like to see more data
before moving on the special access docket. Do you need more data on
competition for wireless special access? Or is your concern over lack
of data specific to wireline?
Answer. The Commission has not sought and thus does not have a
complete record that fully captures the extent of facilities used to
provide all special access services in all locations throughout the
country. As a result, it is difficult, if not impossible, to determine
the appropriate level of regulation or deregulation for special access
services in a given specific location. This includes both wireline and
wireless services. Obtaining this type of data from all types of
providers (both wireline and wireless) would allow the Commission to
more fully analyze outstanding issues and render more meaningful policy
determinations.
Question 2. The Commission's Regulatory Flexibility Analysis for
the November 30 must-carry order says that ``Every effort will be made
to minimize the impact of any adopted proposals on cable operators.''
How much will it cost for every 552 megahertz cable system to file and
prosecute a waiver through the FCC?
Answer. With respect to this order, my colleagues and I endeavored
to ensure that analog cable subscribers do not lose their local must-
carry stations from their channel line-ups after the digital
transition. The order requires cable systems that are not ``all-
digital'' to provide must-carry signals in analog format to their
analog subscribers. This requirement will sunset 3 years after the
broadcast digital transition hard date, with review by the Commission
of the rule within the final year.
As I expressed at the time of my vote, I am concerned about the
effect this order may have on smaller cable operators, particularly
those with systems that employ 552 megahertz or less. I will urge the
Commission to consider waiver requests expeditiously and grant waivers
for such providers, where relief is warranted. You are correct that
filing and prosecuting such a waiver request will be expensive and
burdensome for smaller companies. I had hoped that our order would have
afforded a greater level of relief to smaller cable systems.
Question 3. Would you support a blanket dual carriage waiver for
552 megahertz cable systems?
Answer. Yes, I would support a blanket dual carriage waiver for 552
megahertz cable systems.
Question 4. Section 254(a)(2) of the Communications Act requires
that the Commission ``complete any proceeding to implement
recommendations from any Joint Board on Universal Service within 1 year
of receiving such recommendations.'' The Joint Board on Universal
Service delivered its recommended decision on high-cost reform on
November 19, 2007. Do you support putting the Joint Board
recommendation out for public comment?
Answer. Yes. In fact, the Commission voted on January 16, 2008, to
adopt a notice of proposed rulemaking to seek comment on the Joint
Board's recommendations for permanent reform of the Universal Service
Fund. This notice, along with two others that seek comment on the
elimination of the identical support rule and use of reverse auctions,
was released on January 29, 2008. Comments on all three notices will be
due 30 days after publication in the Federal Register and reply
comments will be due 60 days after publication in the Federal Register.
Parties will be able to file collective comments in all three
proceedings.
______
Response to Written Questions Submitted by Hon. John Thune to
Hon. Robert M. McDowell
Question 1. The FCC has commissioned 10 economic studies on media
ownership and its effect on news and other programming. According to
these studies, how does cross-ownership affect local content and
political slant? Does this outcome differ by the size of the media
market? In other words, how does the cross-ownership ban impact local
content and political slant in the largest 20 markets compared to
effects in smaller markets around the country? What has been the
experience of markets which had companies grandfathered in under old
media ownership rules?
Answer. The record provides both empirical and anecdotal evidence
that commonly owned outlets can, and often do, exercise independent
editorial control. The FCC-sponsored economic study authored by Jeffrey
Milyo, ``The Effects of Cross-Ownership on Local Content and Political
Slant of Local Television News'' focuses on the political slant of TV
stations and concludes that ``television stations cross-owned with
newspapers exhibit a slight and statistically insignificant Republican-
leaning slant'' in content. The study also concludes that cross-owned
TV stations air more local news, including political news, than non-
cross-owned TV stations. The Milyo study's results are consistent with
those in the Pritchard study conducted in the 2002-2003 round of the
rulemaking. That study, ``Viewpoint Diversity in Cross-Owned Newspapers
and Television Stations: A Study of News Coverage of the 2000
Presidential Campaign'' found that ``in five of the 10 newspaper/
television combinations analyzed, the overall slant of the coverage
broadcast by a company's television station was noticeably different
from the overall slant of the coverage provided by the same company's
newspaper.''
Several comments submitted in the rulemaking provide examples of
commonly owned outlets speaking with separate editorial voices. For
example, the Newspaper Association of America provided several examples
of programming and viewpoint diversity to demonstrate that newspaper/
broadcast combinations do not speak with a single, coordinated voice.
With respect to grandfathered companies, Belo's WFAA-TV and The Dallas
Morning News historically have not coordinated their opinions or
viewpoints. Similarly, Media General's various news and information
platforms, regardless of their method of disseminating content, operate
separately in developing their content. The Freedom of Expression
Foundation commented that newspaper/broadcast combinations are more
likely to produce more public affairs programming, and such firms are
unlikely to present a monolithic viewpoint on any or all issues of
public importance. This evidence in the record demonstrates that common
ownership does not equate to common editorial viewpoints or control, as
sometimes alleged.
Question 2. The financial troubles and perceived threats to the
viability of newspapers and broadcasts have played a significant role
in the proposed changes of media ownership rules. Some sources content
that despite declining ad revenues and readership, newspapers remain
profitable. However, others contend that these media outlets have only
been able to remain profitable at the expense of the quality and
quantity of news they produce. What do you perceive the financial
position of newspapers to be in today's market. How does this vary
based on the size of the media market? To what extent will these
proposed changes alleviate these troubles?
Answer. The great weight of the data available to us shows that
while some newspapers are profitable, the industry as a whole is in
decline. Consumers now have more choices and more control over what
they read, watch and listen to than ever. As a result of this multitude
of voices competing for consumer's attention, at least 300 daily
newspapers have shut their doors since the cross-ownership ban went
into effect because people are looking elsewhere for their content.
Newspaper circulation has declined year after year. Since this past
spring, average daily circulation has declined 2.6 percent. In the six-
month period ending September 2007, circulation declined for 700 daily
newspapers across the country. Of the top 25 papers in daily
circulation, only four showed gains. Also, newspapers' share of
advertising revenue has shrunk while advertising for unregulated online
entities has surged. Advertising revenues, which currently account for
slightly more than 80 percent of the industry's total revenues, are
predicted by SNL Kagan to decline through at least 2011.
As gross revenue declines year after year, publishers cut costs to
retain margins. After a while, such cost-cutting slices into the heart
of the news-gathering operation: the newsroom and its reporters. As a
result, the ability to cover more news diminishes. In recent years, we
have witnessed a sharp reduction in the number of professional
journalists employed in the newspaper industry. In 2006, the industry
employed approximately 3,000 fewer full-time newsroom staff people than
it had at its peak of 56,400 in 2000. In 2007, job cuts due to economic
losses were announced by several major newspapers, including, to name
only a few, The Boston Globe (24 newsroom staff cut in 2007, including
two Pulitzer Prize-winning journalists), The Minneapolis Star-Tribune
(50 newsroom staff cut in 2007), Los Angeles Times (70 newsroom staff
cut in 2007) and The San Francisco Chronicle (25 percent newsroom staff
reduction in 2007, equal to about 100 jobs). Other newspapers have
substantially reduced or wholly abandoned news bureaus. These
developments have substantial consequences for the public interest.
The changes to the newspaper/broadcast cross-ownership rule that we
adopted at the Commission's December 2007 agenda meeting will alleviate
these concerns by creating a presumption in favor of lifting the ban
only in the top twenty media markets where there is tremendous
competition in the traditional media sector. Even then we only allow a
combination outside of the top four TV stations and only when at least
eight independent major media voices remain in the market. Outside of
the top twenty markets, our rule establishes a negative presumption
against permitting the combination. In only two special circumstances
will we reverse the negative presumption: first, if a newspaper or
broadcast outlet is failed or failing; and second, when a proposed
combination results in a new source of a significant amount of local
news in a market.
Where neither of these circumstances exists, we establish a four-
prong test to determine whether the negative presumption is rebutted.
To determine if the presumption is overcome, we will consider: (1)
whether cross-ownership will increase the amount of local news
disseminated through the media outlets in the combination; (2) whether
each affected media outlet in the combination will exercise its own
independent news judgment; (3) the level of concentration in the
Nielsen DMA; and (4) the financial condition of the newspaper and
broadcast station, and if the newspaper or broadcast station is in
financial distress, the putative owner's commitment to invest
significantly in newsroom operations.
Question 3. The Universal Service Fund is obviously very important
for rural states like South Dakota. What general troubles do you see
arising with the fund and its solvency? What would you recommend to
help alleviate these troubles? What are your thoughts on the
recommendations put forth by the Federal-State Joint Board in November?
Answer. I have consistently maintained that the Universal Service
system has been instrumental in keeping Americans connected and
improving their quality of life, particularly in rural states like
South Dakota. I also believe that the Universal Service system is in
dire need of comprehensive reform. As I approach this crisis, I will
follow five principles when considering all reforms to Universal
Service. We must: (1) slow the growth of the Fund; (2) permanently
broaden the base of contributors; (3) reduce the contribution burden
for all, if possible; (4) ensure competitive neutrality; and (5)
eliminate waste, fraud and abuse.
I am in favor of considering all options to reform the Universal
Service High Cost Fund, including those disbursement mechanisms that
would target support. On January 29, 2008, we released a notice of
proposed rulemaking seeking comments on the Joint Board's
recommendations for permanent reform of the Universal Service Fund.
Concurrently, we released two other notices of proposed rulemaking,
which seek comment on the elimination of the identical support rule and
the use of reverse auctions. Comments on all three notices will be due
30 days after publication in the Federal Register and reply comments
will be due 60 days after publication in the Federal Register. This
combined comment cycle will provide a full record for the Commission to
consider all options. I am open to all proposals for comprehensive
reform and will evaluate the entire record as soon as it is complete.
Question 4. Many people are concerned that the digital TV
transition is not going as smoothly as would be hoped and a number of
steps still need to be taken including the issuance of rules regarding
the processing of construction permit applications and the assignment
of channels to broadcasters. Why have these issues not been resolved
yet? When do expect them to be resolved? Will this allow the industry
enough time to transition to digital TV?
Answer. On December 31, 2007, the Commission issued an order
resolving the digital TV (DTV) transition issues raised in our Third
Periodic Review of the Commission's rules and policies affecting the
conversion to DTV. The order issues our final rules regarding the
processing of applications and the assignment of channels to
broadcasters. Specifically, the order provides a progress report on the
digital transition, establishes deadlines and procedures to ensure that
the February 17, 2009, transition deadline is met, and offers
regulatory flexibility to broadcasters to assist their efforts to
construct digital facilities by the deadline. I am hopeful that the
details set forth in the order regarding when stations may and must
cease analog operations, when they may and must begin operating on
their post-transition digital channel, and the associated regulatory
flexibility they have, will help ensure that the complicated,
coordinated switch to DTV unfolds smoothly.
Of course, the broadcasters and the Commission still have a
tremendous amount of work to do before February 17, 2009. The
transition is an extremely complex undertaking that presents many
challenges to the industry and to us as regulators. We have attempted
to balance carefully the broadcasters' need for flexibility and
certainty with the Commission's obligation to oversee the transition
for the benefit of over-the-air viewers.
Question 5. The FCC appears to be re-regulating some aspects of
broadcasting which were deregulated under President Reagan and have
helped the broadcast industry remain competitive over the past 25
years. With the influx of new technologies and mediums, why has the FCC
chosen now to begin re-regulation? Have there been any specific
detrimental effects that have prompted this? Why has the FCC
increasingly turned to government mandates instead of market-based
solutions to help resolve these problems?
Answer. I have significant concerns about two recent Commission
actions, both issued on January 24, 2008. In the first, an order
regarding enhanced disclosure by broadcasters, the majority adopted a
new standardized form that requires TV stations to file with the
Commission disclosures regarding efforts to ascertain the programming
needs of various segments of the community. I dissented from this
aspect of the order. The order requires a list reporting all
programming aired in various categories such as local news, local civic
and electoral affairs programming, religious programming, independently
produced programming and so forth. The Commission eliminated
ascertainment requirements for television and radio stations in 1984
after a thorough examination of the broadcast market. While the recent
order falls short of reinstating the ascertainment procedures discarded
by the 1984 Commission, I am concerned that we are heading in the wrong
direction. Today's highly competitive video market motivates
broadcasters to respond to the interests of their local communities. I
question the need for government to foist upon local stations its
preferences regarding categories of programming. While we stop short of
requiring certain content, we risk treading on the First Amendment
rights of broadcasters. This form is government's not-so-subtle attempt
to exert pressure on stations to air certain types of content.
In the second action, the Commission delivered a report on
broadcast localism and notice of proposed rulemaking. I have concerns
about the notice of proposed rulemaking, in which the Commission
tentatively concludes that broadcast licensees should convene permanent
advisory boards made up of community officials and leaders to help the
licensees ascertain the programming needs of the community. The notice
also contains a tentative conclusion that the Commission should adopt
processing guidelines, such as minimum percentages, to ensure that
stations produce a certain amount of locally-oriented programming.
Again, the Commission is heading back in time--in the wrong direction,
toward ascertainment policies. Vigorous competition motivates
broadcasters to serve their local communities. I do not believe that
government needs to, or should, foist upon local stations its
preferences regarding categories of programming. Again, we risk such
policies being overturned by the courts.
Question 6. Earlier this year, the FCC's Office of Engineering
(OET) released a report which shows that allowing unlicensed devices
into the television spectrum may interfere with the television signal
in 80-87 percent of a television station's service area. Additionally,
a July report from the FCC demonstrated that prototypes that utilize
``sensing'' technology did not effectively detect TV signals. Do you
perceive this to be a threat to the DTV transition? If so, what is the
FCC doing to ensure that the DTV transition is not jeopardized by
unlicensed consumer digital devices?
Answer. As long as the Commission lets science, and science alone,
drive our decisions, I do not believe that OET's ongoing testing of
prototype devices to operate in the ``white spaces'' of the TV
broadcast spectrum is a threat to the DTV transition. If the Commission
refrains from polluting science with politics, powerful new
technologies will emerge, and American consumers will benefit as a
result. I am pleased that OET is taking the time necessary to analyze
and field test numerous additional prototype devices. I have long
advocated use of the white spaces, provided such use does not cause
harmful interference to others. I am hopeful that a flexible, de-
regulatory, unlicensed approach will provide opportunities for American
entrepreneurs to construct new delivery platforms that will provide an
open home for a broad array of consumer equipment.
At the same time, the Commission has a duty to ensure that new
consumer equipment designed for use in this spectrum does not cause
harmful interference to the current operators in the white spaces. I
have enjoyed learning from various parties who are engaged in the
healthy technical debate surrounding the best use of this spectrum.
Assuredly, the discussions will become ever more intense as we move
forward. But, at the end of the day, we will have a resolution.
Inventors will continue to invent, and a workable technical solution
will develop. As long as science alone drives our decisions, I foresee
great benefits to American consumers in the long run.