‘COMPLETE MARRIAGE’ OF COMMUNICATIONS JUST STARTING POWELL

Responding to Donaldson questioning of Powell’s comments on future viability of over-air TV, chmn. said it was FCC’s job to pick up public “trends,” more and more Americans now were willing to pay for programming they received in homes and it was “naive” not to study such trends. But, he said: “I don’t personally believe that over-the-air TV will ever be dead.” Asked about earlier statement he made about rising cable rates, he said statement was taken out of context but that increases didn’t justify govt. intervention: “Cable prices don’t come close to what you pay for gas.” All services FCC deals with are very price sensitive, he said.

With 35% TV station ownership rule now in court, where stay was issued keeping the rule in place for time being, “what are you going to do” at FCC, Powell asked. Of that stay and recent ruling by same court throwing out 30% limit on cable subscribers, “many people see that as a gray sign for the life of the rules.” He said he was not for diversity for diversity’s sake and that FCC never had effective way to measure value of ownership diversity. As for affiliates’ case against relaxing cap, burden of proof will be up to stations, he said.

Powell said he realized that when May 2002 deadline arrived for analog stations to begin dual operations with digital transmissions, many wouldn’t be ready to make switch. Vast majority of stations in major markets have met earlier deadlines, he said, and Commission doesn’t plan to announce postponement of 2002 date any time soon because “everybody has to keep moving” and broadcasters and manufacturers must work together to get TV sets in hands of public. As for 2006 date set by Congress for stations to surrender analog channels, “I am one of those who is very critical that that date will ever be realized.”

Auctioning analog channels being returned by TV stations and other spectrum is area that gives FCC as many headaches as any issue it faces, Powell said. That’s because “the demand is dramatically higher than the supply,” he said. Despite line items in Administration’s budget, chmn. said auctions weren’t about making money but were effort to provide space to entities that valued spectrum the most. As for Internet, it already is regulated through “very heavy regulations of phone lines… What isn’t regulated is content and that should always stay unregulated.” As for broadcast and cable content, he said: “We still have rules [but] we're not in this like the Commission once was.” As for First Amendment, he said there are “times when we would like to make exceptions” to free speech guarantees “but we tolerate those things” that are objectionable. -- Tack Nail

NAB Notebook…

Leaders of Network Affiliates Stations Alliance (NASA) got what they wanted at Sun. afternoon meeting in Las Vegas when -- with more than 300 stations in attendance -- none objected to groups’ request at FCC for inquiry into practices of Big 4 TV networks. Going into session, there had been some talk about possibility of extending some sort of olive branch to networks in effort to start negotiations to resolve issues dividing groups, but that didn’t happen at closed meeting, we're told. NASA Chmn. Alan Frank told us affiliates were “enthusiastic in their support” of FCC filing and many were applauded after speaking up at meeting. Stations from smaller groups, we're told, expressed resentment at networks’ contentions that NASA effort was led by big groups and particularly at NBC Pres. Robert Wright’s charge that NAB had been taken over by “publishers.” Frank said there was “outpouring of support for what we're doing.” However, group executive with mostly smaller market stations told us: “Don’t quote me, but there has to be a negotiated settlement of the disputes somewhere down the line.”

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House Commerce Committee Chmn. Tauzin (R-La.) intends to hold hearings on campaign finance reform bill (S-27) passed by Senate and will focus on amendment by Sen. Torricelli (D-N.J.) on lowest unit charge for political campaign ads and limitations on broadcaster preemption of such ads, said Jessica Wallace, committee telecom counsel. She said Mon. at congressional staff panel discussion that Tauzin “indicated a desire to hold a hearing on the Torricelli amendment” and was receptive to discussion of “free air-time issues as well.” She said Tauzin was “philosophically opposed” to idea of govt.-imposed mandate that broadcasters give better ad deals to politicians than to private sector companies competing for same time slots. Setting of hearing date hinges on how well-positioned House leadership is in overall campaign finance review process, she said. Tim Kurth, policy analyst for House Speaker Hastert (R-Ill.), said it was “highly unlikely” that House would take S-27 as written. Reintroduction of bill by Reps. Shays (R-Conn.) and Meehan (D- Mass.) is probable, and House Administration Committee would get first review, he said. “[Campaign finance] legislation would begin here” but “move quickly,” Kurth said. In earlier congressional breakfast panel, Rep. Walden (R-Ore.) expressed need for House bill that would require clear identification of candidates in ads. He said that if candidates wanted to qualify for lowest unit charge for ad rates, they should be required do their own ads at least 75% of the time. “If you want to get at the real issue Americans are upset about, it’s the negative campaigning,” Walden said. “Let’s put the candidates’ voices and faces on their ads. There won’t be nearly as much negative campaigning as a result.” Separately, Tauzin and House Telecom Subcommittee Chmn. Upton (R-Mich.) this year also will hold “at least 3” hearings to weigh possible “hardening” of May 2002 digital TV transition deadline, Wallace said. “He thinks that hardening the deadline will ‘incentivize’ the parties to come together to realize that they have to solve some of these issues” before Congress or FCC steps in with legislative or regulatory remedy, she said. Tauzin is proponent of DTV transition because he believes that “future viability of the broadcast industry really depends on it,” she said. -- SP

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TV Music License Committee estimated that broadcast stations had saved $900 million since 1992, year that court changed formula for determining ASCAP license fee payments. However, changes in competitive landscape of broadcast market and technology require different approach to determining “fair price for music we use,” Committee Co-Chmn. Catherine Nierle said in NAB convention panel discussion Tues. “We continue to pay foreground prices for background music,” she said. Committee currently has no contract with ASCAP, BMI or SESAC. ASCAP contract expired in March 1998 and BMI in March 1999, and SESAC “has requested arbitration,” she said. Blanket licenses, which enable broadcasters to play unlimited amount licensed music, is “old and ossified” licensing technique that has little relevance in technological environment where “every type of music can be monitored,” Committee Counsel Bruce Rich said. He said cable TV industry in fall faces litigation in U.S. Dist. Court in N.Y. on music licensing fees in that industry segment. Case is connected with ASCAP consent decree with Justice Department, he said.

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Some small-market TV stations are considering giving their DTV channels back to govt. rather than spending significant amount to upgrade to DTV, attorney Tom van Wazer said. Speaking at NAB convention, he said “investing where there is no market is not very attractive” to stations. Instead of operating both DTV and analog channels, van Wazer said, stations will continue operating analog as long as possible, then “flash cut” to DTV on their analog channel when they have to. He also predicted many of stations would seek extensions of 2002 deadline for beginning DTV broadcasting. Despite that, it’s “premature” to say that DTV deadlines can’t be met, said Richard Chessen, assoc. chief of FCC Mass Media Bureau. For example, he said concerns about impact of shortage of tower crews on DTV transition probably had been overstated because “great majority” of stations don’t need tower work. Rather than worrying too soon, he said, FCC will “keep our eye on the work in front of us.” Attorney John Burgett said Commission’s current main effort was being “in hyper mode” on processing DTV application, including notifying stations whose DTV applications weren’t acceptable. Chessen said bureau also was dealing with “an unexpected number” of bids to maximize DTV service area, many of which may have been prompted by LPTV Class A applications, which could limit full-power stations’ final service areas. MSTV Senior Vp Victor Tawil said FCC did need to work on definition of “material degradation” of DTV signal by cable systems. He said current definition could seriously damage DTV programming delivered by cable to viewers, and new definition should be based on number of megabits of data actually arriving. Tawil also said FCC carriage rules could “kill” DTV multicasting because cable would have to carry only single video stream. Broadcasters also continued to press for requirement that all TV sets include DTV tuner, allowing it to display DTV programming, though in standard definition. Tawil said all-channel tuner requirements in 1960s helped speed availability of UHF. Chessen said tuner requirements “may not have the same effect” this time because only 15%-20% of all TV sets actually receive programming over air instead of via cable or DBS. Amy Nathan of FCC Office of Plans & Policy said copy protection had “turned out to be a lot larger bottleneck to the DTV transition than anyone expected.”