Regulatory Review: Barry Umansky and John Butcher
DTV Transition
Digital transmission/reception for America’s
over-the-air television system is an achievable and critical goal.
But, the regulatory road to DTV has been marked by a variety of
cobblestones and uphill grades – and by deadlines and expectations
that largely have not kept pace with practical reality.
For most major network-affiliated commercial TV stations
in the top 30 markets, the inauguration of digital transmission
is old news. These stations had to be on the air with a digital
signal by 1999. Though some such stations have not been able to
begin digital broadcasts, due largely to zoning and land use problems,
the vast majority has been operating in digital for years. For them,
it’s now a waiting game – waiting for greater DTV-set
penetration and waiting to see whether cable systems will carry
their digital signals, either by force of law or by private agreement.
The industry currently looks toward a Dec. 31, 2006
"drop dead" cessation date for NTSC broadcasts in this
country, although the current law allows continued NTSC operation
in a market until at least 85 percent of TV households have DTV-reception
capacity. Indeed, there well may be a future legislative change
to this statutory deadline.
Now, as we approach what once was to be another major
"deadline date" in the DTV transition – May 1, 2002
– it’s time to see where things stand from the perspective
of stations’ FCC obligations and the government’s obligations
to help ensure a successful DTV transition. Given the viewing public’s
as yet underwhelming embrace of DTV, the FCC – as outlined
in this column – has provided for individual extensions of
station build-outs and temporarily deferred several DTV-related
deadlines.
The FCC is giving broadcasters greater flexibility
in transitioning to DTV in the hope of ultimately accelerating the
transition process. Also, the FCC has yet to resolve a number of
key issues affecting broadcasters’ digital interests, including
broadcasters’ DTV must-carry rights and public interest obligations.
DTV TRANSITION RULES ALTERED
In November 2001, as part of its "periodic review"
of the DTV transition process, the FCC took a series of steps to
encourage DTV stations to go on the air and to provide consumers
with greater incentives to purchase DTV equipment. Another such
review is scheduled to begin before the end of 2002, with an FCC
review ruling coming in 2003. Below is a summary of the FCC’s
recent DTV decisions:
• New FCC "Extension" Form — The
FCC adopted a new application form (FCC Form 337) for commercial
stations requesting extension of the May 1, 2002 build-out date.
(The noncommercial station build-out deadline remains May 1, 2003.)
It also added "financial hardship" to the criteria traditionally
governing its case-by-case consideration of individual extensions.
Applicants choosing to demonstrate financial hardship were required
to provide an itemized estimate of the cost of meeting build-out
requirements, and demonstrating their inability to cover such costs.
Applicants were also required to detail their good-faith efforts
to meet the deadline, including efforts to obtain financing and/or
equipment and to explain why those efforts were unsuccessful. The
extension application deadline for most commercial stations was
March 4, 2002.
• Maximization — The FCC deferred the DTV-maximized
facility build-out deadlines for all "remaining" commercial
stations and for noncommercial stations as well. Remaining commercial
stations and noncommercial stations granted construction permits
for maximized facilities had been required to construct such facilities
by May 1, 2002, and May 1, 2003, respectively – or otherwise
lose interference protection to the full authorized facilities.
• Replication — The FCC deferred the Dec.
31, 2004 requirement that commercial broadcasters replicate their
entire grade B analog service area with their DTV signal or lose
interference protection in the unreplicated areas. Stations may
now construct and operate facilities that initially provide service
only to their community of license without losing interference protection
within their allotted service areas. This approach encourages broadcasters
to go on air with less costly, lower-power facilities, and allows
them gradually to expand their coverage as the transition to DTV
advances.
• Channel Election — Also deferred from
the original Dec. 31, 2003 deadline is the requirement that commercial
stations with both analog and digital channel assignments within
the DTV core (Channels 2-51) elect which channel they will use as
their post-digital channel.
• Reduced DTV Broadcast Schedule — The FCC
will permit those non-top 30 market stations subject to the May
2002 construction deadline to operate digitally at a reduced programming
schedule by providing, at a minimum, a digital signal during primetime
hours. This modification does not apply to simulcast obligations,
which are scheduled to begin for these stations in 2003, but which
will be reassessed in the 2002 biennial review.
SOME THINGS REMAIN THE SAME
• Fees for Ancillary/Supplementary DTV Services
— The November 2001 FCC Order did not affect the fees broadcasters
must pay for their provision of ancillary or supplementary DTV services
for which viewers pay a subscription fee or are charged to receive.
DTV licensees are also required to pay fees on any compensation
received from third parties in exchange for the transmission of
materials provided by those third parties. The fee amount owed to
the FCC equals 5 percent of gross revenues received from the ancillary
or supplementary services. Fee payments, together with an Annual
DTV Ancillary/Supplementary Services Report, must be sent to the
FCC by each Dec. 1.
WHAT’S STILL AHEAD?
• New DTV Deadlines — As a result of its
extension and/or deferral of DTV-related deadlines, the FCC will
have to set new deadlines for replication, maximization and channel
election. The commission will agree upon these dates in the next
DTV biennial review.
• Technical Issues – The FCC still needs
to resolve several technical issues relating to the DTV transition,
including receiver performance standards, DTV tuner regulations,
the ATSC PSIP standard, and labeling requirements for television
receivers.
• Broadcasters’ DTV Must-Carry Rights —
In January 2001, the FCC concluded that the Cable Act neither requires,
nor precludes, the Commission requiring dual carriage of television
stations’ digital and analog signals. In its report, however,
the FCC offered its "tentative conclusion" that a dual-carriage
requirement might be unconstitutional, in that it could impinge
upon the First Amendment rights of cable television operators. But
the FCC has solicited and received further comments on the range
of dual-carriage issues.
• Satellite Carriage Issues — The FCC also
has gathered comments on the applicability of DTV must-carry rules
to satellite carriers under the Satellite Home Viewers Improvement
Act ("SHVIA"). Broadcasters rely on the court’s decision
that the SHVIA’s "carry one/carry all" principle
is lawful. Broadcasters also point out – as they did more recently
in the proceeding concerning EchoStar’s relegating certain
"must-carry" stations to "second dish" status
– that satellite carriers have ample capacity to deliver all
stations’ analog and digital signals across the markets they
serve.
• DTV Public Interest Obligations — Still
undecided is the extent of DTV broadcasters’ public interest
obligations to provide educational and informational children’s
programming. Similarly, the FCC has yet to provide updated, standardized
disclosure requirements for digital as well as analog broadcasters.
These issues are the subjects of pending FCC proceedings.
Clearly, the regulatory and legislative requirements
governing the DTV transition are "moving targets." Further
clarity as to where those targets lie should be revealed at the
end of the next FCC DTV biennial review, and through possible legislative
amendments to the statutory deadline for the final DTV conversion
of this country’s over-the-air television system.
Barry D. Umansky, the former deputy general counsel
of the National Association of Broadcasters, now is with the communications
practice group at the law firm of Thompson Hine LLP in Washington,
D.C. Reach him at (202) 263-4128 or via e-mail at
barry.umansky@thompsonhine.com.
John Butcher is a communications associate at Thompson
Hine LLP and may be reached at (202) 972-2749 or via e-mail at
john.butcher@thompsonhine.com.
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