Third Report and Order
The Third Report and Order addresses the comments received by the FCC as a result of the Further Notice of Proposed Rulemaking (NPRM). The NPRM addressed various issues raised in an FCC forum held in February, 2005 with various LPFM stakeholders including non-local ownership of LPFM stations, the transferability of LPFM stations, the renewability of licenses that are on involuntary time share arrangements, the maximum distance allowed on minor moves and more periodic LPFM filing windows.
| Document Information | |
|---|---|
| Type | Report and Order |
| Docket Number(s) | MM 99-25 |
| FCC Number | 07-204 |
| FCC Record | 22 FCC Rcd 21912 |
| Federal Register Citation(s) | 73 FR 12601 |
| Federal Register Date(s) | March 6, 2008 |
| Relevant Dates | |
| Adoption Date | November 27, 2007 |
| Release Date | December 11, 2007 |
This Report and Order was released 7 years into the LPFM service and to date, the FCC received 3,236 applications for new LPFM stations for which 1,286 have been granted and 809 stations are fully licensed and operating. At the same time, the Media Bureau was compelled to cancel 17 station licenses and 95 construction permits for failure by the holder to satisfy certain procedural and/or technical requirements.
Ownership and eligibility
Changes in board membership
The NPRM proposed to amend the rules to allow for sudden changes of more than 50 percent of the membership of governing boards. Commenters such as KVLP-LP noted that experience on the board of an LPFM station can confer valuable leadership experience to community members, leading community groups to encourage frequent shuffling of board membership. Overall, most commenters favored amending the rules to permit transfers of control due to sudden change so long as the overall mission of the organization has not changed.
The FCC did amend §73.865 to clarify that transfers of control involving a sudden change in board membership of more than 50% of an LPFM governing board shall not be deemed as a "substantial change in ownership or control".
Assignments and transfers
On this subject, comments were mixed between those who supported the ability for LPFM stations to be transferred/assigned to different organizations without restrictions because there is very little risk to manipulation or take-over in the "market" for LPFM authorizations, and those who contend that transfers/assignments should be limited to those situations where the proposed assignee/transferee "represents the community" and no consideration is involved. The FCC concluded that the for-profit sale of LPFM stations to any buyer is fundamentally inconsistent with the FCC's desire to promote local, community based use and ownership of LPFM stations.
The FCC will allow for assignments of licenses, but only after the station has been constructed and licensed for at least three years and that consideration be limited to the depreciated fair market value of the physical equipment and facilities of the station. Proposed assignees must meet the qualifications to be an LPFM licensee including localism.
The FCC determined that the standard FCC forms that are being used for other broadcast services would also apply to LPFM stations such as Form 314 or assignments of license, Form 315 for non pro forma transfers of control and Form 316 for pro forma transfers of control.
Ownership caps and localism
When LPFM stations were first authorized, ownership was limited to one station per local entity within the first two years. At the two year mark, ownership would increase to 5 stations and then after 3 years from the creation of LPFM, the ownership cap would increase to 10. This was to allow for national organizations to have LPFM stations but giving local applicants a head start.
Several organizations urged the FCC to keep the LPFM service local and limited to one station per entity stating that any relaxation of the localism and multiple ownership restrictions are at odds with the "community radio" rationale that justifies the existence or LPFM stations. In response to the FCC's prior concerns about potential LPFM channels not being used if no local organization wants it, Prometheus Radio Project stated that non-local entities should be barred from applying, because LPFM is not a goal on itself, rather it is a means to promote localism.
As a result, the FCC reinstated the "one to a customer" ownership rules (except for public safety agencies) and the requirement that LPFM stations remain under the control of local organizations. At the recommendation of Prometheus Radio Project, the FCC did extend the local standard for rural markets to consider a local applicant as one that is less than 20 miles from the transmitter site if the LPFM station is located outside of the Top 50 media markets.
Time sharing agreement deadline date
Media Access Project had observed that LPFM applicants are comprised of small organizations with few administrative resources and limited access to the expertise of professional engineers. Few applicants are able to identify other mutually exclusive applications before receiving notice from the FCC leaving them with only 30 days to contact the other applicants, complete negotiations and file their agreements with the FCC. As a result the FCC proposed to extend the settlement period from 30 to 90 days. All commenters who addressed the issue favored adoption of the proposal to extend the period to 90 days, this included NPR and REC Networks.
The FCC agreed with the views of NPR, REC and others and therefore amends §73.872 to extend the settlement deadline to 90 days.
Renewals for involuntary time sharing arrangements
Currently, if an LPFM authorization is issued under an involuntary time sharing arrangement (successive license terms), the licenses are non-renewable. The NPRM proposed to change this provision as it may lead licensees under such arrangements to reach such arrangements to negotiate voluntary time sharing agreements among themselves. REC Networks was one of the few commenters to address this and suggested that if licensees under an involuntary time sharing arrangement was to come up with a voluntary agreement the FCC should grant the agreement and remove the non-renewable condition and be able to renew. So far, with more than 1,200 construction permits already granted, no stations hold authorizations for involuntary time sharing.
The FCC will consider these agreements as minor changes and then can operate under a universal voluntary time-sharing agreement to file it as minor change without having to wait for a filing window. Therefore, the FCC will amend the rules to allow them. The FCC stresses that the settlements must be universal, as in all parties in the group must be in agreement.
Filing for unused time
If in a time share group, if there is any unused time, REC suggested that new applicants be able to file for that unused time during a filing window. The FCC will only entertain these requests during a filing window, even if the new entrant reaches a universal agreement with the other time share stations. The FCC will not accept such filings outside of a filing window both due to administrative burden as well as fairness under the mutually exclusive selection procedures of §73.872.
If additional time becomes available due to the attrition of one of the time share proponents, then the remaining time share proponents can negotiate to apportion out the unused hours.
Technical rules
Construction period
In the original Report and Order, the FCC established an 18 month construction period for all LPFM facilities that would be strictly enforced. However, in the NPRM, the FCC adopted an interim waiver policy based on the fact that some groups may not be able to construct within 18 months because of various issues such as zoning approvals. Those waiver requests would allow for another 18 months to build upon a showing that the permittee can be expected to complete construction within the extended period.
As a more permanent solution, the FCC proposed to extend the construction period to 36 months. Many commenters favored the 36 month period stating that it has administrative advantages over a conditional extension or case-by-case review of individual waiver requests. Prometheus Radio Project and others contend that the better approach was to grant an 18 month extension, but only upon demonstration of good cause so to prevent unable or unwilling LPFM permittees from warehousing valuable spectrum without service to the public for an extended period of time.
As a result, the FCC will amend the rules to allow, upon a showing of good cause, the opportunity to seek an 18-month extension to complete construction.
Amendments
The FCC amended §73.871 to allow time share proponents to be able to make a minor amendment to a common (central) transmitter site even if the distance is more than 5.6 kilometers for LP-100 or 3.5 kilometers for LP-10 as long as the proposed location meets the minimum distance separation requirements.
LPFM-FM Translator interference priorities
Currently, the LP-100 and FM Translator services are on a co-equal basis with one not having "priority" over the other. The NPRM sought comments on under what circumstances should an LPFM station have priority over an FM translator. Specifically, the FCC sought comment on how to overcome the significantly preclusive effect of the 2003 Auction 83 "Great Translator Invasion" filing window, asking, among other things, of whether all of the pending FM translator applications should be dismissed. So far, the FCC has already granted 3,500 FM translator new station construction permit applications from the singleton filings and that 7,000 applications remain on file. Very few opportunities for LPFM stations existed before the Auction 83 window and that the Auction 83 window did have a preclusive effect on future LPFM licensing opportunities.
The FCC did receive a lot of comments on this issue to focus on two possible theories supporting modification of the current rule (1) that LPFM provides a preferred radio service to that offered by translators and (2) that priority status for LPFM applications is necessary to overcome the preclusive impact of the other 13,000 technical proposals filed in Auction 83. LPFM advocates contend that their service is preferable to FM translators because LPFM stations are locally owned and can originate local programming where translators merely rebroadcast another station's programming including distant programming fed by satellite. Some requested that LPFM stations should have priority over "distant" translators, those that broadcast the signals of a non-local station.
NAB, NPR and the state broadcaster associations as well as commercial and NCE broadcasters support retention of the current interference protection rules stating there's no simple ways to distinguish preferred stations or programming and there is no such thing as a "typical" LPFM or FM translator station. They reject as unfounded the contention that program origination or local ownership correlates to more desirable programming. They also note that LPFM stations have limited service in regard to their communities of license and do not need to originate programming. Also LPFM stations are only required to operate 35 hours per week and do not have a main studio or public file. Many contend that because LPFM is still in its infancy, that it is premature to assess the "co-equal" status of LPFM and FM translator stations. NCE stations argue that giving LPFM priority over operating FM translator stations would significantly disrupt established and valued translator service to millions of listeners, especially in rural areas and in situations where broadcasters rely on "chains" of translators to deliver programming.
With regard to the applications filed in Auction 83, some argued that LPFM stations should not have any special preference because LPFM had the first opportunity in the 2000-2001 Filing Window Series. Translator advocates note that their last opportunity for non-reserved band FM translators occurred in 1997. Edgewater Broadcasting (and co-owned Radio Assist Ministries) and REC Networks submitted studies. The Edgewater study shows that the preclusive effect was "miniscule" while the REC study shows many communities in which the 2003 window filings have allegedly precluded or diminished LPFM licensing opportunities. A number of commenters argue that the FCC's concern is misdirected and urge the FCC to instead move vigorously against alleged FM translator filing abuses, speculators and deficient application filings. They suggest imposing numerical application filing limits, either on a prospective basis or without regard to the still-pending atranslator applications. Some contend that the high demand for new FM translators is unsurprising, given the extended freeze on non-reserved band licensing.
The FCC recognizes that both LPFM and FM translators are each valuable components of the nation's radio infrastructure. The FCC will address these issues further in the Second Further Notice of Proposed Rulemaking. For now, the current rules will remain in effect until the FCC resolves the issue in that proceeding. The FCC must also consider the question to whether Auction 83 filing activity has already impacted the Commission's goal to provide both LPFM and translators applicants reasonable access to limited FM spectrum in a manner that promotes the fair, efficient, and equitable distribution of radio service as mandated in §307(b) of the Communications Act. The FCC notes that as of September 30, 1990, a total of 1,847 FM translators and boosters were on the air. As of December 31, 1997 when the FCC imposed a freeze on new non-reserved band translator filings, a total of 2,881 translators were operating nationally. A total of 3,818 licensed translators were in operation in March 2003 when the FCC opened the Auction 83 window and a total of 3,897 stations were on the air when the FCC imposed the freeze on Auction 83 construction permits in March, 2005. The Auction 83 window has nearly doubled the total number of authorized stations and three times more than the number of LPFM stations authorized in the 2000-2001 window series.
The FCC believes that processing all of the remaining 7,000 remaining translator applications would further frustrate the development of the LPFM service and their efforts to promote localism. An REC study showed that 16 percent of census designated communities that otherwise would have had LPFM channels in their communities are now precluded because of Auction 83. In the Auction 83 window, filing activity was divided between hundreds of applicants that filed a limited number of applications and a very small number of applicants that filed for hundreds or thousands of construction permits. Approximately half of the filers submitted one or two proposals. Approximately 80 percent filed 10 or fewer proposals. 97 percent filed 50 or fewer proposals Commonly-owned Edgewater Broadcasting and Edgewater Broadcasting filed 4,219 proposals constituting almost one-third of all Auction 83 filings. The 15 most active filers were responsible for half of the proposals filed in the window.
Some have been concerned about Radio Assist/Edgewater's business strategy. The National Translator Association considers those applicants who intend to obtain construction permits and then sell those permits to be simply speculators for profits. More fundamentally, it appears that the FCC's assumption that competitive bidding procedures would deter speculative filings have been proven to be unfounded in the Auction 83 context. Radio Assist/Edgewater alone has sought to assign more than 50 percent of the 1,046 construction permits it has been awarded through the window and has already consummated assignments for over 400 of all such permits.
In order to further the twin goals of increasing the number of LPFM stations and promoting localism, the FCC limited further processing of applications submitted in the Auction 83 window to 10 proposals per applicants. Those with more than 10 pending proposals will need to identify the 10 they want to keep and the remaining ones will be dismissed. This cut off will limit the preclusive impact of Auction 83 filings on LPFM licensing opportunities by barring the processing of thousands of applications filed by a very small number of applicants without impacting the 80 percent of filers who filed 10 or fewer applications.