Geller to FCC: scrap the rules, try a spectrum fee

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More than three years after promising digital channels to broadcasters, the FCC held a hearing Oct. 16, 2000, about what the broadcasters should do in exchange for the spectrum. Most of the testimony was about possible FCC rules requiring political and children’s programming, but former FCC general counsel Henry Geller suggested, as he and others have said before, that the public interest would be served more effectively by assessing spectrum fees and paying pubcasters to do the public-interest programming. This article was adapted from Geller’s statement.

The broadcast regulatory scheme, adopted in 1927 and continued to the present time in the 1996 amendments to the Communications Act, is one of short-term licensing, with the licensee committed to serving the public interest — of being a public trustee or fiduciary for its service area. The constitutional basis for this unique scheme is set forth in the seminal 1969 Supreme Court decision in Red Lion Broadcasting v. FCC: More people want to broadcast than there are available frequencies (a situation that exists today). The government could have required each frequency to be shared on a daily, weekly or other basis; instead, the government bestows the short-term use of the frequency on a single entity that then must act as a fiduciary for all those whom the government has denied the right to use the scarce resource. As shown by the Supreme Court’s 1994 decision in the Turner cable company’s must-carry case, it is still valid today.

Why force one broadcaster to serve the public interest when another is eager to do it?

There are two initial observations. First, there is not much utility in the Commission’s spending time on the validity of the basic public trustee scheme. A court (really only the Supreme Court, in the circumstances) can declare it unconstitutional. The Commission cannot. Second, Congress can replace this scheme with an entirely different approach, taking into account the great changes that have occurred since its adoption over 70 years ago. The Commission cannot abandon the basic scheme, especially in light of the 1996 Telecom Act stating specifically its applicability in the digital era (Sec. 336(d)).

The Commission can, however, make recommendations to the Congress. I urge you to consider the following: Scrap the public trustee content scheme, and treat broadcasting like its main rival, cable, which pays up to 5 percent of gross revenues for use of the public streets for cable rights-of-way (significantly, the public makes little or no distinction between cable and broadcast channels).

By taking some modest fee from commercial broadcasters for their use of the public spectrum in lieu of the public trustee obligation, noncommercial television could be adequately funded to deliver high-quality public service programming. The objective is to obtain such programming, but since the government soundly cannot review for quality, we are dependent upon the broadcaster to present the high-quality public service programs. The noncommercial system has demonstrated that it will strive to do so; the commercial system, under fierce and growing competition, has no such history or incentive.

For example, in the multichannel digital era, it is greatly desirable to have a channel for pre-school children, one for school-aged, and another for adults, literacy, or training, especially for teachers in the use of high technology. The noncommercial system, if properly funded, would seize such a multichannel opportunity; the commercial system would not, and should not be expected to do so. In short, use of the spectrum fee in lieu of the public trustee content obligation makes sense out of the exploding video distribution field, removes First Amendment strains due to the content regulation, and is much more effective in achieving the goal of high-quality public service programming.

I suggest that Congress could take a modest initial step along the above lines: it could relieve the commercial broadcasters of the FCC’s 1996 mandate that they serve the educational needs of children (Section 303b), including the obligation to present programs specifically designed to do so, and instead impose a 1 percent spectrum fee on gross advertising revenues. This would net roughly $250 million, which would go to public television solely for its use in the educational field. A provision of the 1996 law, Section 303b(b)(2), already gives a station the alternative of supporting children’s programming on another station in the market. This proposal would, in effect, make the provision mandatory instead of voluntary. Before proceeding further along this approach —such as wholly deregulating the content area in radio broadcasting, and then in television—Congress could evaluate its experience with this partial deregulation.

There is one other recommendation to Congress—affording free time to candidates as an important part of campaign finance reform. The details of such an effort are of course to be fashioned by Congress. Since it would obligate broadcasters to allocate a relatively large amount of air time every two years (or perhaps issue vouchers for purchase of that air time), the free time provision, along with the above 1 percent figure in the educational field, would constitute the full broadcaster contribution in lieu of its present public trustee obligation. This would be a meritorious conclusion, because an educated and informed electorate is so vital to the proper functioning of our democracy.

It will be argued that I am being naïve—that the broadcasters have so much “clout” that the above recommendations have no chance of success in Congress. I acknowledge that in the near term there is little likelihood. But it is important to argue for the approach that markedly advances the public interest—to get it out before the Congress. It took a long time to correct the situation in the transportation field, but eventually the Congress completely deregulated shipping by plane, train and truck. Here, time and the continuing technological explosion, including on the Internet, are on the side of drastic overhaul of the public-trustee content approach.

I turn now to the public interest obligations in the digital era under the existing law. First, it is important to note that there is no way now to describe how the broadcasters will operate. The digital television bitstream of 19.4 megabits per second could be used for an HDTV operation or a single channel standard-definition channel with the remainder of the capacity going to ancillary data services. If so, the DTV broadcast situation would not differ from the present analog one. I have sought revised policies as to the analog operation—for example, a policy requiring broadcasters to give candidates a modest amount of free air time in the 30-day period before election. Since the focus here is on the digital future, and not re-fighting past battles, I will not expand on these matters.

As stated, there is no way to tell if the broadcasters will use the 19.4 mbps for extensive multichannel broadcast operations. It can therefore be argued with some force to simply await future developments.

The counterargument is that once the multichannel operation becomes established, it can be disruptive to impose the substantial new public service obligations upon it, such as requiring that one of the channels (3-4 mbps) be devoted on a sustaining basis to public service, such service to be wholly within the discretion of the licensee; in accordance with 303b(b)(2), the licensee could “buy” its way out of this obligation by paying some fixed proportion of the revenue represented by this 3-4 mbps stream (ascertained by taking the average of the revenues of the other channels) to public broadcasting, locally or nationally.

In my view, this “play or pay” approach is flawed administrative policy, because the Commission would still be forcing unwanted programming obligations on commercial broadcasters and then find itself unable to effectively evaluate their performance because of the First Amendment. I believe it would be wiser to stick with the legislative recommendation noted above—the 1 percent solution.

Finally, assuming that the 1 percent solution is not implemented, modest expansion of the three-hour core educational children’s TV guideline, and imposition of the five-minute fix for election campaign free time could be readily accommodated in the multichannel environment without undue disruption, and therefore should be considered when that situation does in fact arise.

I hope that the foregoing is helpful to the Commission in its consideration of this important issue.

Henry Geller is a former FCC general counsel who has continued to work on Commission issues as a private citizen. In recent years he has served as a communications fellow with the Markle Foundation, as a senior fellow with the Annenberg Washington Program, and, before that, as director of Duke University’s Washington Center for Public Policy Research, 1982-89. He lawyered for the FCC for many years, rising to general counsel in 1964-70, and later served as head of the National Telecommunications and Information Administration, 1978-81.


Al Gore was among those who suggested a spectrum fee on cell phone frequencies in 1994.

The Gore Commission four years later recommended a spectrum fee as an option for commmercial broadcasters who do DTV multicasting (see recommendation No. 5).

In a variation on spectrum fees, Newton Minow and Lawrence Grossman propose a “digital gift” of support for content production for education and public service in general, based on federal proceeds from UHF spectrum auctions after the DTV transition, 2001. Despite Grossman’s extended efforts at coalition-building, most of the auction booty drained into reduction of the federal deficit.



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