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VOLUME III
THE COMMUNICATIONS ACT OF 1979
(~ObOZ~32f.
HEARINGS
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS
OF THE
COMMITTEE ON
INTERSTATE AND FOREIGN COMMERCE
HOUSE OF REPRESENTATIVES
NINETY-SIXTH CONGRESS
FIRST SESSION
ON
H.R. 3333
TIThES II, V AND VII
COMMUNICATIONS REGULATOR! COMMISSION; ADMINIST'R4-
TIVE AND JUDICIAL PROCEDURES; PENALTIES; AND NA-
TIONAL TELECOMMUNICATIONS AGENCY
JUNE 12 AND 13, 1979
Serial No. 96-126
Printed for the use of the Committee on.Interstate and Foreign Commerce
0
U.S. GOVERNMENT PRINTING OFFICE
51-254 0 WASHINGTON: 1980
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COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
JOHN D. DINGELL, Michigan
LIONEL VAN DEERLIN, California
JOHN M. MURPHY, New York
DAVID E. SATTERFIELD III, Virginia
BOB ECKHARDT, Texas
RICHARDSON PREYER, North Carolina
JAMES H. SCHEUER, New York
RICHARD L. OTTINGER, New York
HENRY A. WAXMAN, California
TIMOTHY E. WIRTH, Colorado
PHILIP R. SHARP, Indiana
JAMES J. FLORIO, New Jersey
ANTHONY TOBY MOFFETT, Connecticut
JIM SANTINI, Nevada
ANDREW MAGUIRE, New Jersey
MARTY RUSSO, Illinois
EDWARD J. MARKEY, Massachusetts
THOMAS A. LUKEN, Ohio
DOUG WALGREN, Pennsylvania
ALBERT GORE, JR., Tennessee
BARBARA A. MIKULSKI, Maryland
RONALD M. MOTTL, Ohio
PHIL GRAMM, Texas
AL SWIFT, Washington
MICKEY LELAND, Texas
RICHARD C. SHELBY, Alabama
SAMUEL L. DEVINE, Ohio
JAMES T. BROYHILL, North Carolina
TIM LEE CARTER, Kentucky
CALRENCE J. BROWN, Ohio
JAMES M. COLLINS, Texas
NORMAN F. LENT, New York
EDWARD R. MADIGAN, Illinois
CARLOS J. MOORHEAD, California
MATTHEW J. RINALDO, New Jersey
DAVE STOCKMAN, Michigan
MARC L. MARKS, Pennsylvania
TOM CORCORAN, Illinois
GARY A. LEE, New York
TOM LOEFFLER, Texas
WILLIAM E. DANNEMEYER, California
LIONEL VAN DEERLIN, California, Chairman
JAMES M. COLLINS, Texas
JAMES T. BROYHILL, North Carolina
CARLOS J. MOORHEAD, California
MARC L. MARKS, Pennsylvania
SAMUEL L. DEVINE, Ohio
(Ex Officio)
HARRY M. SH005HAN III, Staff Director/Counsel
KAREN B. POSSNER, Communications Policy Analyst
EDWINA ELIZABETH DOWELL, Staff Counsel
HARLEY 0. STAGGERS, West Virginia, Chairman
W. E. WILLIAMSON, Chief Clerk and Staff Director
KENNETH J. PAINTER, First Assistant Clerk
BRIAN R. Morn, Professional Staff
BERNARD J. WUNDER, Jr., Associate Minority Counsel
SUBCOMMITTEE ON COMMUNICATIONS
JOHN M. MURPHY, New York
TIMOTHY E. WIRTH, Colorado
MARTY RUSSO, Illinois
EDWARD J. MARKEY, Massachusetts
RONALD M. MOTTL, Ohio
AL SWIFT, Washington
THOMAS A. LUKEN, Ohio
ALBERT GORE, JR., Tennessee
HARLEY 0. STAGGERS, West Virginia
(Ex Officio)
(II)
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CONTENTS
Hearings held on- Page
June 12, 1979 1
June 13, 1979 153
Statement of-
Baer, William J., Assistant General Counsel for Legislation, Federal Trade
Commission 153
Bolger, Thomas, chairman, television board, National Association of Broad-
casters 189, 193
Brennan, Thomas C., Commissioner, Copyright Royalty Tribunal 61
Cohn, Stanley I., Deputy Associate Administrator, Federal Systems and
Spectrum Management, National Telecommunications and Information
Administration, Department of Commerce 1, 2
Cole, Barry, Annenberg School of Communications, University of Pennsyl-
vania 101
Day, J. Edward, special counsel, consumer electronics group, Electronic
Industries Association 173
Drabble, Nancy, Public Citizen's Congress Watch 120
Geller, Henry, Assistant Secretary for Communications and Information,
National Telecommunications and Information Administration, Depart-
ment of Commerce 1
Krasnow, Erwin, general counsel, senior vice president, National Associ-
ation of Broadcasters 189
McKenzie, Susan, legislative liaison, National Treasury Employees
Union 144
May, Walter E., chairman, radio board, National Association of Broadcast-
ers 189, 194
Mihuc, Joseph W., secretary, FCC Chapter 209, National Treasury Employ-
ees Union 144
Naradzay, Bonnie, Special Assistant for Public Participation, Federal
Trade Commission 153
Nunn, Sam, College of Urban Affairs and Public Policy, University of
Delaware 94
O'Sullivan, Kevin, on behalf of National Association of Independent Televi-
sion Producers and Distributors 163
Renouf, Katrina, counsel, National Association of Independent Television
Producers and Distributors 163
Symons, Howard J., Public Cit~izen's Congress Watch 120
Thurston, Donald A., chairman, National Association Broadcasters 189
Warren, Robert, professor, College of Urban Affairs and Public Policy,
University of Delaware 94
Wasilewski, Vincent, president, National Association of Broadcasters 189
Additional material submitted for the record by-
Commerce Department, attachment to Mr. Cohen's prepared statement,
appendix A-informal rulemaking 41
Electronic Industries Association, letter dated June 22, 1979, from Mr. Day
to Chairman Van Deerlin, re regulations of other countries in opposition
to regulation of performance characteristics of television receivers 177
National Association of Independent Television Producers and Distribu-
tors, letter dated August 6, 1979 from Mr. Delman to Ms. Possner re
Worldvision's contacts with the Copyright Royalty Tribunal 172
Public Citizen's Congress Watch:
Attachment to Mr. Symon's and Ms. Drabble's prepared statement,
Summary of public participation funding programs at Federal agen-
cies 130
Federally mandated intervenor funding at State level: The Public
Utility Regulatory Policies Act of 1978 140
Letter submitted for the record by-
Comptroller General of the United States, Elmer B. Staats 211
(III)
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IV
ORGANIZATIONS REPRESENTED AT HEARINGS
Commerce Department:
Cohn, Stanley I., Deputy Associate Administrator, Federal Systems and Spectrum
Management, National Telecommunications and Information Administration.
Geller, Henry, Assistant Secretary for Communications and Information, Na-
tional Telecommunications and Information Administration.
Copyright Royalty Tribunal, Thomas C. Brennan, Commissioner.
Electronic Industries Association, J. Edward Day, special counsel, consumer elec-
tronics group.
Federal Trade Commission:
Baer, William J., Assistant General Counsel for Legislation.
Naradzay, Bonnie, Special Assistant for Public Participation.
National Association of Broadcasters:
Bolger, Thomas, chairman, television board.
Krasnow, Erwin, general counsel, senior vice president.
May, Walter E., chairman, radio board.
Thurston, Donald A., chairman.
Wasilewski, Vincent, president.
National Association of Independent Television Producers and Distributors:
O'Sullivan, Kevin.
Renouf, Katrina, counsel.
National Treasury Employees Union:
McKenzie, Susan, legislative liaison.
Mihuc, Joseph W., secretary.
Public Citizen's Congress Watch:
Drabble, Nancy.
Symons, Howard J.
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THE COMMUNICATIONS ACT OF 1979
TUESDAY, JUNE 12, 1979
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMMUNICATIONS,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9:30 a.m., in room
2123, Rayburn House Office Building, Hon. Lionel Van Deerlin,
chairman, presiding.
Mr. VAN DEERLIN. Good morning. Today will be the first of 2
days of hearings on titles II, V, and VII of H.R. 3333. The subjects
covered are FCC reform and executive branch reorganization.
I would like to remind participants that we have a full schedule
and the House will be going into session on an important markup
bill at 11 o'clock. It would be appreciated if witnesses would honor
the time constraints placed upon them for their formal testimony,
leaving fuller opportunity for subcommittee questioning.
Our first witnesses, appearing together, are Hon. Henry Geller,
Assistant Secretary of Commerce for Communications and Informa-
tion, and Mr. Stanley I. Cohn, who is the Deputy Associate Admin-
istrator for Federal Systems and Spectrum Management in the
National Telecommunications and Information Administration.
Welcome back on another of your frequent appearances on this
legislation, Mr. Geller.
STATEMENTS OF HENRY GELLER, ASSISTANT SECRETARY FOR
COMMUNICATIONS AND INFORMATION, NATIONAL TELECOM-
MUNICATIONS AND INFORMATION ADMINISTRATION, DE-
PARTMENT OF COMMERCE, AND STANLEY I. COHN, DEPUTY
ASSOCIATE ADMINISTRATOR, FEDERAL SYSTEMS AND SPEC-
TRUM MANAGEMENT
Mr. GELLER. It is a pleasure to be here, Mr. Chairman. We have
a fairly lengthy statement which deals with titles II, V, and VII,
and if I may, I would like to have it introduced for the record.
I thought that while I would be available to answer questions on
the CRC, NTA, ex parte, all of the various aspects dealt with in the
statement, that it would be better if we focused, in view of the busy
schedule you mentioned, simply on the spectrum allocation aspect.
It is by far the most important.
Spectrum is the backbone, the lifeblood of the telecommunica-
tions system, and if it is mismanaged, and not used adequately, the
results are disastrous. You saw this mismanagement in FCC's mis-
take in UHF-VHF in the early 1950's. We are still paying the price
of that.
(1)
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2
What I thought I would do is turn it over to Mr. Cohn, the
Deputy Associate Administrator for Federal Systems and Spectrum
Management. He is an experienced and skilled professional in this
field, and I will let him focus on that one issue. I will be avrqable
to answer questions on the other relevant aspects if time permits.
Mr. VAN DEERLIN. Fine. Please proceed, Mr. Cohn.
STATEMENT OF STANLEY I. COHEN
Mr. COHN. Mr. Chairman, the act's most significant provisions
with regard to NTA are those intended to improve the manage-
ment of a vital national resource, the radio spectrum. We would
like to commend the subcommittee for recognizing the serious
nature of the spectrum problem.
The spectrum is not an unlimited resource. But there are addi-
tional potential national benefits over and above those now being
obtained which can be realized from its use. Like other resources,
it must be managed effectively and efficiently or these benefits will
not be forthcoming.
Unlike other resources, it is not consumed by use. However, it
can be wasted or not used efficiently, with a resulting denial to
new users or for new applications. The nature of spectrum use
changes rapidly because of increasing demand, new technology and
new applications. Management of the resource must therefore be
dynamic and respond to these changes.
Economic considerations and techniques have already been cov-
ered on our testimony on part IV, and these will not be repeated
but should be considered as critical background. Current law di-
vides spectrum management responsibilities between the President,
whose responsibility is delegated to NTIA, for Federal use, and the
Federal Communications Commission for non-Federal use.
The division of the spectrum between Federal and non-Federal
users and the sharing of certain frequency bands between both
groups is accomplished by coordination between NTIA and FCC.
This division's responsibility has served the Nation well for half a
century. It has proved to be a workable system in times when
sufficient spectrum has been available to fill the needs of both
Federal and non-Federal users.
In recent years, however, demands for new allocations and as-
signments have been increasingly difficult to meet. This has hap-
pened despite technical advances which have extended the bound-
aries of the usable portion of the spectrum and expanded the
number of stations it is possible to fit into certain frequency bands.
This growing scarcity of spectrum resources, which many believe
may lead to a spectrum crisis in the 1980's, has begun to reveal
problems in the present system. The idea that a spectrum scarcity
or a spectrum crisis would arise to a significant extent because of
physical limitations of the spectrum is inaccurate.
The spectrum, if properly conserved through sound management,
could accommodate foreseeable future needs. Whatever scarcity
might occur in the future would be primarily a reflection of the
inadequacy of management techniques for allocation and assign-
ment.
These techniques were suitable for situations of relatively light
demand on the spectrum. They employed methods that did not
require detailed consideration of geographic factors or other case-
by-case engineering evaluations.
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Recently, however, due to technical progress and to expanded
social, business, and Government needs, demand for spectrum has
grown significantly. In the process, our traditional spectrum man-
agement techniques have begun to show their limitations.
The problem of spectrum scarcity is, then, largely a management
problem and thus subject to management solutions which involve
the increased use of engineering techniques. Unless they are ap-
plied, the situation will surely grow worse. By their very nature,
however, the necessary management remedies in many cases tend
to render the distinction between Government and non-Govern-
ment services artificial. Moreover, the distinction is an impediment
to employing these remedies with the full degree of effectiveness
that will be needed to meet increasing demands on the spectrum.
Thus, the goal of legislation regarding radio spectrum manage-
ment should be to improve spectrum management in order to
facilitate the sharing of the resource, provide for effective and
efficient use of the spectrum, and accommodate present and future
demands.
There are two ways of accomplishing this goal. The first would
involve combining, in one agency, spectrum management authority
for both the Federal and non-Federal sectors, while the second
involves improving spectrum management within the present au-
thorities.
If a system which unifies spectrum management by discarding
many of the present distinctions between responsibilities for Gov-
ernment and non-Government use is to be adopted, it should be
based on four fundamental principles:
One, all spectrum allocation authority, that is, specifying bands
for radio services, should be centralized in one executive branch
agency.
Two, to insure that the allocation policy is thoroughly adhered
to, that agency should also have authority to set sufficiently de-
tailed technical rules by which the assignment process, that of
specifying a frequency for a particular radio station, would be
governed.
Three, the actual assignment process must be carried out in a
unified fashion, that is, with common data bases, common engi-
neering tools, resulting in the most efficient assignments without
regard to artificial Government or non-Government division of
spectrum.
Four, due to their sensitive nature, non-Government authoriza-
tions-selecting particular licensees-should not be the authority
of the Executive but should be made by an independent regulatory
agency. Similarly, Government authorizations should be made by
the executive branch.
The proposed act encompasses principles 1 and 4 but not 2 and 3,
and it is somewhat unclear in its provisions on the principles it
adopts. We believe that any new plan for spectrum management
that does not embody all four principles in a suitable way is
seriously defective and should not be enacted.
Our concern about the bill's provisions for spectrum manage-
ment go beyond issues of clarification. As stated in our principles,
we strongly believe that in order for the management process to be
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4
truly effective, the full authority to do the job must be vested in
the agency which is given the responsibility.
This would mean at least that this agency would have to have
the authority to specify in as great detail as necessary the techni-
cal criteria on which assignments would be made in each band
allocated. This is our second principle. We believe that unless it is
adopted, many of the disadvantages of the present divided authori-
ty in allocation would be perpetuated.
Under the arrangement suggested in the bill, NTA could make
an allocation based on its understanding of CRC assignment rules
and subsequently discover the CRC had a differing interpretation
and implementation. And, of course, the reverse situation could
also, occur. Such a system would greatly reduce the benefits of
unified allocation authority and make it difficult to take the uni
fled view of spectrum planning that is required to meet the grow
ing demands for this resource.
Unless NTA or NTIA, as we prefer for reasons given in the
written testimony, is also given clear authority to specify the tech-
nical rules governing assignments and be able to effect a unified
assignment system as in principle 3, little will have been gained by
the other changes in spectrum management proposed by the bill.
We therefore believe that because the bill creates a division be
tween allocation and assignment, it is defective and should not be
enacted.
This second way of improving spectrum management is by en
hancement of the analytical activities which serve as a base for
spectrum planning The present Federal/non Federal division of
spectrum management would be retained in this proposal
In the early 1970's, NTIA's predecessor organizations, OT and
OTP, initiated a number of efforts to improve Federal spectrum
management. Two of these programs enhanced spectrum manage-
ment by the use of analysis techniques The first of these, spectrum
resource assessments, involves analyzing present and projected use
of various exclusive Government and shared Government/non Gov
ernment allocated bands, determining potential compatibility prob-
lems and corrective actions to mitigate interference between sys-
tems, determining inter- and intra-service sharing opportunities
and providing recommendations on improving the efficiency and
effectiveness of spectrum use in the bands studied.
The second of these programs is the system review procedure.
Under this procedure, proposed Federal systems are examined at
the conceptual, experimental, developmental, and preoperational
stages. This is done to insure that compatibility with existing and
other known proposed systems in the environment will be achieved
when the reviewed system becomes operational.
Both of these programs, as well as the results of our other
efforts, have proved to be useful in Federal spectrum management
and in our planning efforts. In addition to improving the efficiency
and effectiveness of Federal spectrum use, considerable cost savings
have resulted because incompatible situations have been avoided
rather than corrected by field modifications or by scrapping of
systems because of incorrectable operational interference problems.
Programs similar to these do not exist for non-Government spec-
trum management. Our second alternative would, therefore, consist
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5
of establishing and utilizing similar analysis techniques to assess
overall national spectrum utilization and to review all conceptual
and developmental systems intended to use the spectrum to allow
for before-the-fact solution of spectrum problems.
The obvious way to achieve this would be to have the FCC or
CRC establish an analysis capability similar to NTIA's. We would
be most happy to aid the FCC or CRC in this effort by providing
advice and knowledge based on our experience and by providing
the analysis techniques which have been developed. In this
manner, the total national use of the spectrum would be treated,
with the FCC or CRC being responsible for non-Government as-
pects and the NTIA for Government aspects.
In such a system, a joint FCC-CRC-NTIA report would be issued
annually. This report would cover actions taken during the year as
well as long-range plans concerning efforts to improve overall na-
tional spectrum management. Both public and private use of the
spectrum would therefore be considered and both organizations
would be concerned with overall accountability for all spectrum.
Moreover, both completed and planned changes and improved
procedures for allocations, assignments, and authorizations would
be agreed on by the Federal and non-Federal spectrum manage-
ment entities. Where agreement could not be reached, the differing
views would be presented. The joint effort would also, where appro-
priate, recommend legislative changes believed to be necessary to
improve management and use of this resource.
The above-proposed alternative would certainly improve the
management and use of the existing exclusive Government and
non-Government bands and those existing shared bands. One argu-
ment against this alternative is that it would continue the present
practice of balancing the interests of opposing entities, Government
and non-Government, for use of the spectrum.
If this were the case, then progress in changing the present
exclusive bands to Government/non-Government shared bands
would be slow.
While there is some substance to this criticism, we believe that
on balance, the benefits to be gained warrant adoption of this
proposal. Further, we regard this alternative as a waystation to the
ultimate solution, a single allocation/assignment agency. In short,
we are proposing, as an alternative, an evolutionary process to
obtain the goal of unified allocation and assignment.
Should the subcommittee still wish to enact the spectrum man-
agement provisions of H.R. 3333, there are a number of points
which are covered in the written testimony that should be consid-
ered before final legislation is written. I will not go into those in
the summary.
Finally, Mr. Chairman, we believe that H.R. 3333 should not be
enacted in its present form since it separates the assignment and
allocation functions. We would fully support adoption if the bill
were modified to provide a unified allocation and assignment au-
thority along the lines which I discussed earlier.
If the subcommittee feels that such a modification is unwarrant-
ed at this time, then we would urge retaining the present division
along Federal/non-Federal lines with the enhanced analytical and
planning capability which I described in the second alternative.
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As to unified spectrum management, we note that contrary to
our strong recommendation, when testifying on H.R. 13015, that
the bill should not be enacted if allocation and assignment are
split; H.R. 3333 continues that split. We also note that there has
been considerable opposition to this concept of unified spectrum
management.
Realistically, therefore, the concept as developed in our four
principles, and particularly the fusion of allocation and assign-
ment, may not be enacted in this Congress. If that were to be the
case, we would urge that in any event, it not be dropped. It is, we
stress again, an idea which merits the most serious consideration of
the Congress. We would therefore hope that it would be given that
consideration and study in the next Congress. For example, S. 611,
title V, the Spectrum Commission, might be a good place to study
this.
Mr. Chairman, this concludes my summary.
[Testimony resumes on p. 45.]
[Mr. Cohn's prepared statement and attachment follow:]
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STATEMENT OF
STANLEY I. COHN
DEPUTY ASSOCIATE ADMINISTRATOR
FOR FEDERAL SYSTEMS AND SPECTRUM MANAGEMENT
NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION
Mr. Chairman, I welcome this opportunity to testify before the
Subcommittee on Titles II, V, and VII of H.R 3333. Because these Titles
cover a diverse range of topics, I will be discussing them in a two-fold
manner: First, setting forth background and second, commenting on specific
provisions in each Title. I hope that this approach will be beneficial to the
Subcommittee, particularly in the area of spectrum allocation and
management, where the background principles are most important. I will
begin with Title II, which seeks to create a new regulatory authority--the
CRC.
The issues here involve important policy decisions, and the Executive
Branch has not completed its study of the Bill or coordinated with all
interested agencies in order to reach final conclusions. Consequently,
NTIA's conclusions presented today represent our views as an expert agency,
rather than those of the -Administration.
REGULATORY REORGANIZATION
Backgrotmd
Telecommunications regulation has been divided along two lines:
regulation relating to government communications and that pertaining to
non-government corn munications. On the non-government side, strong
centralization of authority is present in the Federal Communications
Commission (FCC). The Commission allocates spectrum, assigns
frequencies, evaluates tariffs and facilities, and--through its rules and
adjudications'--formulates and implements policies for broadcasting and
wire communications. It has expansive, flexible power to act according to
a broad standard, the public interest, and this power is combined with wide
authority to adopt rules or policies.
But the crucial question is: Has it been effective in the policy area?
Many observer~, and we gather from H.R. 3333 this includes you,
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8
Mr. Chairman, the answer is no. The case as commonly laid out consists
of two major points. First, as this Subcommittee pointed out in a 1975
report, the Commission has not engaged extensively in long-range policy
planning. This may be, in part, either because it is caught up in so many
daily or short-term operational crises, or because as a body heavily engaged
in administration, it tends to resist long-term policy changes that might
affect actions currently in progress. In any event, short-term concerns tend
to predominate over those of the long-term. The Commission is, of course,
seeking to improve its long--range planning capability by strengthening its
Office of Plans and Policy, and this development is certainly worthy of note.
Nevertheless, the entire record stretching back over the decades justifies a
careful examination of this situation by the Subcommittee.
Second, serious questions have been raised about the Commission's
performance in many specific policy areas. Many believe, for example, that
the FCC has seriously erred in its critical allocation task. Critics contend
that it displayed lamentable judgment in intermixing UHF and VHF
assignments, with adverse consequences that still plague the nation. Much
criticism has also been leveled at its decision concerning allocations to FM
broadcasting and land mobile radio, and at its judgment as to block
allocations.
In the important area of broadcasting, there are those who believe
the Commission has not developed policies to implement the basic public
trustee notion. Indeed, this view is shared by many at the Commission. As
recently as 1973, after we had four decades of experience with the present
Act, the FCC Chairman told an audience of broadcasters:
If I were to pose the question, what are the FCC's renewal
policies controlling guidelines, everyon~iii this room would be
on equal footing. You couldn't tell me. I couldn't tell
you--and no one else at the Commission couj~~ do any better
(least of all the long-suffering renewals staff)~-
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9
Furthermore, the Ft~C's comparative process, both for new
applications and for license renewals, has, been severely criticized by the
courts. In 1971, the Commission acknowledged that the winning applicants in
the period of 1952-1965 had regularly "puffed" their programming proposals.
On the average, the applicants stated that they would dedicate 31.5 percent
of their programming time to local live coverage; but, in fact,. they devoted
only an average of 11.8 percent of time to this end, and nothing happened to
them at renewal.!"
As this Subcommittee knows, the FCC's cable policies have also been
severely criticized. Among other reasons, this criticism seems to stem from
the fact that the Commission, after delaying pay television for years,
adopted restrictive rules that the courts found unnecessary and illegal.
I do not wish to be misunderstood. No one says that the Commission
has erred in every important policy matter. It has done much good. Nor am
I criticizing the present Commission under Chairman Ferris for mistakes
that may have been made in the past. But, looking at the overall record of
several decades, there have been many failures in important policy areas.
Obviously, th~ thrust of the Bill is that remedial action is desirable.
.H.R.3333: Titlell
The Bill, in Title 11, proposes to abolish the FCC and in its place
create a new commission, the Communications Regulatory Commission
(CRC), which would have a more limited jurisdiction over the
communications industry. Like the FCC, the CRC would be an independent
regulatory agency.
We generally support the provisions regarding the quality and the
independence of the Commissioners. Specifically, we support the provision
in Section 212(e) that appointees reflect a balance of professional
backgrounds pertinent to telecommunications. This requirement would
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10
militate against appointments made primarily because of political
considerations, rather *than the expertise and judgment that the nominee
could bring to the panel.
Several modifications in the provisions in this area could be adopted.
We recommend not limiting each Commissioner to one term as proposed in
Section 2l2(c)(2). This provision might result in the loss of the services of an
experienced, dedicated public servant. Moreover, it does not square with
the provision permitting work in the regulated industry if the full term is
served. As the end of his or her term approaches, the Commissioner is, in
effect, instructed to be thinking largely about an industry niche, rather than
about the possibility of continued service. In this connection, the suggestion
that a Commissioner who has served the full term be given an additional
60-day period with pay to find employment--it being understood that he or
she will not open any negotiations while with the agency--seems worthy of
study.
We also suggest that the term "telecommunications entity" in
Section 23l(aX2) not be defined to include every concern "which is subject to
regulation by the Commission under this Act." In view of the widespread
but incidental use of radio in virtually all businesses, such a definition would
preclude a Commissioner or supervisory employee, who left prior to the
completion of his or her term, from almost all employment. The phrase,
"which is substantially affected by the regulatory activities of the
Commission," could have the same drawback, in light of the growing ability
of FCC acti?n to impact significantly on a widening variety of industries
such as banking, airlines, or the print media. In the "information age," few
companies or industries would not be significantly affected by the
regulatory policies of the Commission. The legislative history should
therefore make clear the importance of the term "substantially"--namely,
that the effect, while significant, must fall within a substantial (ample)
portion of the firm's activities to come within the ambit of the provisions
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11
Otherwise, this provision may be too broad and too vague, and could prove
detrimental to attracting well-qualified individuals to government service.
The provision in Section 2l2(b)(3) provides for a veto, by either House,
of the President's designation of the CRC Chairman. We strongly oppose
this provision. There is no reason--no past experience--that would warrant
a change from the present law, under which the President simply designates
the Chairman. Further, as you know, the Administration strongly believes
that a one-house veto of this nature is unconstitutional.
We turn now to a second facet of the Bill: those sections meant to
assure the Commission's efficiency.
o The provision for a Commission of five members
instead of seven, as the FCC is presently organized,
would appear to maintain the full advantage of the
eollegial body, and yet reduce costs and contribute
* somewhat to more efficient operation. We note that
~other regulatory agencies such as the CAB and SEC
operate effectively with five members.
o We generally support Section 243. We believe that the
Chairman should be able to exert strong leadership. We
commend the provision in 243(b)(l) that other membes
of the Commission should also be able to place items on
,the agenda.
o Because of the volume of work and the currently
limited staffs of the Commissioners, it is often
impossible for Commissioners or their assistants
independently to research and evaluate the
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12
recommendations of the bureaus or offices. Thus, an
expanded staff for Commissioners should conduce to
more informed decisionmaking. Accordingly, we would
also suggest removal of the limit of five staff members
per Commissioner in Section 221(a). Within a
reasonable and set budget, each Commissioner should
have the flexibility to staff his or her office in a
manner most suitable for his or her needs. With regard
to staff upgrading, higher pay levels -should allow
Commissioners to attract the most qualified assistance.
Public PartIcipation
Section 215 of the Bill creates an Office of Consumer Assistance that
"would assure that the interests of consumers are presented" to the
Commission. While we support the creation of such an office to fulfill the
responsibilities specified in Section 215(b), the mere presence of a consumer
affairs office is not sufficient to "assure" that consumer interests will
indeed be rep~resented fully before the Commission.
- - We believe that besides having such an office to represent consumers,
there is a strong need to encourage the public to participate in FCC
proceedings. To accomplish that, it is critical that financial assistance be
extended to public interest groups that would not otherwise be adequately
represented in Commission proceedings,- and whose participation would make
a substantial' contribution to those proceedings.
Section 244 of the Bill represents a commendable effort to
institutionalize public participation funding. As you know, this
Administration has strongly backed such efforts in legislation, most recently
in S. 755, the Regulation Reform Act of 1979.
PAGENO="0017"
13
We. believe, however, that the provision as drafted does not provide
broad enough coverage for reimbursement. The provision is limited to rate
proceedings involving the dominant~carrier and to rulemaking proceedings;
Section 244(b)(2) proscribes reimbursement in tw~ important and frequent
situations--proceedings to revoke or deny a broadcast license. But a public
trustee or public interest scheme clearly calls for facilitating public
participation in adjudicatory proceedings. it is the public in various
communities which has the greatest interest in broadcast service meeting
the Act's standards. Through research and monitoring, public groups can
develop data that would be helpful to the Commission's determination of the
licensee's status. Yet, because the task of preparing and following through
on a petition to revoke or deny is costly, such groups may find the cost of
participation in adjudication to be prohibitive. The end result is decreased
public participation, and- with it a subversion of the Act's scheme. One need
only to look to cases like WLBT-TV in Jackson, Mississippi, to establish that
public participation in adjudication can markedly serve the public interest.~!
We believe, therefore, that the Subcommittee should expand the
scope of proceedings that are eligible for reimbursement by the
Commission. Naturally, the same criteria for reimbursement should apply
both to rulemakings and adjudication proceedings. In this way, competing
applicants would not be able to claim reimbursement, since the financial
requirements for an application negate a claim of financial inability to
participate in the proceeding.
In our, view, however, the criteria for reimbursement contained in
Section 244 are too restrictive. In order to be eligible for financial
assistance, an applicant would have to set forth an interest that is necessary
for a fair determination of the issues in a proceeding. Since it would be
difficult, if not impossible, for the Commission to make that assessment in
advance of a proceeding, we recommend that the Commission be required to
ascertain only that representation of the applicantts interest could
51-254 0 - 80 - 2
PAGENO="0018"
14
reasonably be expected to contribute substantially to a fair disposition of
the proceeding.
We believe that the financial need criterion in Section 244 is too
narrow as well it would require as a condition of eligibility that an
applicant be unable to pay the costs of various aspects of participation in a
proceeding There are many small organizations that have total budgets
larger than the cost of participatirg in one proceeding but that need to
spend much of their money on other activities necessary to their
maintenance and effectiveness We suggest that the eligibility of such
organizations be clarified by adoption of the test set forth in S 755 the
Administration's regulatory reform bill which would permit financial
assistance to applicants who do not have sufficient resources available to
participate effectively in a proceeding in the absence of such assistance
Ex Parte Provisions
1 Adjudications
Prmciples
Because adjudications involve adversary parties in a trial-type
setting due process requires that these proceedings be governed by a strict
prohibition of communications made outside of the formal record Case
law statutory law and current FCC rules all adhere to this principle and it
has worked well in practice
H R 3333
Section 234(a)(l) seeks to control exparte communications
before a hearing is designated Another section of the Bill
Section 5l2(c)(l)(f) proscribes such communications after a case has been
designated for a hearing
PAGENO="0019"
15
The FCC's present rules specify that interested persons are
not to make ex parte presentations after a petition to deny or a mutually
exclusive application is filed. The rules forbid Commissioners from
initiating such contacts; however, they do not affect the staff, which must
process the applications and conduct the investigations.
We appreciate the purpose of Section 234(a)(1)--to allow all
interested parties.~/to know about communications between the Commission
and the parties to an adjudication.
This provision, however, applies both to Commissioners and
participating supervisory employees. It seems unnecessary and burdensome,.
for example, to require the head of the Complaints and Compliance Branch
to notify other competing applicants of every contact or communications
that is made or received in the course of the Branch's proper investigation.
Since we do not know of any criticism of the FCC's present and
well-established way of handling this situation, we would not alter its
process as proposed in 234(a)(l).
2. Informal Rulemaking
The Communications Act does not now deal with this area. Rather,
it comes under the Administrative Procedure Act and case law. We suggest
that while clarifying legislation would be desirable, procedures in this area
should continue to be uniform, and therefore there should be no special
provisions applicable only to the Commission. If, contrary to the above,
there is legislation in the CRC area, we would urge that it be along the lines
suggested to the Commission in a recent NTIA filing.V We have attached as
Appendix A a summary of the principles of that position and their
application to H.R. 3333.
PAGENO="0020"
16
.H.R.3333: TitleV
Completing Rulemaking Actions
Section 511(c) calls for completion of a rulemaking proceeding
within, one year of issuance of the notice of proposed rulemaking.
Section 511(d) calls for action on a petition for rulemaking within 90 days
after filing. We appreciate the reason for *these provisions. The
Commission has taken as long as five years to act in many rulemaking
proceedings Indeed after the conclusion of the oral 01 written phase years
have passed with no Commission action of any kind. Action on petitions for
rulemaking can take four or more years. While the issues in some
proceedings are complex and call for complex economic or other analysis,
the delay extends far beyond the time needed for such analysis `1 here are
instances where no action is taken for years after the last comment is filed,
with the result that the record becomes stale and there is a need for a new
round of comments and oral arguments; see e.g., Docket No. 18891, FCC
79263, par. 3.
Nevertheless, we do not favor the strict time limits proposed
in 5ll(c)(d). In rulemaking particularly, with its heavy emphasis on economic
analysis, the time needed varies with the nature of the issue, and the agency
should therefore be given discretion. We would suggest that a uniform
approach such as in S.755 be followed (i.e., requiring agencies to set
deadlines for their actions, which, although not legally binding, would be the
subject of annual reports in the event of failure to meet them).
Another alternative would be to require the Commission first, to
appoint publicly a Commissioner to be responsible for overseeing the
progress of each rulemaking or petition for' rulemaking, and second, to
submit annual public reports on this subject to the Congress as part of the
yearly Congressional oversight proceedings. The Commissioners would then
PAGENO="0021"
17
know that they would have to explain why some proceeding or petition was
still pending after a year or mor e
Filing Exceptions
There is a need to clarify the requirement in Section 512(b)(l) and
(b)(2) that a decision be made on any exception filed to an initial decision
Most agencies such as the CAB ICC and NLRB rule on such exceptions
with a general declaration stating that those that are granted are reflected
in the decision and the rest are denied for several stated reasons--c g
reasons given in the decision; not supported by the record; having no
decisional significance. This manner of ruling has been sustained by several
courts and is now well established The FCC on the other hand has been
required by the D.C. Court of Appeals to rule on each individual exception.
We believe that there should be consistency in treatment and that the
general way of proceeding employed by the CAB and NLRB should be
applicable to Commission proceedngs It obviously saves time and
resources and has not been shown to be unfair to the parties over decades
of use Accordingly either the Bill or the legislative history should reflect
this general approach
Limitations on Actions
Section 534 of H R 3333 amends Section 415 of the 1934 Act to apply
only to domin,rit carriers It continues the two-year statute of limitations
presently contained in Section 415 The Commission in several decisions
has ruled that Section 415 is not applicable to actions brought by the
Government Section 534 should be amended therefore to reflect these
precedents The legislative history should specifically indicate a
Congressional intent not to alter past FCC rulings on this issue
PAGENO="0022"
18
know that they would have to explain why some proceeding or petition was
still pending after a year or more.
Filing Exceptions
There is a need to clarify the requirement in Section 512(b)(l) and
(b)(2) that a decision be made on any exception filed to an initial decision.
Most agencies, such as the CAB, ICC, and NLRB~ rule on such exceptions
with a general declaration, stating that those that are granted are reflected
in the decision and the rest are denied for several stated reasons--e.g.,
reasons given in the decision; not supported by the record; having no
decisional significance This manner of ruling has been sustained by several
courts and is now well established. The FCC, on the other hand, has been
required by the D.C. Court of Appeals to rule on each individual exception.
We believe that there should be consistency in treatment, and that the
general way of proceeding employed by the CAB and NLRB should be
applicable to Commission proceedings. It obviously saves time and
resources, and has not been shown to be unfair to the parties over decades
of use. Accordingly, either the Bill or the legislative history should reflect
this general approach.
Limitations on Actions
Section 534 of H.R. 3333 amends Section 415 of the 1934 Act to apply
only to dominant carriers. It continues the two-year statute of limitations
presently contained in Section 415. The Commission, in several decisions,
has ruled that Section 415 is not applicable to actions brought by the
Government. Section 534 should be amended, therefore, to reflect these
precedents. The legislative history should specifically indicate a
Congressional intent not to alter past FCC rulings on this issue.
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19
Emergency Powers of the President
The Bill makes no provision to continue the vartime and
emergency powers of the President over communications facilities as
currently authorized in Section 606 of the Communications Act of 1934
These powers include ordering priority transmission of national security
message traffic protecting lmes of communication fron obAruction
closing down wire and radio communications facilities; suspending or
amending the rules governing these facilities; and authorizing their use or
control by the Government.
The Nation would be highly dependent upon communications
facilities in wartime to meet its vital need to transmit security and defense
information. As a result, we believe some provisions for dealing with
emergency powers of the President along the lines of the present
Section 606 should be included in any revised Communications Act. If
changes in technology since the Act of 1934 was drafted make it desirable to
adopt somewhat different provisions than those of Section 606, we suggest
that it be done after consultation with the Office of Science and Technology
Policy the National Security Council and the Department of Defense
The Review Board
Section 242(e)(l)(b)(i) allows the continuation of the FCC's Review
Board but Section 513(e) disallows judicial appeals dii ectly from the Board's
decisions Ttather interested parties must first file an application for
review with the Commission
The Review Board has made a marked contribution to the FCC's
processes Its members can thoroughly explore the records and participate
intimately in d3cision-making and this has led to much better informed
PAGENO="0024"
20
judgments. The Board has also relieved the Commissioners of the need to
pass on many complex, formal hearing cases.
Therefore, it does not seeTh logical to require that a party who
wishes to appeal the Review Board's decision to the courts must in every
case first file an application for review with the Commission. The losing
party, after all, has by that point already enjoyed a full appellate review of
its ease--probably even a better review than it would obtain from the
Commissioners. Only novel and important questions pertaining to law or
policy should be brought before the Commission. Under these
circumstances, a complaining party should be required to file a succinct
application setting forth why its case presents such a question. If the party
does not believe its case is of such a nature, and if it wishes to challenge
some decision of the Review Board, then it should be allowed to proceed
immediately to court.
SPECTRUM ALLOCATION AND MANAGEMENT
Principles
The Act's most significant provisions with regard to the National
Telecommunications Agency (NTA) are those intended to improve the
management of a vital national resource--the radio spectrum. I would like
to commend the Subcommittee for recognizing the serious nature of the
spectrum problem. The spectrum is not an unlimited resource but there are
additional potential national benefits, over and above those now being
obtained, that can be realized from its use. Like other resources, it must be
managed effectively and efficiently or these benefits wili not be
forthcoming. Unlike other resources, it is not consumed by use. However,
it can be wasted or not used efficiently, with a resulting denial to new users
or for new applications. The nature of spectrum use changes rapidly
because of increasing demand, new technology and new applications.
PAGENO="0025"
21
Management of the resource must therefore be dynamic and respond to
these changes.
We have already covered in our testimony on Title IV the strong need
to use economic considerations and techniques, such as auction and
subleasing.~! I will not repeat that discussion, other than to stress again its
crucial importance to this area of spectrum allocation and management. I
turn now to a discussion of spectrum management, with our previous
testimony as critical background.
First, I shall explain my use of some basic terms referring to
management functions. The term "allocation" refers to the specification of
bands for radio services--such as fixed or land mobile--and the
establishment of general spectrum policy. The term "assignment" refers to
determining what frequency should be assigned to a specific station; e.g.,
that a television station having certain technical characteristics shall be
assigned Channel 9 in a given city. Finally, the term "authorization" refers
to the function that involves selecting what entity can operate a specific
station; e.g., selecting television licensees. I stress that these definitions
are very important for a clear discussion of spectrum management.
Current law divides spectrum management responsibilities between
the President and the Federal Communications Commission. Section 305(a)
of the Communications Act of 1934 empowers the President to set
frequencies for each radio station or "class of stations" owned and operated
by the Federal Government, thereby encompassing both assignment and
allocation authority. In the Federal case, the authorization and assignment
* functions are not differentiated but are encompassed in the assignment role.
Reorganization Plan No. 1 of 1977 resulted in redelegation of most of the
President's spectrum management powers from the Director of OTP to the
Secretary of Commerce, effective March 26, 1978. By Department of
Commerce internal order, this authority now rests with the Assistant
PAGENO="0026"
22
Secretary for Communications and Information, the Administrator of NTIA.
Under the Reorganization Plan, frequency assignment appeals may be taken
to the Office of Management and Budget.
The Interdepartment Radio Advisoiy Committee (IRAC) founded in
1922 advises the Assistant Secretary on Fedeial spectrum ~1locations
assignments, policy and management issues. NTIA chairs IHAC, the
membership of which comes from the major spectrum-using departments
and agencies. The FCC has liaison representation.
Managing the spectrum for non-rederal users--including state and
local governments--is the responsibility of the FCC. Section 303(c) of the
1934 Act authorizes the FCC to "assign bands of frequencies to various
classes of stations and to assign frequencies for each individual station."
The first of these functions is considered to be the Commission's "allocation
authority," while the latter serves as a mandate to make specific frequency
assignments and authorizations.
The division of the spectrum between Federal and non-Federal users,
and the sharing of certain frequency bands between both groups, is
accomplished by coordination between NTIA and the FCC.
The division of responsibility has served the nation well for half a
century. It has proved to be a workable system in times when sufficient
spectrum has been available to fill the needs of both Federal and
non-Federal users
In recent years however demands for new allocations and
assignments have become increasingly difficult to meet This has happened
despite technical advances that have extended the boundaries of the usable
portion of the radio spectrum and expanded the number of stations it is
possible to fit into certain frequency bands This growing scarcity of
PAGENO="0027"
23
spectrum resources which many believe may lead to a "spectrum crisis" in
the 1980's has begun to reveal problems in the present system of divided
authority
The idea that spectrum scarcity or a "spectrum crisis' would arise to
a significant extent because of physical limitations of the spectrum is
maccur ate The sDectrum if properly conser ved through sound
management could largely accommodate foreseeable future needs While
there is definitely a strong need for further research on the relationship
between the performance of radio systems and their requirements for
spectrum, lack of research information is not the primary limitation on
spectrum use The management techniques generally in use today were
suitable for situations of i elatively light demand on the spectrum they
employed methods that did not require detailed consideration of geographic
factors or other case-by-case engineering evaluations
Recently, however, due to technical progress and to expanded social,
business and government needs, demand for spectrum has grown
significantly. - In the process, our traditional spectrum management
techniques have begun to show their limitations. Fortunately, however, our
technical capabilities for spectrum management have improved at the same
time Using computers for example we can more quickly evaluate
alternative means of providing the needs of a given service in a given area
rather than by continued reliance upon older conservative prediction
formulas which do not account for the specific characteristics of the
systems and area involved We can also improve spectrum sharing--the
flexible allocation of frequency bands to several radio services In addition
encouraging utilization of higher ranges of the spectrum--above 12 GHz--is
of growing significance And on the horizon are techniques for spectrum
conservation such as "band-width compression" and "spread spectrum"
Finally much radio equipment now being manufactured is far more
efficient in aspects of spectrum use than older equipment Because the
PAGENO="0028"
24
characteristics of transmitting and receiving equipment have a major
influence on the demand for spectrum, taking maximum advantage of this
aspect of the 1ttechnological revoLution" should be an integral part of
spectrum management. Existing rules, however, maintain assignments that
perpetuate the use of older, spectrum-inefficient equipment.
Several reports concerned with spectrum management have
recognized the need for improved management of this resource. "Spectrum
Engineering--The Key to Progress" published in 1968 by the Joint Technical
Advisory Committee of the IEEE and EIA urged the use of improved
engineering techniques in spectrum management. The GAO in two reports,
"Information on Management and Use of the Radio Frequency Spectrum--A
Little Understood Resource," September 1974, and "Further Opportunities to
Improve Radio Spectrum Management in the Federal Sector," October 1975,
has pointed out that insufficient effort is being applied to spectrum
management. The GAO noted that because of the large investment, "It is
essential that this resource be effectively and efficiently managed and
used," Many of the recommendations of these reports have been followed to
the extent possible within the available funding and personnel resources of
NTIA.
Based on these recommendations and those of our own staff and the
IRAC, a number of new or improved spectrum management capabilities have
been developed. In the early 1970's analysis techniques designed to assess
the present and projected Federal use of the resource, determine where
intra-~ and inter-service sharing would be possible, evaluate interference
potential and resolve operational interference problems were put into
operation. Data bases of equipment characteristics and characteristics of
the terrain were developed for use with these analysis techniques.
Improvements were made to the automated processing of assignments and
various spectrum management data bases to improve efficiency. A mobile
Radio Spectrum Measurement System, which uses up-to-date automated
PAGENO="0029"
25
measurement techniques was put into operation to provide usage and
compliance data validate analysis techniques and obtain da a needed for
solving operational interference problems Finally in order to cope with the
shortage of spectrum management personnel and to improve the quality of
existing personnel in this field a Federal Government-wide spectrum
management career development program was established
All of these steps have enhanced our capability to cope with the
increasing number and complexity of problems associated with the
expanding demand for use of the spectrum.
We have done much to modernize Federal spectrum management
transforming it from a largely administratively-based overly conservati ie
process to an engineering-based process which allows for more sharing and
greater utility of the resource. The future will require even more
improvements.
The problem of spectrum scarcity is then exacerbated by
management problems and thus to some extent subject to management
solutions which involve the increased use of engineering techniques Unless
they are applied the situation will surely worsen By their very nature
however the necessary management remedies in many cases tend to render
the distinction between government and non-government services artificial
Moreover, the distinction is an impediment to employing these remedies
with the full degree of effectiveness that will be needed to meet increasing
demands on spectrum
Spectrum sharing between government and non-government users
illustrates this well This technique requires that we discard the notion that
any part of the spectrum be dedicated solely to government or
non-government use it demands only that we find some suitable place for
each application regardless of the user More than 40 percent of the usable
PAGENO="0030"
26
spectrum is now shared between government and non-government radio
services, but the proces of extracting consent from both the IRAC and the
FCC for the use of these shared bands can seriously delay service
implementation. Also, the belief that once a band is opened to sharing, its
dedicated character is lost forever, often results in resistance to change
from both the Federal and non-Federal users.
Thus, the goal of legislation regarding radio spectrum management
should be to improve spectrum management to fa~ilitate the sharing of the
resource, provide for effective and efficient use of the spectrum, and
accommodate present and future demands.
To meet the management task ahead, we believe that a system which
unifies spectrum management by discarding many of the present distinctions
between responsibilities for government and non-government use must
eventually be adopted. Such a system should be based on four fundamental
principles:
1. All spectrum allocation authority should be centralized
in one Executive Branch agency, NTIA. (For reasons
stated within, at pp. 31-32, we believe that the agency's
scope should encompass information policy matters, and
that therefore "NTIA" is by far the preferable term.)
2. To insure that the allocations policy is thoroughly
adhered to, that agency should also have authority to
set sufficiently detailed technical rules by which the
assignment process would be governed.
3. The actual assignment process must be carried out in a
unified fashion (i.e., with common data bases, common
engineering tools),resulting in the most efficient
PAGENO="0031"
27
assignments, without regard to artificial
government or non-go~ernment division of
spectrum.
Due to ~their sensitive nature, non-government
authorizations (selecting particular licensees)
should not be the authority of the Executive, but
should be made by an independent regulatory
agency, the CRC. Similarly, government
authorizations should be made by the Executive
Branch
The proposed Act encompasses principles 1 and 4, but not 2 and 3, and
it is somewhat unclear in its provisions on the principles it adopts. We
believe that any new plan for spectrum management that does not embody
all four principles in a suitable way is seriously defective and should not be
enacted.
We agree, therefore, with Section 704(4) of the proposed Act which
confers total allocation authority on the Executive Branch entity Only
unification of government and non-government authority in this way will
meet the demands for effective management in the years to come. This has
been recognized by many, at least since the issuance in 1968 of the Report
of the Rostow Commission, and we are glad that the Subcommittee has
taken the initiative in this direction. In light of our four points, we do,
however, have several issues of clarification and a major concern about the
system proposed in the Bill
Section 435(a)(l) provides that radio stations owned and operated by
the Federal Government would use frequencies "assigned to each or to each
class by the President" It is our understanding that this provision was
meant to vest only assignment authority in the President and the use of
4.
PAGENO="0032"
28
`~each class' from Section 305(a) stems from language currently relied upon
for Federal Government allocation authority and was inadvertent.
Retention of this language would, of course, be inconsistent with the intent
of Sections 704(a) and 707 to have a single allocating agency. Futher,
Section 704(a) provides for NTA to exercise the allocation function "in
accordance with Section 435(a)(l) and Section 707(a)," while Section 707(a)(3)
states that the NTA allocation authority "shall be subject to the provisions
of Section 435(a)(l)". Accordingly, the phrase "or to each class" should be
deleted from 435(a)(l) and reference to Section 435(a)(l) would then be
unnecessary.
NTIA's present functions include this Federal assignment authority
and Section 7l1(a)(l) transfers to the new agency, NTA. If this is the case,
then Section 435(l)(a), as modified above, should be referenced as an
additional function in Section 707(a). It would appear that the intent of the
Subcommittee was to include Federal assignments in the new agency's
missions.
Section 435(b)(l) of H.R. 3333 modifies the provisions of
Section 305(d) of the 1934 Act to conform them to the realities of modern
day technology. We endorse this change. Under Section 305(d), there has
been an ambiguity concerning the President's power to authorize a foreign
government to construct an earth station utilizing satellite technology for
its diplomatic communications. Indeed, satellites may not be the only new
technology that create interpretive problems under Section 305(d). Laser
and/or fiber optic technologies, although presently speculative as to specific
utilizatioas, could raise similar questions about the meaning of the present
Section 305(d). The rapid development of diverse telecommunications
technologies justifies the modifications embodied in Section 305(d). The
rapid development of diverse telecommunications technlogies justifies the
modifications embodied in Section 435(b)(l). This provision, unlike the
existing one will permit an expansive interpretation consistent with the
potential variety of telecommunications means available.
PAGENO="0033"
29
As we read the new section, a satellite earth station would now be
permitted to be located in the "environs" of the District of Columbia (e.g.,
the Blue Ridge Mountains), in addition to within the District of Columbia
proper. This will accommodate spectrum interference problems associated
with satellites and not previously associated with high frequency radio. The
Bill makes clear that the President has authority to allow other radiating
technologies in addition to high frequency radio. The section also makes
clear that the important limiting factor on the use of these authorizations is
that they be used for "diplomatic messages." Thus, the principle of
maximum reliance on the private sector carriers for most communications
traffic is preserved along with the efficient utilization of new technologies.
Finally, Section 435(b)(2) extends to foreign governments, and by
reciprocal agreement to the United States, the ability to protect high level
government officials and diplomats on foreign soil through the use of land
mobile radio equipment. We interpret the use of the phrase "base and land
mobile" to indicate an intention to include only base station communication
with mobile units (e.g., aircraft stations would be excluded). The limitation
of such mobile stations to operation within 30 miles of the site of the
embassy or legation seems reasonable in order to prevent the use of the
authorization for purposes other than protecting the ambassador and
personnel of the foreign government. It also allows reuse of the spectrum
for domestic purposes beyond that limited range. We commend this
modification.
The Bill assigns NTA the "principal" responsibility for spectrum
allocation. However, the heading of Section 436, "Spectrum Allocation
Standards and Management," seems to indicate that the CRC is intended to
have some allocation responsibility. The text of that section does not bear
this out. If the Subcommittee desired to create fully unified allocation
management, we urge that this intent be made clear.
51-254 0 - 80 - 3
PAGENO="0034"
30
Our concern about the Bill's provisions for spectrum management
goes beyond issues of clarification, however. As stated, we strongly believe
that in order for the management process to be truly effective, NTIA must
have the full authority to do the job. This would mean at least that NTIA
would have to have the authority to specify in as great detail as necessary
the technical criteria on which assignments would be made in each band
allocated. This is our second principle. We believe that unless it is adopted,
many of the disadvantages of the present divided authority in allocation
would be perpetuated. Under the arrangement suggested in the Bill, NTIA
could make an allocation based on its understanding of CRC assignment
rules and subsequently discover the CRC had a differing interpretation and
implementation. And, of course, the reverse situation could also occur.
Such a system would greatly reduce the benefits of unified allocation
authority and make it difficult to take the unified view of spectrum planning
that is required to meet the growing demands for this resource. Unless
NTIA is also given clear authority to specify the technical rules governing
assignments, little will have been gained by the other changes in spectrum
management proposed by the Bill. We, therefore, believe they would be
defective and should not be enacted, as formulated.
The question remains of how it is possible to insure that this agency
could provide detailed and effective guidance on assignments, and how to
effect a unified assignment system (principles 2 and 3).. There are several
ways of accomplishing this, and we would be glad to discuss the respective
merits at a later date. Our major concern here is to urge the Subcommittee
to incorporate into its final legislation provisions reflecting our four
princip1es~ If there is agreement on principles, the mechanics can, we
believe, be satisfactorily resolved.
In making this recommendation, we wish to meet head-on the most
commonly-voiced objection to fully unifying spectrum management. It is
often argued that if an Executive Branch agency handled all allocations,
PAGENO="0035"
31
and, at the least, executed such a major influence over assignments, it
would favor government over non-government users and, in particular, that
the Department of Defense, the largest government spectrum user, would be
able to encroach on spectrum allocated to the civilian sector. We believe
this fear to be unfounded. NTIA, while part of the Executive Branch, would
be independent of all agencies and would be responsible for overall efficient
spectrum management. Moreover, allocations affecting non-Federal users
would constitute rulemakings under the Administrative Procedure Act.
Public notice and the opportunity for comment would be required, with both
court and Congressional review available.
Indeed, we believe that the private sector would benefit from the
new arrangement. It is envisioned that opportunities would develop which
would permit greater sharing of government and non-government spectrum.
Practically speaking, the two sectors go their separate ways, meeting only
at IRAC. With unified management, it is likely that both sides would
become much more interested in the overall uses of the spectrum. This
would only benefit the nation.
But, most importantly, the present institutional arrangement has an
unfortunate side effect: it inspires the view that total spectrum
management is a matter of balancing the interests of "opposing't
entities--government and non-government. We believe that, in reality,
there is an ability to largely accommodate foreseeable government and
non-government needs in the spectrum if only the proper management
methods are ~adopted. If the present arrangements are maintained,
government and non-government users are more likely to come into serious
conflict.
Under the new arrangement, we believe the CRC should retain the
authority to make the highly sensitive judgments about which
non-government licensees should be authorized to use radio stations on
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32
particular assignments. The present IRAC advisory system should be
retained for government authorizations. Authorization is a policy matter
incidental to overall spectrum management efficiency, and is best handled
by an independent commission for non-government authorizations and the
Executive Branch for government authorizations.
Should the Subcommittee be unwilling to reflect in its final
legislation the four principles which have just been presented and the
establishment of a unified allocation assignment authority, we urge that,
rather than creating a division between allocation and assignment,
conideration be given to a second alternative. This alternative involves
improving spectrum management by enhancement of the analytical
activities which serve as a base for spectrum planning. The present
Federal/non-Federal division of spectrum management would be retained in
this proposal. While not meeting all of the four principles previously stated
it would provide a significant step toward their fulfillment.
In the early 1970's NTIA's predecessor organizations, OT and OTP,
initiated two programs to enhance spectrum management by the use of
analysis techniques. The first of these, Spectrum Resource Assessments,
involves analyzing present and projected use of various allocated bands,
determining potential compatibility problems and corrective actions to
mitigate interference between systems, determining inter- and
intra-service sharing opportunities and providing recommendations on
improving the efficiency and effectiveness of spectrum use in the bands
studies. These resource assessments are performed in exclusive government
bands and in shared government/non-government bands, but not in exclusive
non-government bands because NTIA's authority is limited to Federal use of
the spectrum. Because of the changing nature of use (nearly half of the
assignments change in some way each year) it is NTIA's goal, by 1982, to
assess the total Federal involvement on a three-year cycle.
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33
The second of these programs is the System Review Procedure.
Under this procedure, proposed Federal systems are examined at the
conceptual, experimental, developmental and pre-operational stages. This
is done to ensure compliance with rules and regulations and to ensure that
compatibility with existing and other known proposed systems in the
environment will be achieved when the reviewed system becomes
operational. At the present time, due to resource limitations, such reviews
are performed for systems intended to operate at frequencies above 420
MHz. By conducting these analyses before systems become operational,
identified problems can be rectified and solved before the fact rather than
after the fact.
Both of these programs have proved to be useful in Federal spectrum
management and in our planning efforts. In addition to improving the
efficiency and effectiveness of Federal spectrum use, considerable cost
savings have resulted because ineompatable situations have been avoided
rather than corrected by field modifications or by scrapping of systems
because of incorrectable operational interference problems.
Programs similar to these do not exist for non-government spectrum
management. Our second alternative would, therefore, consist of
establishing and utilizing similar analysis techniques to assess overall
national spectrum utilization and to review all conceptual and
developmental systems intended to use the spectrum to allow for
before-the-fact solution of spectrum problems.
The obvious way to achieve this would be to have the FCC or CRC
establish an analysis capability similar to NTIA's. Although there would be
some changes in procedures, due to differences between the Federal and
non-Federal sectors, the same analysis and engineering techniques could be
used. We would be most happy to aid the FCC or CRC in this effort by
providing advise and knowledge based on our experience and by providing the
PAGENO="0038"
34
analysis techniques which have been developed. In this manner the total
national use of the spectrum would be treated, with the FCC being
responsible for non-government aspects and the NTIA for government
aspects.
In such a system, a joint FCC (CRC)/NTIA report should be issued
annually. This report would cover actions taken during the year as well as
long-range plans concerning efforts to improve overall national spectrum
management. Both public and private use of the spectrum would therefore
be considered and both organizations would be concerned with overall
accountability for all spectrum. Moreover, changes--both completed and
planned--to allocations assignments and authorizations would be agreed on
by the Federal and non-Federal spectrum management entities. The same
would be true for improvements of procedures for allocations, assignments
and authorizations which will enhance overall utility of this resource.
Where agreement could not be reached, the differing views would be
presented. The joint report would also, where appropriate, recommend
legislative changes believed to be necessary to improve management and use
of this resource.
The above proposed alternative would certainly improve the
management and use of the existing exclusive government and
non-government bands and those existing shared bands. One argument
against this alternative is that it would continue the present practice of
balancing the interests of `opposing" entities--government and
non-government--for use of the spectrum. If this were the case, then
progress in changing the present exclusive bands to
government/non-government shared bands would be slow.
While there is some substance to this criticism, I believe that on
balance the benefits to be gained warrant adoption of this proposal.
Further, I regard this alternative as a way-station to the ultimate
PAGENO="0039"
35
solution--a single allocation/assignment agency. In short, we are proposing
as an alternative, an evolutionary process to obtain the goal of unified
allocation and assignment.
Finally, I have a few concluding points. First, I applaud the Bill's
requirement that a study be conducted on how to provide more efficient
uses of electromagnetic spectrum. This is an important complement to the
allocation authority. I am also pleased to see that it requires a study of how
radio frequency interferes with consumer electronics equipment. This
serious problem requires a great deal more information than is available
today, both about the interference susceptibility of electronics equipment
and about the radio frequency and electromagnetic spectrum environment
generally.
Second, we note that Section 413(a) of the Bill gives the CRC
authority to regulate the interference potential of equipment. As previously
mentioned, equipment characteristics strongly influence the demand for
spectrum and, therefore, the problems faced in the spectrum allocation
process. Development of more efficient spectrum use requires consideration
of all equipment characteristics, not just interference potential, however.
For this reason, the Department of Commerce believes that the
Subcommittee should await the results of the study required by
Section 707(c) before reaching a decison on (1) the nature of regulatory
authority over equipment; and (2) which agency or agencies should exercise
the authority.
In summary, Mr. Chairman, I believe that on this important spectrum
management issue, H.R. 3333 should not be enacted in its present form
since it separates the assignment and allocation functions. I would fully
support adoption if the Bill were modified to provide NTIA with a unified
allocation and assignment authority along the lines which I discussed earlier.
If the Subcommittee feels that such a modification is unwarranted at this
PAGENO="0040"
36
time, then I would urge retaining the present division along
Federal/non-Federal lines with the enhanced analytical and planning
capability which I described in the second alternative.
THE NATIONAL TELECOMMUNICATIONS AGENCY (NTA)
H.R. 3333: Title VII
The Bill proposes to establish an independent Executive Branch
agency, the NTA, to perform some functions now performed by NTIA and
several new functions, including several now vested by statute in the FCC.
The NTA would:
(i) Have the primary responsibility for developing and implementing
national telecommunications policy (Section 704(1)), and in this connection,
to conduct, support, and coordinate research (Section 704(13)).
(ii) Exercise principal responsibility for allocating the entire radio
frequency spectrum (Section 704(4)).
(iii) With regard to Federal communications, have broad
responsibilities, such as serving as the principal advisor to the President on
telecommunications issues (Section 704(2)); settling telecom munications
disputes among government telecommunications services (Section 704(3));
assisting and coordinating security and emergency matters
(Section 704(7)U8)); and establishing policy guidelines for, and overseeing
GSA's procurement of, government telecommunications systems
(Section 704(11)).
(iv) Develop and administer grant programs for public
telecommunications facilities (Section 704(12)), and low interest loans for
minorities in broadcasting (Section 704(10)).
PAGENO="0041"
37
(v) Prepare for and manage, in consultation with the State
Department, participation in international telecom munications conferences
(Sction 704(5)).
Taking into account the overall thrust of the Bill, NTA would clearly
be a different entity from NTIA or NTIA's predecessors. The Bill accords
NTA a greater role in policymaking, particularly as regards spectrum
management. It also assigns to NTA new responsibilities in
telecommunications applications and gives NTA a large mandate to oversee
government telecommunications activities, a mandate that cuts across the
programs of all Executive Branch departments.
Under the Bill, NTA would have the authority to develop a national
telecommunications policy. But while it is authorized to "take such action
as may be necessary to provide for development and implementation" of this
policy (Section 704(1)), it is not at all clear how it would carry out this
responsibility. The poliey function under the Bill is divided between the
CRC and NTA. Thus, NTA could merely make recommendations to the
Commission or the Congress.
Aside from the unified spectrum management assignment along the
lines of our four principles, the other major responsibilities of the proposed
NTA are now c~'ered by Reorganization Plan No. 1 of 1977 and Executive
Order 12046. Under these, NTIA has operated effectively for the past year,
and thus, on this basis a new independent agency is not necessary and we
would strongly bppose its creation.
As to this matter when viewed from the aspect of unified spectrum
management, we strongly recommend, when testifying on H.R. 13015, that
the Bill should not be enacted if allocation and assignment are split;
H.R. 3333 continues that split. We also note that there has been
PAGENO="0042"
38
considerable opposition to this concept of unified spectrum management.
Realistically, therefore, the concept, as developed in our four principles and
particularly the fusion of allocation and assignment, may not be enacted in
this Congress. If that were to be the case, we would urge that in any event,
it not be dropped. It is, we stress again, an idea which merits the most
serious, consideration of the Congress. We would, therefore, hope that it
would be given that consideration and study in the next Congress. See, e.g.,
S. Gil, Section 503.
We have a further objection concerning the change from NTIA to
NTA. The Bill focuses almost exclusively on the policy issues relating to
telecommunications. Generally speaking, it omits any assignment of
responsibility in the area that is coming to be called "information policy."
There is an exception to this, privacy, dealt with in Section 704(11).
Simply stated, information policy is concerned with those issues that
emerge from concentrations or flows of information and that display two
charateristics:
0 they are generally, although not necessarily, influenced
by developments in technology, especially computers
and telecommunications;
o they may have a significant impact on our institutions
or on. the complex of social, economic, and political
relationships within our society.
It is not a cliche to say that the United States is moving toward an
"information society." A recent Commerce Department study suggests that
over 50 percent of our national work effort is tied to the production, use, or
PAGENO="0043"
39
dissemination of information. Naturally, any activity of this magnitude is
bound to raise important and complex questions of public policy.
Indeed, a host of information-related issues have already been
identified by varied Federal commissions, legislators, administrators,
information industry spokespersons, civil liberty organizations, and
consumer groups. As we move into the 1980's, the manner in which these
issues are resolved--or not resolved--will significantly affect the structure
of certain important institutions in our society and it may substantially alter
the balance of power among these institutions. I am speaking now of
institutions in the broadest sense; i.e., government at all levels, industry,
the press, and the public.
One section of the Bill--Section 704(l3)--could be read to provide for
research on information policy issues arising out of the introduction of new
communications technologies. However, policymaking authority in this area
is not discussed.
Moreover, as the Subcommittee knows, the lines between
telecommunications and computers are blurring. The same can be said of
the lines between telecommunications policy and policy pertaining to the
information carried via telecommunications systems. So, it is unrealistic to
limit the Government's policymaking role to those issues relevant merely to
telecommunications technology. If this legislation is to be effective for the
rest of this century and beyond, it must come to grips with the
Government's oversight and policy roles in the broader field of information.
Without specific legislative direction, we will surely witness de facto
solutions to these information-related problems and possible unnatural
fragmentation of policy responsibility. This last night in turn lead to
confusion within the Government and in the minds of the general public.
We urge the Subcommittee, then, to consider carefully that the Bill
in its present form does not adequately address the concerns of information
policy.
That concludes my statement. Again, Mr. Chairman, we commend
the sponsors of H.R. 3333 for raising and dealing with these important
issues, and stand ready to cooperate fully in perfecting the legislation.
PAGENO="0044"
40
FOOTNOTES
Speech of FCC Chairman Dean Burch, to the International Radio
and Television Society, September 14, 1973.
Moline Television Corp., 31 F.C.C. 2d 263, 272 (1971).
Office of Communication of the United Church of Christ v. FCC,
359 F.2d (D.C. Cir. 1969); 465 F.2d 519 (D.C. Cir. 1972).
Because this term is not defined, there is some doubt whether it
includes only the competingapplicant or petitioner to deny, or informal
complaints as well.
Comments of the National Telecommunications and Information
Administration in FCC Docket No. 78-167, filed August 16, 1978.
Statement of Paul I. Bortz, Deputy Assistant Secretary, National
Telecommunications and Information Administration, on H.R. 3333, Spectrum
Fees, Land Mobile and Other Radio Services before the House Subcommittee
on Communications, Wednesday, June 6, 1979, pp. 1-8. See also Statement
of Henry Geller, Assistant Secretary for Communications and Information,
U.S. Department of Commerce, on H.R. 3333 before the Subcommittee
on Communications, U.S. House of Representatives, May 1979, pp. 25-26.
7! Sangamon Valley Television Corp. v. United States, 269 F.2d 221,
224 (D.C. Cir. 1959); Accord: Action for Children's Television (ACT) v.
FCC, 564 F.2d 458, 477 (D.C. Cir. 1977); Home Box Office, Inc. v. FCC,
* 567 F.2d 9, 35 (D.C. Cir.), cert. denied 434 U.S. 829 (1977).
See ACT v. FCC, supra note 7, at 474-478.
Speech of the FCC Chairman Richard Wiley, to the Federal Communications
Bar Association, April 30, 1974 (FCC Mimeo 21343).
PAGENO="0045"
41
APPENDIX A
Informal Rulemaking
Introduction
The following discussion is premised upon a Congressional
determination to legislate in the CRC (FCC) field as to. the proccdures
governing informal rulemaking (see ~. 9) for the desirability of a uniform
approach under the APA). Presumably such legislation would stem from the
consideration that the courts have laid down several holdings, some in
conflict, applicable to FCC informal rulemaking proceedings. Compare
Home Box Office v. FCC, 567 F. 2d 9 (D.C. Cir.) cert. denied
434 U.S. 829(1977),with Action for Children's Television, 564 F. 2d 458 (D.C.
Cir 1977). Further, the discussion is, of course, inapplicable to the issue of
the relationship between Executive Branch agencies and the President or his
Executive Office in informal rulemaking proceedings.
Principles
NTIA believes that in formulating policies and procedures
regarding ex parte communications in informal rulemakings, the objective
should be to foster a genuine and fair dialogue between interested parties
and the Commission, while creating a record of agency decisions that is
suitably framed for judicial review.
Accordingly, interested parties should be provided an adequate
opportunity to contribute any data, views, information or arguments with
respect to an agency proposal. The Commission, in turn, should be able to
preserve the traditional flexibility associated with informal rulemakings and
to rely on its own expertise as long as the basis for its decision is spread on
the record.
PAGENO="0046"
42
H.R. 3333
The pertinent section of this Bill that deals with ex parte
communications in informal rulemaking is Section 234. Subpart (b) covers
any Commissioner or participating supervisory employee who initiates or
receives any communication from any interested party to an informal
rulemaking proceeding. It requires written notice, and a summary of the
communication involved, to be furnished to all other participants in the
proceeding, if the "communication occurs after the record relating to such
proceeding has been closed by the Commission."
Unlike an adjudication, there is no formal record or closing period
for the record in an informal rulemaking. Therefore, we assume that this
section is meant to cover all communications made after the expiration date
for filing all comments. If, however, the intent is to require notification at
an earlier period, such as once a notice of proposed rulemaking has been
issued, this should be resolved by language that makes clear at what point in
the proceeding the provision becomes effective.
As written, we believe the provision accomplishes both too much
and too little, depending on the nature of the rulemaking. Some rulemakings
are of a technical, often non-controversial nature. In these cases, basic
fairness to contending participants is not a matter of concern, so that the
Commission should be free to obtain information, from any source at any
time, without restrictions. Notification to other interested parties would
serve no useful purpose.
On the Other hand, other rulemakings involve the "resolution of
conflicting private claims to a valuable privilege." Here, the courts have
held that basic fairness requires such proceedings to be conducted in the
open.!" Under present law and FCC policy, ex parte communications in
these types of rulemakings are prohibited (although the FCC has adopted a
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43
narrow interpretation as to what kinds of rulemakings are covered by this
categorization).
There is a third category of rulemakings that falls somewhere
between the others. These involve broad policy areas, such as the fairness
doctrine or children's television, where important matters of industry
operations are at stake. We believe that here again, whatever the present
law,!"some process must be formulated to control the practice of oral
presentations made in the privacy of individual Commissioner and staff
offices after written and oral arguments in a rulemaking proceeding have
been completed. This practice is contrary to the principle of basic fairness
to all participants, and also hinders the process of judicial review. Former
Chairman Wiley, in a 1974 speech, accurately described the result of these
closed-door meetings, which result in the offering of "compromises,
fall-back positions and the so-called `real facts."!"
Finally, there are proceedings that are not categorized as
informal rulemakings, but that, in effect, should be treated no differently
than the broad policy rulemakings described above. A particular inquiry
proceeding, for example, can involve the same considerations as in
rulemaking, with the exception that a policy, rather than a rule, is the end
product. The principle of basic fairness should still be followed here,
regardless of the form of the proceeding.
The present law is confused (see cases cited note 7) and calls for
* clarification. We urge that the provision in 234 be revised to specify that
unless the Commission makes the explicit finding in the Notice of Proposed
Rulemaking that the proceeding is of a technical, non-controversial nature,
all ex parte communications going to the merits shall be succinctly
* summarized (if oral) and placed in the public docket. We believe that this
will permit the agency flexibility to receive data in informal conferences
and yet will insure basic fairness to all participants and facilitate effective
judicial review. It is a combination of sunshine and flexibility appropriate to
the nature of the proceeding--rulemaking to formulate substantive policy
rather than adjudication of the rights of individuals or parties.
PAGENO="0048"
44
We also believe that the category of those covered by the provision
may be too limited to achieve basic fairness. Since non-supervisory
personnel, such as key staff members or Commissioners' aides, may be
personally and substantially involved in a particular rulemaking proceeding,
the provision should be made applicable to all participating employees,
regardless of supervisory authority. This can be accomplished by striking
the word "supervisory" from Subparts (b) and (c).
The term "interested party" should also be defined in Subpart (d). An
"interested party" should include:
(a) Participants in the rulemaking; i.e., those filing or
intending to file formal comments. This category should
include not only private parties, but also public officials
and other governmental agencies participating in
Commission proceedings.
(b) Their representatives.
(c) "Interceders" on their behalf. The Administrative
Conference has defined an interceder as "any individual
outside the agency conducting the proceeding (whether in
public or private life), partnership, corporation, association
or other agency, other than a party, or an agent of a party,
who volunteers a communication which he may be expected
t~ know may advance or adversely affect the interests of a
particular party to the proceeding whether or not he acts
with the consent of any party or any party's agent."
Finally, a Subpart (e) should be added to afford the Commission
flexibility in implementing the provision. It should direct the Commission to
extend the applicability of the section to appropriate Notices of Inquiry that
share the characteristics of broad policy rulemaking. Moreover, the
Commission should be encouraged, either in the legislative language or
history, to designate some specific point in each rulemaking after which all
exparte communications would be pEohibited. This would insure that the
Commission's final deliberations on proposed rules were not influenced by
external pressures. The p~rticular point chosen might be after an oral
argument, if one were held, or after an opportunity for staff consideration
at the end of the comment period.
PAGENO="0049"
45
Mr. VAN DEERLIN. Mr. Cohn, the principal criticism we have
heard of the bill's proposal for spectrum management stems from
fear that the executive branch might use this enormous power to
silence unfavorable critics of the administration. We want to be
careful to meet such fears as this and it seems to me that your
views do not represent any such paranoia.
After all, if an administration wants to silence its critics by
getting them off the air, there are probably more devious ways of
doing it than this would entail. Do you think the division of spec-
trum management responsibility between the executive branch-
for the Government sector-and the Commission-for the non-Gov-
ernment sector-can be improved upon?
Mr. COHN. As presently exists, do you mean?
Mr. VAN DEERLIN. As proposed in the bill, with spectrum man-
agement functions assigned to the NTA rather than the Commis-
sion.
Mr. COHN. I don't feel dividing the allocation and assignment
functions is the best way to go. These are intimately related. And I
think whoever has allocation authority should have assignment
authority.
Mr. VAN DEERLIN. Do you agree with that, Mr. Geller?
Mr. GELLER. Yes, very much so. We strongly believe that if you
split the two, you will create a division which will be almost as
inimical as the present split between Government and non-Govern-
ment; and therefore, if you are going to do the job, you ought to do
it effectively and put the two together.
As Mr. Cohn said, if the single allocator decides that 100 mega-
hertz are needed for some service, whatever it is, and it does so
based upon certain assumptions as to assignment rules, heights,
and power, separations and so on, and then having decided that,
the CRC chooses to adopt different assignment standards, this
would frustrate entirely what the allocator had done.
It is for that reason we think they go hand in hand, like ham
and eggs; you have to put the two together.
May I also address and propagandize a bit on the first point you
made? We think that, as you have indicated, it is absolutely ludi-
crous to think that somebody would try to still antiadministration
viewpoints by eliminating channel 2 in New York or channel 4
here. That is not the way it would be done. Such an action would
stand out like a dead mackerel in the moonlight and wouldn't
survive for a moment.
The way it would be done-and this is why I say I am propagan-
dizing-is by using the public interest standard, the one now in the
act. It is a vague standard. It allows the FCC or the CRC great
leeway in how it wants to act. And as we have seen in the Nixon
administration with the tapes Nixon said the Washington Post
would have a damned hard time, a damnably hard time at renew-
al.
Mr. VAN DEERLIN. Getting its television licenses renewed?
Mr. GELLER. Yes, on its television station. He sent Charles Colson
out to talk to the networks. Suppose you had an FCC which was in
league with the administration and it issued a notice of proposed
rulemaking saying the networks could only own one station or two
stations instead of the present limit of five. Then you sent Colson
51-254 0 - 80 - 4
PAGENO="0050"
46
out to talk to the networks about problems of mutual concern, with
such a notice over their head.
The public interest standard allows you all of this leeway to act
under that, and what I am saying is it is not going to happen in
allocations. That is a very difficult area. There would be very much
sunshine on it. It will happen in areas where there is great leeway
to act under a public interest standard.
Mr VAN DEERLIN What is the nature of the spectrum crisis in
the 1980's to which you have alluded, Mr. Cohn?
Mr. COHN. For example, Government assignments grow at a rate
of about 7 percent per year, and the number of changes we have in
assignments are approximately half the total assignments per year.
If you project these rates out, you will find that somewhere in the
mid-to-late eighties, unless more engineering is applied to spectrum
management, we are going to run out.
Mr. VAN DEERLIN. What is the nature of this expanding Govern-
ment use of the spectrum?
Mr. COHN. More economical ways to do Government business,
greater defense requirements, greater safety requirements of the
FAA, et cetera.
Mr. VAN DEERLIN. I assume that defense applications constitute
a good part of it. What kinds of uses exist today that didn't exist in
recent years?
Mr. COHN. Radars are probably the biggest users of the spectrum
as a single class of equipment. They probably use about 25 percent
of the Government's involvement in spectrum There are ways, we
feel, of fitting th~se together, fitting more equipment within the
same band. But it is going to take some engineering to do this, not
just plain conservative administrative assignment rules which have
been used in the past.
Mr. VAN DEERLIN. Do you mean that the Government's use of
the spectrum is perhaps not the most efficient use which could be
made?
Mr. COHN. Nor is the non-Government's.
Mr. VAN DEERLIN. Except that--
Mr. COHN. I think the management techniques have been very
conservative using worse case situations, placing assignments so
that they absolutely cannot cause any interference These tech
niques have essentially used very large areas that are precluded to
other assignments. People have used these conservative adminis-
trative rules and they are not necessarily reality.
Mr. VAN DEERLIN. Do you mean a wider separation between
bands?
Mr. COHN. A wider separation than is necessary, both in the
Government and non-Government sides. The spectrum resource
assessments and the system review procedures that I have talked
about are a step in the direction of trying to reduce these spacings
and cram more users into the same spectrum space.
Mr~ VAN DEERLIN. Incidentally, as an authority in this field,
could you set at rest the technical and engineering questions that
have been raised in regard to 9 kilohertz separation on radio
rather than 10?
PAGENO="0051"
47
Mr. COHN. I don't know whether I can set them at rest, but there
is a very definite need to reduce the spacing. Other parts of the
world have done it and I believe we can do it successfully.
Mr. VAN DEERLIN. Can it be done without sacrifice of quality?
Mr. COHN. That is what our studies seem to indicate.
Mr. GELLER. The Commission, I believe, is about to issue a notice
and begin a proceeding on this issue. We at NTIA are going to
devote major resources to showing, one, it will not cause adjacent
channel interference, two, it will not cause inordinate cause even
in adjusting the direction rays, and three, it won't affect AM
stereo. And finally, we believe it may be necessary because prelimi-
nary indications have indicated we may suffer interference from
regions 1 and 3 as Mr. Cohn mentioned; that in times of low
sunspot activity, this interference will pick up. Therefore, if we do
not move to 9 kilohertz, we may find our operations will be ad-
versely affected by this heterodyne interference.
Mr. VAN DEERLIN. There would be unaccountable static?
Mr. GELLER. Yes. It is a whistle.
Mr. COHN. It is a whistle.
Mr. GELLER. We are not sure, but what I am saying to you is that
there are indications of this. But as Mr. Cohn has said, our prelimi-
nary studies have indicated it will not cause any interference and
we don't see why it would. After all, regions 1 and 3 have done so
and they are not getting poorer service.
Therefore, we think the change is perfectly feasible. It was pro-
posed to move to 8 kilohertz as a separation, and instead of that, 9
was used as a compromise. All I am saying is we think there will
be a proceeding. NTIA will provide the engineering data in that
proceeding. We believe we will carry the burden of showing that
this is sound in terms of engineering.
Once we carry that burden, Mr. Chairman, it then becomes a
matter of using the spectrum efficiently. If it can be used at 9
kilohertz rather than 10, it makes sense to use 9-the more effi-
cient alternative. This ties in not only with providing more spec-
trum for daytime-only use in this country, but for minority use.
Mr. VAN DEERLIN. Yes. If we are going to deregulate the com-
mercial radio industry, it seems that the corollary is to make
possible further competition.
Mr. GELLER. Yes; and that is possible through expanding the AM
band at WARC. It is possible through use of directional rays in FM.
We have flied a petition with the FCC urging that measure. It does
not require international agreement. It is feasible right now if the
Commission will move to do so, and it could add scores of other
stations in that area.
So that we think that besides the 8,400 radio stations which are
now on the air, there can be hundreds and hundreds more, thus
allowing quite a choice in the marketplace for different formats for
services to the public.
Mr. VAN DEERLIN. Thank you.
Ms. Possner.
Ms. POS5NER. Mr. Cohn, I have a few questions for you. I am not
sure whether I was following your oral statement completely,
but in your written statement you say that spectrum scarcity is
exacerbated by management problems, lack of coordination be-
PAGENO="0052"
48
tween those entities that have management responsibility I don't
have the Executive order creating NTIA in front of me
Would you summarize for us the extent to which NTIA now has
authority to manage and allocate the spectrum?
Mr. COHN. Our authority now concerns Government use of the
spectrum.
Ms. POSSNER. Only those frequencies that are federally owned
and operated?
Mr. COHN. That is right. Now, in certain bands there are mixed
Federal and non-Federal use, and we are involved in those. But we
are not involved in the exclusive non-Government bands.
Ms. POSSNER. And to the extent that the FCC has authority over
managing the spectrum-the non-Federal portions of the spec-
trum-you did allude to the fact that in the present regulatory
environment there is considerable coordination between the NTIA
and the FCC.
Mr. COHN. That is right, particularly in those mixed shared
bands, which, by the way, represent about 40 percent of the spec-
trum.
Ms. POSSNER. Forty percent of the spectrum is shared by Govern-
ment and non-Government users?
[Mr. Cohn nods affirmatively.]
Ms. POSSNER. In H.R. 3333, principal authority over allocating
and managing the spectrum is given to the new agency, the NTA.
That is in title VII. And in title IV, section 435, the President is
given the authority to assign frequencies for use by stations owned
and operated by the Federal Government.
Mr. COHN. Right.
Ms. PO5SNER. And the CRC is given the authority to assign
frequencies for non-Federal use. In your oral statement you said
the bill is defective because of this division between allocation and
assignment.
Mr. COHN. That is right. We feel that the allocator and the
assigner should be the same agency.
Ms. POSSNER. In all cases?
Mr. COHN. In all cases. We have talked about authorization, that
is, who gets the particular license, and we feel a non-Government
entity should license non-Government users.
Ms. PO55NER. Then perhaps I am not understanding your defini-
tion of the term "assignment."
Mr. COHN. An assignment is a specific frequency to a specific
radio station.
Ms. POSSNER. And as proposed, the CRC would grant assignments
for non-Federal licensees-non-Federal frequencies?
Mr. COHN. That is right, in the bill.
Ms. POSSNER. In the bill, the President, or the NTA, would do
that-grant assignments for Federally owned and operated fre-
quencies?
Mr. COHN. That is right. That is in the bill.
Ms. POSSNER. But title VII grants the NTA specific authority to
exercise principal responsibility for allocation of the entire spec-
trum. So I guess I still don't understand where the defect is. If the
NTA has principal authority over allocating and managing the
spectrum, and that to some extent eliminates the management
PAGENO="0053"
49
problems we have today because authority is divided among several
entities, I simply do not understand what the fatal defect is.
If the NTA has the authority over management and allocation
and the NTA has the authority over assignments for Government
portions of the spectrum, and CRC over non-Government, where is
that defect-in the assignment function?
Mr. COHN. Assignment and allocation--
Ms. POS5NER. Are different.
Mr. COHN. Are different, but they are mixed together, as Mr.
Geller pointed out. As Mr. Geller pointed out, the assignments
could be based upon a set of rules.
Ms. POSSNER. Such as alluded to in those four points?
Mr. COHN. Yes. The other assignment authority would not neces-
sarily have to follow. They could change the rules and the alloca-
tions would be meaningless.
Ms. PO5SNER. You also mentioned four principles--
Mr. COHN. Right.
Ms. POSSNER. That are essential to a sensible, efficient spectrum
management policy. One, I believe, is that a single agency have
responsibility for spectrum management and allocation. Your
fourth principle is that the CRC make non-Federal assignments,
and numbers 2 and 3 are the ones you said are not in the bill.
Mr. COHN. Number 4 was not on assignments; it was on authori-
zations.
Ms. POSSNER. Authorizations. Numbers 2 and 3 are technical
rules governing assignments and a standardization of the assign-
ment process or a unified assignment system. And because those
two principles are not embodied in the bill now, the bill is defec-
tive.
Mr. COHN. That is right.
Ms. POSSNER. I have one final question. If the NTA section, title
VII, were not enacted in the form in which it appears today, would
you support-either Mr. Cohn or Mr. Geller-a shift of spectrum
management and allocation authority to the NTIA? What, if any-
thing, would need to be done to the NTIA's authority over spec-
trum management and allocation to achieve the results we are
aiming at in title VII?
Mr. GELLER. We would certainly support it, provided, as Mr.
Cohn said, you combine both allocation and assignment. We believe
those responsibilities could be given to NTIA. It would have to be
given by law. It would require a specific provision. And if it were
not in title VII, it would have to be elsewhere in title IV, giving
NTIA that authority. We do strongly support the notion of a single
allocator assignment.
We would point out, for all of the reasons Mr. Cohn said and
others, that by putting them together we bring more sunshine,
more focus on the process. The non-Government side would be very
much interested in what the Government side is doing, and vice
versa, and that is a benefit. The more you have people questioning,
looking, examining this from both sides, the more the public bene-
fits.
Mr. VAN DEERLIN. What would be the Commission's authority
with respect to licensees who had violated FCC rules?
PAGENO="0054"
50
Mr GELLER They would have the same authority they have in
H R 3333 at the present They would be the authorizing ones They
would say who would go on channel 9 in New York City and how
long they would stay on channel 9 If the licensee did something
contrary to the law, rule or policy, it would be the CRC, the
Commission, who would move to revoke the license or deny renew-
al.
What we are talking about here is how to make maximum use of
the spectrum because it is such a precious resource and it needs
this unified~ management. We are not talking at all in this morn-
ing's session about the policies and rules under which the licensee
on channel 9 shall operate. That would be for the non-Government
side to do, for the CRC to police. We don't think the Executive
branch should be involved in that activity at all.
But as I said to you, I don't see any reason why one entity,
NTIA, should not be managing the entire spectrum, all the assign
ments, we don't think that would endanger anything under the
first amendment. I repeat to you, the danger under the first
amendment is going to come under the public interest standard
and is going to call for oversight by this committee
Mr VAN DEERLIN When you use the term "assignment," then,
you are not referring to the licensing of a specific user, are you?
Mr GELLER No As Mr Cohn says, that is authorization What
you have is an allocation of frequency: 100 megahertz-I'm just
making this up-shall go to broadcasting. Now you have to assign
within that 100 megahertz and determine how you are going to use
it: What are the technical rules, what is the separation, what are
the heights and power? And by doing that, you decide that there
shall be seven assignments in New York City, channels 2, 4, 5, 7, 9,
11 and 13. That is an assignment.
Now, you still haven't determined who is going to be on them. So
you turn to who shall be on them and how late they shall operate,
and that is called authorization and that belongs with the non-
Government, with the CRC. But if you split the other two func-
tions, then the giving of the 100 megahertz could be frustrated by
the assignment agency-a different agency could come along and
say we are not going to do what you thought we were going to do
with this 100 megaheratz. We are going to use 200-mile separation
or 300-mile separation, or we are going to use a heightened power
of this or that. And it would make a mess out of the 100 megahertz
allocation. It wouldn't work any more.
Ms. POSSNER. Mr. Cohn, did you want to respond to the question
I asked Mr. Geller about strengthening NTIA's authority over spec-
trum management and allocation should title VII not be enacted in
the form in which it appears today?
Mr. COHN. I think my answer would be very similar to his.
Ms. POSSNER. Thank you. I have no further questions.
Mr. VAN DEERLIN. Mr. Wunder, minority counsel.
Mr. WUNDER. Thank you, Mr. Chairman.
Mr. Cohn, I would like to shift subjects on you for a minute.
Referring to your statement, the public participation provisions
which appear starting on page 6. First of all, in your statement you
indicate the bill is deficient in that it does not provide for funding
for public interest groups or others in adjudicatory proceedings. If
PAGENO="0055"
51
there were any such provision made, would you agree that there
needs to be some standard specified in the legislation as to who and
what group and under what circumstances they shall be entitled to
the money? Mr. Geller?
Mr. GELLER. Yes, we do agree. And we think the administration's
bill, S. 755, sets forth what we think are appropriate standards,
and that is that the party seeking money must reasonably be
expected to contribute substantially to a fair disposition of the
proceeding, and that the money is needed because the party has a
shown he doesn't have sufficient resources available to participate
effectively in the absence of such assistance. We believe those
should be the two criteria.
Our reason for stressing this, Mr. Wunder, is that if you keep the
public trustee system, it is based, we believe, upon public participa-
tion. The public needs lawyers to participate effectively, and the
system becomes nugatory, almost, if you don't have such a provi-
sion.
Mr. WUNDER. When you think about the existing public partici-
pation funding mechanisms of agencies such as the FDA, FTC,
CPSC, the proceedings almost uniformly have nationwide applica-
bility. Take the CPSC. If they are setting a standard for small
children's toys, that has nationwide ramifications because the prod-
uct is marketed in every locality. But the FCC proceedings in a
broadcast license renewal does not.
If you are using the standard that you have outlined, it says
nothing about the group that will be funded having any broad-
based type of support in the community. One of the great fears of
the broadcasters is that they will be subjected to frivolous proceed-
ings which will be exacerbated by public funding mechanisms.
Mr. GELLER. The point you raise is certainly a good one. There
are two types of proceedings. One is the one of general applicabil-
ity, and the FCC has them, as does the Federal Trade Commis-
sion-for children's television and so on.
Mr. WUNDER. Sure.
Mr. GELLER. But there is another aspect I would bring to your
attention: The system you the Congress have decided upon is one of
local outlets. It is one of responsibility to the local group, to the
listener, even to a single listener, who is now given standing. The
Congress has required, under section 311, that the public be given
notice of renewals and ability to participate in that proceeding.
If you want the public to participate, if you want a system of
millions of monitors because you want that grassroot inquiry, then
you should follow through on the local level with the funding of
local groups.
If the idea is that a station in Roanoke, Va. should be responsible
to the Roanoke public and it is to the public that the FCC should
look at renewal more than to anyone else, then if the Roanoke
public wants to participate, they do need lawyers. We have found
that absent the lawyers, the public doesn't know what the rules of
the game are and they are more apt to raise frivolous things such
as poor taste or issues the FCC can't get into.
It is for that reason that we urge that, if you maintain the
system of public trusteeship, then you do need this funding of
public interest groups. Without it, the broadcasters will have very
PAGENO="0056"
52
experienced counsel and the public interest groups not, and that
will result in very unequal combat.
Mr. WUNDER. In theory that all sounds very nice, but when you
are talking about the number of groups potentially that could form
in a locality just for the sake of forming, it certainly boggles the
mind.
Mr. GELLER. Yes, it does. I think the agency would have to
exercise discretion, just as was stated in the leading seminal case,
United Church of Christ, when the courts held that listeners have
standing. The courts said that if the agency gets overwhelmed, if
the floodgates open, it, the agency, can take steps to limit the
number of people who may participate. I think that is even clearer
with regard to funds.
First of all, there has to be made a showing not only that the
public group needs the money to participate but that it will make a
substantial contribution to the fair resolution of the proceeding. An
agency cannot keep funding group after group. Once one group
comes in and proves its relevance, the agency, which has very
limited money, would have to say to other groups: I am sorry, we
have funded one and we are not going to fund several, three or
four.
So far, the floodgates have not really opened. The Commission
has not been overwhelmed by people coming forward. But you raise
a point that would have to be looked at. If it turned out that there
were enormous requests, the Commission would have to adopt
rules, such as allowing only one to a customer, or designing a
selection process.
Mr. WUNDER. Thank you, Mr. Chairman.
Mr. VAN DEERLIN. Mr. Luken.
Mr. LUKEN. Pursuing that to some extent, I too think it boggles
the mind and that the agency would, in effect, be the decider of
what public interest groups are going to be recognized and funded.
So it is really going to be the agency, not the public interest
groups, which will be the instrumentality bringing the charges or
making the objections or making the case.
Mr. GELLER. No, I think the groups would be coming--
Mr. LUKEN. This is what happened in the FTC.
Mr. GELLER. I believe the groups will be coming forward. The
agency should not foment participation by any local group.
Mr. LUKEN. If I may interrupt.
Mr. GELLER. Yes, sir.
Mr. LUKEN. For you to say the agency shouldn't foment, could be
considered a pious statement, or hortatory, at worst. The agency
very well might. There have been accusations with some justifica-
tion that public agencies have done just that, and for us to say that
they should not isn't going to prevent their doing it.
Mr. GELLER. It seems to me if you have a Roanoke-again, I use
it as an exampl~-TV station, which the agency thinks it is not
operating properly, then the agency should act on its own. It has a
complaints and compliance section. It should send its people out to
investigate; it should designate hearings; and it should carry the
burden of moving forward.
If, on the other hand, a public interest group--
PAGENO="0057"
53
Mr. LUKEN. What do you mean by acting properly? The public
trustee concept?
Mr. GELLER. Anything. A rigged quiz. Failure to carry out its
promises. Failure to serve-there might be 45 percent minorities in
the area and the station has virtually zero minority programing.
Any number of things.
Mr. VAN DEERLIN. Are you just pulling Roanoke out of the hat?
Mr. GELLER. Yes. If you would like for me to use Pocatello, it is
almost always used. But the agency has a complaints and compli-
ance section. It is supposed to get annual figures and get figures at
renewal about what has been done in local and informational
programming and in a number of other areas. It also can learn
through a number of sources about double billing, rigged quizzes,
any number of policies. The agency should act on its own then.
But there is another concept in the bill, and that concept is one
that the licensee is a public trustee and responsible to his public.
That means that the Commission likes to have public participation.
I don't mean it should go out and say go participate but what it
does is it gives the public notice of renewal. That is required. They
have to do it over the air. They have to make announcements: We
are coming up for renewal, and if any persons want to participate,
they can come forward. That, I think we would all agree, is very
desirable. Actually it is a mistake to call them public interest
groups by that name. They don't necessarily represent the public
interest. What they represent is a group of listeners who feel that
the station has not served the public adequately. Everybody would
agree they are entitled to come forward and give their story to the
Commission.
The system is one of local outlets responsible to local groups, to
the local public, and the question then is: If they come forward,
how do they do that without attorneys? Because I am sorry to
say-it is my own profession-that it has become so complicated it
is very difficult to participate in an FCC proceeding without an
attorney. The broadcasters have one. Doesn't the public interest
group have to have one if they are going to participate effectively?
But it would be up to the agency to make sure the complaint was
not frivolous, as Mr. Wunder pointed out; to make sure a given
group really needs the money and it really will make a contribu-
tion. After too many apply and the money supply is depleted the
public interest groups will have to get together and settle on one
counsel.
I want to back up on one thing and say that in radio, particular-
ly, NTIA does not favor the continuation of the public trustee
concept. We favor scrapping it. We think the regulation of program
content has been ineffectual, it has large first amendment costs,
and we believe you should go to a different system. But if you keep
it--
Mr. LUKEN. Do you think those public interest groups out there
agree with you on that?
Mr. GELLER. No, they don't. They disagree totally.
Mr. LUKEN. They sure don't agree, and they are organizing. The
drums are--
Mr. GELLER. I know about the drums. They are beating behind
me too, sir. But what I am saying is if you keep the public trustee
PAGENO="0058"
54
concept, you should keep pace with it And it seems to me in doing
that you should fund public interest groups because other than
that you are keeping the promise to the ear and breaking it to the
heart
It is for that reason that we support extending the provision that
is now in the bill only as to rulemaking, we support its extension to
licensing proceedings if you decide to keep the public trustee con
cept
Mr LUKEN I have made statements similar to yours, not with
tongue in cheek but not with any great deal of certitude that I was
right or that I could carry them out, or help to carry them out,
with reference to deregulating radio But as we get closer to a
possible decision and as we hear from more public interest groups
and public interest representatives, I would predict that it is going
to be very difficult, if not impossible, for this Congress to carry out
such deregulation
Mr. GELLER. I am sorry to hear that.
Mr. LUKEN. Certainly I have made a very provocative statement.
Mr VAN DEERLIN Has it occurred to you, Mr Geller, as an
observer of the communications scene, that what the public inter
est organizations were telling us last week dovetails almost precise
ly with what we were hearing from network representatives in
regard to the public trustee concept? Can it be possible that their
motivation is the same?
Mr. GELLER. Their motivation may be different, but it is extraor-
dinary to hear both sides saying, `a representative of AMST, for
example," the act is fine Both groups may be saying you have to
refine it, but it works basically well, but--
Mr. VAN DEERLIN. As sort of backup documentation, the public
interest groups cite the dreadful things they see and hear on
television today, all of which seem to have occurred under the 1934
act that they ask us so steadfastly to maintain.
Mr. GELLER. What I would urge is deregulation in radio. We all
know there will not be any deregulation of television, but you have,
as I have said, 8,400 radio stations, 39 in Washington and 59 in
Chicago, and more in the offing through these various methods of 9
kilohertz, FM directionals, extension at WARC of the AM band.
What I would strongly urge the Congress to do is to try deregula-
tion in AM, try getting rid of the public trustee concept in AM, and
at least try the same in the major markets.
There is no need for this regulation. It is out of line with reality
to regulate all these 59 stations in Chicago as public trustees. Try
it and see that the sky-wrong analogy these days with Skylab-
but that the world won't come to an end; that things will go on and
it will work You could then build on that experience But if you
don't take that first step and try deregulation in major markets,
you will never get any experience and you will be stuck with the
present system, and I think very strongly that that would be a pity
Mr. LUKEN. If the gentleman would yield back.
[Mr. Van Deerlin nods affirmatively.]
Mr. LUKEN. Mr. Chairman, you are not saying, if I may address
that question to you, that the public interest groups and the broad-
casters are saying the same thing? The statement that was just
made with reference to deregulating the major markets
PAGENO="0059"
55
Mr. VAN DEERLIN. The broadcasters and the public interest
groups are telling us almost the same thing word for word about
the public trustee concept.
Mr. LUKEN. The general----
Mr. VAN DEERLIN. If you can find any significant difference in
position between Everett Erlick and Ralph Nader on the public
trustee concept in testimony before this subcommittee, I will buy
your lunch.
Mr. LUKEN. Except the broadcasters do want to deregulate, get
rid of fairness and equal time. They want to get rid of it period, as
I heard it.
Mr. VAN DEERLIN. They also want to get rid of competition from
cable television, satellites and superstations.
Mr. LUKEN. Well, sure.
I am not disagreeing with the chairman at all in his overall
comment, but in these particulars I am suggesting there is a differ-
ence in some particulars, there is a difference in approach.
Mr. GELLER. I think it is a mistake to call the broadcasters
monolithic. There are NRBA, the National--
Mr. LUKEN. They are just taking a tough bargaining position.
Mr. GELLER. Some of them strongly favor deregulation. But there
are a number of them who, because of opposition to the spectrum
fee and the concept of the spectrum fee, would just as soon keep
the 1934 act and not run the danger of a substantial spectrum fee,
and therefore they opposed deregulation.
Mr. LUKEN. They will settle for the benign status quo.
Mr. GELLER. That is it. The bottom line is that they would be
better off overall, perhaps, with the status quo, they feel, than with
moving to a new system. Some of them are locked into the present
system the same way public interest groups are locked in to the
present.
In making this argument, I want to stress to you we are not
talking about total deregulation. We would keep a lot of regula-
tions that were content neutral, such as rigged quizzes and multi-
ple ownership and those regarding the equal opportunity employ-
ment. In fact, there could be heightened attention on those. What
has been a failure, we think, by the FCC, is looking at overall
programing in light of the public trustee concept; it hasn't served
the public interest.
Mr. LUKEN. You said what you are not going to deregulate. What
are you going to deregulate?
Mr. GELLER. We are going to deregulate the renewal. What we
would urge you to do in radio is to have no renewal, to have no
public trusteeship concept. We urge you to scrap the licensee's
requirement to come in every 3 or 5 years or whatever and show
that in overall programing he has served the public interest. For
this requirement means that a licensee would have had to ascer-
tain social problems and have a series of programs that meet those
problems. Then, the FCC, a Government agency, has to judge
whether those programs sufficiently and adequately met the prob-
lems. That is a subjective judgment and it has not worked.
Mr. LUKEN. I don't understand, frankly. You say you are going to
deregulate the renewal. The renewal is only a process.
PAGENO="0060"
56
Mr. GELLER. Yes; but it is a process based upon a public trustee
concept We would get rid of the public trustee concept The licens
ee would no longer be a public trustee
Mr. LUKEN. My question is what does that mean, public trustee
concept? What specific parts of that public trustee concept are you
going to adopt?
Mr. GELLER. We would get rid of the entire concept that the
licensee has to show every few years at renewal time that his
overall programing has served the public interest That would go
What would happen is that your bill would then specify that the
Commission can have regulations in EEO and multiple ownership,
and whatever you wanted to keep, you could keep: for example,
equal time, at least as to paid time.
Mr. LUKEN. You would keep equal time?
Mr. GELLER. That is up to you. We suggest you do it. It is a
concept which is established. You can keep it. But you could get rid
of the fairness doctrine.
Mr. LUKEN. We should get rid of the fairness doctrine?
Mr. GELLER. Yes.
Mr. LUKEN. In the major markets?
Mr. GELLER. Yes.
Mr. LUKEN. Of radio?
Mr. GELLER. Yes.
Mr. LUKEN. Not anywhere else?
Mr. GELLER. I think it is not realistic to try to deregulate televi-
sion. I think you have to build on the experience in radio and turn
to TV in 10 years and see how it works.
Mr. LUKEN. What I am saying-and I will "ciss and decease," as
someone said recently-luck to you and to us in attempting to do
what you are suggesting.
Mr. GELLER. I understand that, but all I urge you, again, is to say
that it is right to begin; that you should begin to deregulate in at
least some part of the major markets and see what happens. You
could get a report in 5 years or 3.
Mr. LUKEN. Thank you, Mr. Chairman.
Thank you, Mr. Geller.
Mr. VAN DEERLIN. While Mr. Gore is warming up, and since this
hearing is mainly on title II, the restructuring of the FCC, do you
think that the provisions contained in title II of the bill in regard
to the restructuring of the Commission would help to alleviate
some of the management problems that we are reading and hear-
ing so much about now-such as the rising backlog of renewal
hearings and applications for new services?
Mr. GELLER. I think the bill has many commendable provisions
in that sense. I think it is desirable to reduce the Commission to
five members, to lengthen their term. We do suggest that you allow
reappointment. We think it is very desirable to get rid of the
comparative hearing. It has been a stultifying, wasteful process
criticized by everyone, every judge, every court, everyone who has
looked at it.
You have done it by lottery. We suggest a way that is better, we
think, and will keep better faith with the minorities who are now
coming on-stream and want to get broadcast stations.
PAGENO="0061"
57
But again, we commend you in the bill for seeking to change the
commission structure. By doing that, you get rid of a number of
backlogs. You allow the Commission to focus better on major policy
issues in common carrier, international and other areas that
should command its attention. We have pointed out a number of
areas where we think it would be a great improvement; a number
where we suggest revisions that would better accomplish our pur-
pose. But on the whole, yes, we do support what you are seeking in
this bill.
We also support the notion of a new Commission, a CRC, because
if the bill passes, it would be a different commission from the FCC.
It would have much more limited powers. It would be called upon
to move toward deregulation in common carrier, the marketplace
solutions, and we think it is good to establish a new mood by
calling it a different agency.
Mr. VAN DEERLIN. I realize this may be an unpleasant question
to pose to a Government official, but what sort of reductions in
staff do you think might be possible at the Commission as a result
of such restructuring?
Mr. GELLER. If you get down to five commissioners, you will save
some staff and considerable sums of money because the two com-
missioners are supported, I think, by about $800,000 a piece, some-
thing of that nature.
If you get to deregulation, if you carry out other provisions of the
bill, you would certainly save staff in that sense. You could get rid
of the comparative hearing. You would save both in examiners and
staff in the Broadcast Bureau. There are a number of provisions in
the bill which would save a great deal of staff resources. We have
not calculated it yet, so I am unable to give you an~ figure of what
it would be, but the bill does reduce the agency s size in many
significant ways.
Mr. VAN DEERLIN. Mr. Gore.
Mr. GORE. No questions, Mr. Chairman.
Mr. VAN DEERLIN. Ms. Possner.
Ms. POSSNER. Mr. Geller, isn't it true that in some cases restruc-
turing might not result in an overall reduction in staff but might
require a shift in staff.
Mr. GELLER. No question.
Ms. POSSNER. In title III, for example, which deals with telecom-
munications carrier regulations, wouldn't you agree that additional
staff would be necessary with respect to the agency's responsibil-
ities in acting on tariffs filed by the dominant carrier?
Mr. GELLER. But even there I think you would have reduction.
The Commission now is regulating MCI and SBS and all of these
people who do not have the dominant market power your bill
refers to. There would be no more need for these people to come
before the Commission. And if you look in the Yellow Peril, as it is
called, you will see that every week one competitor is petitioning
against another competitor. It is true, you are quite right, you
would be left with a lot of regulation of A.T. & T. and anyone else
who had such dominance, and that is even desirable. There could
be better focus on the issues of cross-subsidization.
But I believe overall you would have a reduction of staff even in
your title III because you would get rid of all of this present
PAGENO="0062"
58
regulation of resellers. What is the purpose of it? They have no
power. There is no need for the Commission to regulate them, yet
they do it.
Mr. VAN DEERLIN. Would it be possible to identify the Yellow
Peril for the record?
Mr. GELLER. That is "Telecommunications Reports." I am sorry.
It is a yellow sheet of this nature [indicating]. I am sure you have
seen it.
When I was going to testify on common carrier, I made copies of
it although I didn't use it It showed that without involving A T &
T, in the particular week I was going to testify, three people
assaulted each other: Graphnet was fighting with Western Union
and RCA was fighting with somebody else. What they do is fight
with their lawyers before the Commission instead of their salesmen
in the market. Consequently, you have long delays.
We think that by moving in the direction of your bill, there will
be a staff reduction even in title III
Mr. VAN DEERLIN. Did I understand you to recommend against
the nonrenewability of commissioners' terms?
Mr GELLER Yes Certainly that is a close issue and we do under
stand what motivates doing it But we would suggest that if you get
a good man on, or a good woman-sorry-and he comes up for
reappointment, that if you say he can't be reappointed, then his
only future may be serving in the industry But if he has served his
full term, the 10 year term or whatever is specified, and wishes to
be reappointed and merits it, we wonder why .he should not be.
Now, we understand the reasoning on the other side, that he
may-it is possible-he may shade what he does in an effort to win
favor with the industry as he comes up toward reappointment so
that he doesn't have a lot of opposition In the past, some very fine
Commissioners on the Federal Power Commission and the Federal
Communications Commission aroused great industry opposition,
and when they came up for renewal of their renomination, they
sometimes didn't get appointed again
The purpose of it, I take it, Mr. Chairman, is to say to people
your whole future lies in doing a good job in the one term you
have.
Mr. VAN DEERLIN. Like a Federal judge.
Mr. GELLER. Yes.
Mr VAN DEERLIN Of course, the history of the Federal Commu
nications Commission shows that the average term served is only a
little more than 5 years for commissioners and a little more than 3
years for chairmen, and I suppose if you discounted the lifetime
longevity of Robert E Lee, the average for commissioners would be
down to around 2 or 3 years.
Mr. GELLER. And Rosel Hyde served for a very long time also.
Mr. VAN DEERLIN. If there are no--
Mr. MOORHEAD. I have a couple of questions.
Mr. VAN DEERLIN. Oh, I am sorry, Mr. Moorhead. I didn't see
you come in. Go ahead.
Mr. MOORHEAD. I was concerned with your testimony concerning
public participation. I agree with you that the public has to have
an input in these matters, but it seems to me when the Govern-
ment begins to finance these appearances, the so-called public in-
PAGENO="0063"
59
terest groups with a very, very narrow special interest seem to be
the ones who get the money, and the public is left out more than
they ever have been before
Most of these special interest groups that call themselves public
interest groups represent, in my district, at least, a very tiny
segment of the public, who in most instances are against every
thing they are trying to do How do you get the money in the right
places?
Mr. GELLER. First, I couldn't agree with you more that public
interest, as I said earlier, is a misnomer. They shouldn't be called
public interest groups because they don't necessarily represent all
the public. They are, as~ you say, special interest groups, and I
think that is perfectly permissible designation.
I think if there is a special interest group, a minority or what-
ever, whose members feel that the station is not adequately serving
their needs, those members should have access to a course of
action The act and the whole scheme of the act is to allow public
interest groups to say we represent 25 percent of this area and we
are not receiving any representation in controversial issues or
problems-we are not being allowed to participate in the station's
activity.
That is then a matter for the FCC to look over. There should not
be any allocation by percentage of minorities in the population
But you cannot, on the other hand, ignore minorities You cannot
put on controversial issues and pay no attention to a particular
minority So they are allowed to enter the process That is the
scheme That is the reason for the public announcement
We understand the difficulty in financing these groups, but if
you do not finance them and they do not have adequate funds to
participate, and they can make a contribution to the fair resolution
of the matter, how will they participate? How does your scheme of
responsibility to the groups, to the public-even if the groups are
specialized-how will that work out if they have no funds to hire
lawyers?
Aren't you then saying yes, you can participate, but you as a
member of the public cannot do it adequately or efficiently because
there is no way you can get counsel to do it?
Mr MOORHEAD Usually if there is a strong enough feeling with
out the public itself or a group within the public, if they feel
strongly enough on an issue, they will contribute money for the
cause and they will be willing to work at it If it is just a group
who have appointed themselves and want, perhaps, public money
to finance their operation, they are defeating the public interest
Mr GELLER Let me point out, though, that, in a number of
statutes, you the Congress have set down a system of what might
be called private attorney generals You have said to special inter
est groups-in the civil rights area, the pollution area, and a
number of other areas-you can participate, you can bring the
case, and if you prove the case, you can get the costs of your
counsel
Now, what we are asking you is why shouldn't that concept be
applicable here so long as you keep the public trustee notion? If
you are trying to foster public participation, a system of public
monitors at the local level, then shouldn't one who makes an
PAGENO="0064"
60
attempt to participate, shows a fair contribution, shows he doesn't
adequately have the funds without public help, shouldn't he be
funded? And that is the issue we are raising to you.
What I stress to you is that this concept of private attorney
generals does have its roots in a number of laws Congress has
passed in the last decade.
Mr. MOORHEAD. Will you contribute the funds to any group that
wants to come in, regardless of what position he represents?
Mr. GELLER. No. I think the group in question would have to
make a showing that it will contribute substantially to a fair
disposition of the matters that are the subject of a hearing. If the
group shows that it will assist the Commission and make a sub-
stantial contribution, then I think it would be up to the Commis-
sion to consider whether it wanted to fund the group.
If the Commission receives requests from too many groups, it
would have to tell the groups that they cannot all receive funds.
The Commission could tell the groups to get together and decide
upon a common counsel. The Commission could state its ability to
fund only one counsel and that he or she will have to represent all
the groups.
But I do urge you again to consider that the scheme is one of
public interest, of being responsible to the public in the area. Even
a single listener-who, I agree, may not reflect the overall views of
all the people in the area-is entitled to raise matters that are
relevant to the public interest standard.
Now, we think that the public interest scheme is out of line with
reality in radio, and we would urge you strongly to scrap it. But if
you keep it, it seems to us you ought to make it effective.
Mr. MOORHEAD. Isn't it true in these times when public moneys
are not easy to come by and there are so many things that are
needed, that this is just another area of a drain on the public
treasury and it has to be justified as being a higher purpose than
some of the other things that cannot be funded?
Mr. GELLER. That is a different matter. I would defer entirely to
Congress on that. We think it is a worthwhile endeavor if you keep
the public interest standard, but as to how funding public interest
groups compares with using the limited money available to finance
medical, energy, or other demands, we would defer entirely to the
Congress.
Judgments do have to be made. We are not expert on what the
competing values are. All I am saying to you is that if you keep the
public trustee standard you ought to give serious consideration to
the public complaint process. How that cause stacks up against
others is not for us to decide-we would not dream of making that
evaluation. We don't have the rest of the equation-only you do.
Mr. MOORHEAD. Thank you for appearing this morning.
Mr. VAN DEERLIN. In theory, of course, the regulatory agency
itself could be expected to represent the public interest.
Mr. GELLER. Yes; but remember, the regulatory agency cannot go
out and find out what is happening in each local community. It
would be very difficult for it to do so. And that is why the subcom-
mittee in section 311 and the FCC in its rules have required that
the station announce it is coming up for renewal. The station must
inform the public that anyone can come and look at its files.
PAGENO="0065"
61
You have a witness coming on later today, Mr. Barry Cole, who
is very expert in this area and can, I am sure, supply you with
details. But it is quite a structure; it is all based upon getting into
the local community, giving the local community notice, and allow-
ing them to participate in the renewal process.
Mr. VAN DEERLIN. Mr. Swift?
Mr. SWIFT. No questions, Mr. Chairman.
Mr. VAN DEERLIN. Thank you, Mr. Geller and Mr. Cohn, for your
help this morning.
Our second witness insofar as the principal subject matter of
today's hearing is concerned will appear somewhat out of order. He
is Mr. Thomas C. Brennan, Commissioner for the Copyright Royal-
ty Tribunal.
Mr. Brennan, we welcome you to the subcommittee. As you
know, the legislation has prompted a brisk discourse on the subject
of responsibility of cable television operators: Should they be total-
ly deregulated in providing programing and, if so, under what
terms. We will be very pleased to hear from you how the present
copyright royalty system operates. I guess it is a little less than 2
years old; isn't it?
Mr. BRENNAN. That is correct, Mr. Chairman.
STATEMENT OF THOMAS C. BRENNAN, COMMISSIONER,
COPYRIGHT ROYALTY TRIBUNAL
Mr. BRENNAN. I have a prepared statement which I will request
be printed in the record.
The statement discusses three issues that I was asked to com-
ment on by members of the subcommittee. I am very conscious of
the time pressures on the subcommittee, and perhaps it would
expedite the proceedings, rather than to consume time by summa-
rizing the statement, for me at this stage to invite questions from
the chairman and the staff, and that, perhaps, might cover more
ground in a shorter period of time.
[Testimony resumes on p. 70.]
[Mr. Brennan's prepared statement follows:]
51-254 0 - 80 - 5
PAGENO="0066"
62
Testimor~y of
Commissioner Thomas C. Brennan, Copyright Royalty Tribunal
on H. R. 3333
House of Representatives Subcommittee on Communications
June 12, 1979
I am Thomas C. Brennan, senior Commissioner of the
Copyright Royalty Tribunal. Prior to my current position
I served as Chief Counsel of the Senate Subcommittee which
processed the copyright revision bill, and was actively
involved in cable regulatory and copyright issues.
I am appearing at the request of the Subcommittee
in my personal capacity. The views expressed are my own and do not represent
official positions of the Thibunal.Even in a personal capacity, there are
some subjects that I have concluded must be excluded from
the scope of my testimony. I do not believe it appro-
priate for me to discuss issues that will come before
the Tribunal in the execution of its quasi-judicial functions.
I have been asked to discuss several specific subjects
and to generally comment on the previous testimony concerning
the functions of the Tribunal. Before doing that, it may
be useful to provide some background as to the circumstances
which resulted in the creation of the Tribunal. ~During
the long gestation *period of the revision bill, it became
apparent that both the House and the Senate intended
to utilize compulsory licensing as a means of balancing
the competing claims of the owners of copyrighted materials
and the users of such works. It then became necessary
to devise a mechanism to make these statutory licenses
viable, to avoid the Congress having to periodically
review the royalty rates, - and to resolve various practical
problems inherent in the operation of the licenses. For
PAGENO="0067"
63
example, the cable television industry reluctantly accepted
the concept of copyright payments but insisted that it
must not have any responsibility for the distribution of
the royalty fees among the many copyright owners. The
Tribunal was thus invented to periodically review, and
possibly adjust, royalty rates applying to cable, records,
jukeboxes, and public broadcasting. The Tribunal also
resolves disputes concerning the distribution of certain
royalties, including the cable royalties. Somewhat similar
bodies exist in several other major nations.
The first specific subject I have been asked to
discuss is the economic justification for the existing
fee schedule and the public policy considerationsthat
influenced the Congress in the determination of the
cable copyright provisions. The legislative history
is clear -- there is absolutely no empirical economic
justification for the statutory schedule. None of the
Act's sponsors or the Committees which considered the bill
have ever suggested that the rates were adopted on the
basis of any objective standard. The original Senate
Subcommittee schedule would have provided a graduated
schedule up to five percent of gross receipts,~ although
it was anticipated that most cable systems would be paying
under three percent.
During the processing of the bill, I observed
the offering of various amendments to reduce rates
and to expand the scope of various exemptions. In my
view, the success of many of these amendments was not
necessarily induced by the cogent economic arguments of
their sponsors. The original Senate approach was to initiate
cable into a copyright payments system, to resolve doubts
in favor of lower rather than higher rates, and to provide
for early and comprehensive review of the fee schedule.
PAGENO="0068"
64
As I shall discuss shortly, this last objective was
greatly diluted as the bill ran the legislative gauntlet.
From the perspective of copyright policy, the most
significant issue was whether cable operators would be
required to negotiate for copyright licenses to carry
the programs they pick up as secondary transmissions, or
be granted a statutory license. The active consideration
of this issue in the Congress extended beyond the House
and Senate Subcommittees having jurisdiction in copyright
matters. In the Senate, the bill was referred to the
Commerce Committee, and this Subcommittee is acquainted
with the procedures that were followed in the House of
Representatives. I do not recall any congressional dissent
from the conclusion expressed in H. R. 94-l~76 "that it
would be impractical and unduly burdensome to require
every cable system to negotiate with every copyright owner
whose work was retransmitted by a cable system."
I am not aware that any viable alternative has emerged
to alter the judgment reached by the Congress only three
years ago. Indeed, the Subcommittee is being urged to
adopt essentially the same approach previously discarded
by both the Congress and the Federal Communications
Commission. The inherent limitations of that approach
are made manifest by the effort already to qualify it
by grandfather clauses, transitional periods, and exemptions,
exceptions, etc.
The second subject I have been asked to discuss
is the scope of the Tribunal's jurisdiction to review
the statutory rates and to respond to certain changes
in the FCC rules. To say that the Tribunal may conduct
a "complete review" in 1980 of the statutory rates distorts
the language of the Copyright Act. It simply is not
true that "if program owners believe they are not being
PAGENO="0069"
65
adequately compensated, Congress has already given them
a remedy,"
The original intent of the sponsor of the copyright
revision bill for an early objective review ,and possible
adjustment,of the cable rates does not survive in the
enacted legislation. In all the other statutory licenses,
the Tribunal has full jurisdiction to review and possibly
adjust the rates based on the record developed during the
Tribunal's proceedings. The cable industry successfully
pursuaded the Congress that if the Tribunal could review
the basic schedule it would result in financial institutions
declining to make loans for the development of the cable
industry. Since copyright fees will always remain one
of the smaller operating costs of a cable system, I found
this argument much less pursuasive than the Congress apparently
did.
As has been much discussed in the testimony, if
the FCC alters the signal carriage or exclusivity rules,
the Tribunal is authorized to conduct a special proceeding
to assure that the rates are reasonable in light of the
altered circumstances. However, the testimony was confused
as to whether this is a one-shot review. The Chief Counsel
of the Subcommittee at page 190 of the Nay lL~ hearing
represented that the Tribunal would have only "one opportunity"
to adjust the rates, other than for inflation. I call
the counsel's attention to the final sentence of section
8O~ (b) of Title 17. This provides that in 1980 and
at five year intervals, the Tribunal may reconsider any
change in rates previously made as a result of changes
in the signal carriage or exclusivity rules.
The third subject that I have been asked to discuss
are the procedures of the Tribunal concerning the dis-
tribution of the deposited royalty fees. The Subcommittee
PAGENO="0070"
66
might find it instructive to direct the staff to compare
the assertions, of certain of the Subcommittee witnesses
with the comment\s filed on behalf of the same witnesses
in the proceedings of the Tribunal.
The Tribunal in its distribution procedures has
been governed by the perhaps quaint noiion that we should
act in accordance with public law and the intent of the
Congress, especially when there is general agreement
as to the legislative intent. The Copyrig~t Act generally
became effective January 1, 1978. The Act provides that
claimants to cable royalties must file with the Tribunal in July~
of each calendar year. Other provisions of the Act control
the filing twice a year by cable operators of statements
of account reporting the signals and programs which they
have transmitted. It is necessary for copyright owners
to have access to these cable operator reports in order
to properly document their claim.
The first of the cable reports was not available
until after the July statutory deadline. The Tribunal
therefore proposed that claimants in July 1978 be required
to only file a "bare bones" claim to preserve their
rights. This proposal of the Tribunal was supported
by all the principal copyright claimants. To reduce
expenses and paperwork, it was further decided to essentially
consolidate the 1978 and 1979 distribution proceedings.
Under the Copyright Act, the Tribunal is barred from
declaring the existence of a controversy concerning cable
distribution until after August 1 of each calendar year.
An important question that had to be resolved by
the Tribunal was whether it should propose a distribution
formula prior to the filing of the first substantive
claims, and prior to any determination under the copyright
PAGENO="0071"
67
Act that a controversy exists. All the major claimants
urged the Tribunal at this stage to not propose a distri-
bution formula. The Tribunal, after carefully reviewing
this subject, concluded that it would not be desirable for the
Tribunal presently to propose a distribution formula.
What were the reasons advanced by the copyright owners
in opposition to Tribunal involvement prior to the fall of *
this year? The overriding argument was that the claimants
were negotiating in an effort to reach a complete or
partial voluntary agreement and that for the Tribunal to
require various justifications from the claimants would
result in a considerable expenditure of time and effort
that might well prove to be unnecessary. -
Let me briefly sununarize what some of the claimants were
telling the Tribunal~ The Commissioner of Baseball Bowie
Kuhn in his 1978 comments stated that he "does not believe
that the Tribunal should, at this point, specify the type
of information which must be included in the July filing."
On April 25, 1979 the Commissioner submitted a statement
generally supporting the Tribunal's most recent distribution
rule. The Motion Picture Association of America testified
before the Tribunal on November 9, 1978 that "I think
it is best that the parties be given maximum opportunity
to collect data on their own." On the same occasion the
representative of the National Association of Broadcasters
testified "I think we would all like the opportunity,
or at least I speak for N.A.B. in this respect, to have
an opportunity to negotiate among ourselves before the
Tribunal actually steps in." The N.A.B. urged the Tribunal
to delay "commencement of any formal proceeding to establish
criteria or methodology for the distribution of royalties."
This period to -explore- -the prospects for ~a. voluntary
agreement was specifically contemplated by the Congress.
PAGENO="0072"
68
The Congress wrote an antitrust exemption into the Copyright
Act so as to permit such discussions among the claimants.
To further encourage a voluntary settlement, the Copyright
Act provides that the full cost of any Tribunal distribution
proceeding must be deducted by the Tribunal prior to the
distribution of royalty shares.
The Commissioners of the Copyright Royalty Tribunal
have no illusions about the difficulties inherent in
the initial distribution proceeding. We anticipate
that there will be a controversy, but we are hopeful
that determinations and precedents established by the
Tribunal in the initial proceeding will facilitate subsequent
voluntary distribution agreements. Contrary to,some
comments made during the hearings, the Tribunal is not looking
to the Congress to come to our rescue. We recently appeared
before the House Subcommittee which has legislative
jurisdiction over this subject matter. We did not suggest
any change in our distribution responsibilities and the
Tribunal does not believe that any change is necessary.
Mr. Chairman, I fully sympathize with the members
of this Subcommittee, having had myself for so many years
to wrestle with the cable television questi9n. It is clear
that any viable resolution must ref lept an integrated
communications and copyright solution.' It is necessary,
furthermore, for the Committees having jurisdiction in
copyright matters, and the Congress generally, to consider
the interrelationship among various sections of the Copyright
Act. ` The Act, as previously discussed, provides for
several compulsory licenses. My personal opinion has
been that, other than for cable, compulsory licensing
is neither necessary nor desirable. But the Congress
has determined otherwise and I see no prospect of this
judgment being altered.
PAGENO="0073"
69
If section `~53 is enacted in its present form,
the Congress would be saying that the jukebox industry,
which must obtain licenses from only three societies of
copyright owners, has such difficult clearance problems
that it requires a compulsory license, but that it is
feasible to require thousands of cable operators to obtain
program consent from hundreds of copyright owners. Closer
to the concerns of this Subcommittee, the Congress would
be saying that Public Broadcasting, because of clearance
problems, requires a compulsory license for the use of
certain categories of copyrighted works in the programs
it originates but that it is feasible for cable operators
to negotiate for program licenses for the programs they
retransmit.
I have reviewed the comments made by members of this
Subcommittee, by members of the Senate Communications
Subcommittee and by others in the Congress with an active
interest in this subject. I seriously doubt that at
the present time there is a disposition in the Congress
to significantly alter the cable copyright structure
so recently implemented. It has been suggested that a
possible resolution would be to retain the compulsory license,
but amend the Copyright Act to give the Tribunal jurisdiction
to conduct a general review, and possible adjustment,
of the basic statutory rate schedule. The congress would
presumably identify the factors to be considered by the
Tribunal, as it has in the other compulsory licenses.
While this approach has a certain attraction, it
was successfully resisted in the past by the cable industry.
Perhaps a different result could now be achieved as part
of a broader general accommodation of regulatory and
cable issues.
If it should develop that it is not possible during
this session, or even this Congress, to complete action
on all issues in the communications rewrite, it might be
desirable to provide for a study of the existing rate
schedule. The Tribunal could presumably undertake a
study of the rates without any amendment of the Copyright
Act although there would be no jurisdiction to alter the
rates, except as presently provided. It may be that
the Tribunal will find it necessary to review the impact
of the basic rate schedule in performing its currently
mandated cable functions.
Finally, Mr. Chairman, after the Subcommittee has
made its policy decisions, I shall be glad to provide,
in consultation with the House Judiciary Subcommittee,
any necessary technical assistance in terms of the re]ation-
ship between the Communications and Copyright Acts as
they impact on the Tribunal.
PAGENO="0074"
70
Mr. VAN DEERLIN. Thank you, Mr. Brennan. It seems to me that
the obvious question in light of the controversy that has raged
between the commercial broadcasting industry, the cable television
industry and the program distribution industry is how well you
believe the Copyright Royalty Tribunal is working in regard to the
equation between cable, programers, and broadcasters; whether the
compulsory license fee is sufficient to maintain order and equity in
a totally deregulated climate.
Mr. BRENNAN. Yes; let me comment on our authority to possibly
adjust the fee schedule. As I indicated in my prepared statement,
the Congress adopted the existing schedule in the absence of any
empirical data. It is simply not true to say, as some have contend-
ed, that the Tribunal in 1980 may undertake a complete review of
the rates.
It is simply not true, as some have contended, that if copyright
owners believe they are not receiving adequate compensation, that
Congress has already provided a remedy. That was the intention of
the original sponsors of the Copyright Act, but in the process
through the two houses, our authority to review the rates has been
greatly diluted. We really have no authority to deal with the basic
schedule other than the inflation adjustment factor.
As to our jurisdiction to respond to FCC developments, I believe
our authority there is somewhat broader than has been recognized
in some of the comments made before the subcommittee.
Mr. VAN DEERLIN. The Tribunal is collecting roughly $1 per year
for every cable home in the United States, is it not?
Mr. BRENNAN. It is anticipated that the first yearly distribution
will be approximately $13 million, which is $4 million to $5 million
more than was estimated in the House committee report. If the
chairman desires, I could possibly briefly discuss the distribution
process.
Mr. VAN DEERLIN. Has there been any distribution?
Mr. BRENNAN. The Copyright Act became effective generally on
January 1, 1978. Under the act, claimants are required to file
during the month of July of each year. Cable operators are re-
quired twice a year to pay the fees and file statements of account
in which they report on the signals and programs which they pick
up.
Because these latter reports were not available in a timely fash-
ion, the Tribunal, with the support of all the copyright claimants,
decided it was not feasible to have a 1978 distribution proceeding.
We therefore have essentially consolidated the 1978 and 1979 dis-
tribution proceedings, and the next filing will occur during the
month of July.
We have no illusions as to the difficult task that we will con-
front. If the task were simpler, I suspect the Congress would have
resolved it either in the act or in the committee report. We are
given extensive guidance by the Congress in a number of areas, but
when it came to distribution, the House committee report says we
will leave this to the good judgment of the Tribunal.
We are hopeful that whatever precedents and determinations are
established in the first distribution proceeding will encourage sub-
sequent voluntary agreements, and the intent of the Congress was
to have the Tribunal encourage efforts for voluntary agreements.
PAGENO="0075"
71
There are several antitrust exemptions in the act for that pur-
pose. Also another incentive for a voluntary agreement is that the
costs of our proceedings are deducted from the royalty fees before
they are distributed, so there is an additional incentive for the
copyright claimants to undertake to obtain voluntary agreements.
Mr. VAN DEERLIN. I assume the Tribunal has a staff and, I
suppose, it has to be paid.
Mr. BRENNAN. Sir, we have no professional or administrative
staff. The only employees we have are the secretaries to the com-
missioners. The intent of the Congress which was clearly set forth
in the House committee report was that this was to be a working
commission. The Congress intended that the commissioners would
basically pe~'form their own professional chores, and the President
in selecting the membership was encouraged to choose individuals
with skills in various professional disciplines.
So we have two attorneys and one accountant. We do have some
authority to hire consultants if a need should arise.
Mr. VAN DEERLIN. Have you hired any consultants yet?
Mr. BRENNAN. We have not.
Mr. VAN DEERLIN. What is the range of claimants? Do they
include other than program producers?
Mr. BRENNAN. It is conceivable that there will be some legal
disputes as to which entity is entitled to receive a portion of the
royalty pot. You may have seen reference in the trade press to a
tentative position taken by the NAB, in which they exert a claim
to a much larger share than I think other claimants would accept.
Mr. VAN DEERLIN. How surprising.
But the claim would be made on behalf of stations; would it not?
Mr. BRENNAN. Yes; a number of individual radio and television
stations have filed claims. When I was the chairman of the Tribu-
nal last year, I made a special effort to encourage the NAB to
operate to the extent they can as a common agent for individual
stations because it would not be feasible for a local radio or a local
television station in most cases to hire local counsel to fight this
battle before the Tribunal.
Mr. VAN DEERLIN. In theory, of course, every television station
that produces news that is picked up by a cable system would to
that extent be a program producer-a copyright holder; would it
not?
Mr. BRENNAN. That is correct, and a number of such claims have
been filed with us.
Mr. VAN DEERLIN. So, in addition to Hollywood program produc-
ers, you have--
Mr. BRENNAN. We have basically broadcasters, movie companies,
program syndicators, the sports people, and finally, the performing
rights societies, ASCAP, BMI, and SESAC.
Mr. VAN DEERLIN. I have heard the suggestion that by accepting
money through the Copyright Tribunal, the sports claimants might
feel that they were automatically yielding rights to their program-
ing that they are very jealous of guarding. Do you agree?
Mr. BRENNAN. I would not agree with that conclusion, Mr. Chair-
man. The Congress has provided for a compulsory license, and
their filing a claim with us in no way jeopardizes whatever rights
they might have now under the FCC regulations.
PAGENO="0076"
72
Mr. VAN DEERLIN. Mr. Luken.
Mr. LUKEN. I will pass for the moment, Mr. Chairman.
Mr. VAN DEERLIN. Mr. Swift.
Mr. Swivr. No questions.
Mr. VAN DEERLIN. Mr. Wirth.
Mr. WIRTH. Thank you very much, Mr. Chairman.
Sir, you mentioned in response to the chairman's questioning
that the Copyright Tribunal at this point had no professional staff
other than two lawyers; is that correct?
Mr. BRENNAN. We have no professional staff.
Mr. VAN DEERLIN. The lawyers he referred to are members of
the Commission.
Mr. BRENNAN. Yes, sir.
Mr. WIRTH. So you have no staff. Senator Hollings, in various
discussions about the cable producers retransmission consent issue,
has, to paraphrase him maybe incorrectly, said that this is essen-
tially a fight between two industries; that the Copyright Tribunal
should be brokering; that it is really not a matter of communica-
tions policy.
Have you all on the Tribunal discussed this issue, and what is
your reaction to that statement that this is not a communications
issue but is rather something that should be brokered by you, the
Copyright Commission?
Mr. BRENNAN. I think to a great extent Senator Hollings was
referring to the matter of the royalty payments, as .to whether the
existing schedule is adequate, whether we have sufficient jurisdic-
tion to respond to developments at the FCC if certain of the FCC
rules should be modified. I would agree with the Senator to the
extent that it might involve the question of royalty determinations.
I do not believe it was the intent of Congress for our body to
make policy recommendations generally to the Congress.
Mr. WIRTH. Do you feel sufficient jurisdiction to handle this
issue?
Mr. BRENNAN. In responding to the chairman's questions, I said
that as far as our jurisdiction to react to changes at the FCC, I
believe that we do have adequate jurisdiction. But as to the basic
fee schedule, the answer is quite clear. We have no jurisdiction
other than to make the inflation adjustment.
Mr. WIRTH. Could you expand on that? I am not sure that I
understand that.
Mr. BRENNAN. Yes; when the copyright bill was first introduced
many years ago and during most of its life, the Copyright Royalty
Tribunal would have had jurisdiction periodically to review and
possibly adjust the fee schedule which the Congress provided in the
act. As part of an industry agreement, that review authority of the
Tribunal was greatly diluted, and all that remains is jurisdiction to
make certain that the rates keep pace with inflation.
For example, if a cable system did not increase its subscriber
charges at the same rate as inflation was increasing, this would
result in a loss to the copyright owners, and we have jurisdiction to
deal with that but nothing else as far as the basic schedule.
Mr. WIRTH. What you describe as an industry agreement was
written into the copyright legislation; is that correct?
PAGENO="0077"
73
Mr. BRENNAN. It was written into the Copyright Act in the
House of Representatives following an agreement between the Na-
tional Cable Television Association and the Motion Picture Associ-
ation.
Mr. WIRTH. And what was your basic understanding of what that
agreement was?
Mr. BRENNAN. It was to preclude the Tribunal from making any
adjustment in the basic schedule other than to take account of the
inflation factor.
Mr. WIRTH. And do you remember or do you have knowledge of
what the rationale was behind that?
Mr. BRENNAN. A major argument of the cable industry was that
if there was authorization for independent periodic reviews, it
would be difficult to induce bankers to invest in the cable industry.
That was a major concern of the cable industry.
Mr. WIRTH. And what was the thrust on the side of the motion
picture parties, the other parties to this agreement?
Mr. BRENNAN. In the beginning, the copyright owners were op-
posed to compulsory licensing. When it became obvious that that
was the direction in which the Congress desired to go, the emphasis
was then on not having the Congress adopt a fee schedule, or at
the very least, to provide some mechanism for review.
Then you get involved with the philosophical questions, Con-
gressman, as to whether it is appropriate for a Government agency
to be involved in making such determinations.
Mr. WIRTH. Still, I am not sure I thoroughly understand this. It
is very important, as you know, for the whole retransmission con-
sent argument that is now being considered. Who sets the fee
schedule?
Mr. BRENNAN. The schedule which is now in force was estab-
lished by the Congress when it passed the Copyright Act.
Mr. WIRTH. And that schedule was agreed to through what you
describe as the industry agreement which was agreed to by both
parties?
Mr. BRENNAN. That is correct. And that agreement was then
ratified by the Congress as part of the--
Mr. WIRTH. OK. When was that agreement established?
Mr. BRENNAN. This agreement was back in 1976, but the act
itself did not become effective generally until January 1, 1978.
Mr. WIRTH. The agreement was formulated by the motion picture
industry and the cable television industry in 1976.
Mr. BRENNAN. That is correct.
Mr. WIRTH. Do you remember, at the time of that agreement,
whether or not there was any reference to what we are now calling
superstations?
Mr. BRENNAN. I am not aware of any such reference, but I was
not part of the private discussions.
Mr. WIRTE. So the fee schedule was effectively set up by that
agreement between those two industries, and the Copyright Com-
mission only has the ability to increase that by the rate of infla-
tion, is that right?
Mr. BRENNAN. That is correct as far as the basic schedule. As
you know, if the FCC should change their rules as to exclusivity or
signal carriage, then we have more adequate jurisdiction.
PAGENO="0078"
74
Mr. WIRTH. On page 4 of your testimony, you say that in 1980
and at 5-year intervals, the Tribunal may consider any change in
rates previously made as a result of what are referred to as the
signal carriage or the exclusivity rules. Do you anticipate making
this kind of review in 1980?
Mr. BRENNAN. Because of the FCC developments? The review of
the basic schedule---
Mr. LUKEN. Would the gentleman yield at this point?
Mr. WIRTH. Yes.
Mr. LUKEN. I wanted to ask the question: What FCC develop-
ments? You have referred to them several times, and I am not sure
which you are referring to.
Mr. BRENNAN. Yes, Congressman. Under the Copyright Act and
again as part of this industry agreement, if the FCC rules pertain-
ing to distant signal carriage or program exclusivity are modified
from the rules in effect `in 1976, then the Tribunal with regard to
those two issues is given jurisdiction in essence to make the copy-
right owner whole, to attempt to make up for any financial loss
that may result from the modification of the Commission rules.
In those areas we believe our jurisdiction is adequate.
Mr. WIRTH. And that would occasion the kind of review you
make reference to on page 4 in your testimony?
Mr. BRENNAN. That is correct, sir.
Mr. WIRTH. Is that a relatively complicated proceeding? Were the
distant signal importation rules to be changed by the FCC, would
that occasion a significant amount of recrafting of the fee schedule
as now set in the legislation?
Mr. BRENNAN. I would anticipate it would be a rather protracted
and technical proceeding. There is a provision in the Copyright Act
which provides that every proceeding must be completed within 1
year from the date of commencement. So it would not be an on-
going activity.
Mr. WIRTH. Can you do that with the commissioners and secre-
taries' help?
Mr. BRENNAN. It is quite likely we would see the need to hire
one or two consultants. I think our budget comes up on the House
floor very shortly, and perhaps I can get a copy of this transcript
and use it on that occasion. But seriously, Congressman, we would
contemplate hiring consultants. We have been reluctant to do it up
to this point because we did not know how things might develop in
the Congress, or, for that matter, at the FCC.
Mr. VAN DEERLIN. Will the gentleman yield?
Mr. WIRTH. Yes.
Mr. VAN DEERLIN. What sort of judgments would you seek assist-
ance of consultants in making?
Mr. BRENNAN. It would be, I suppose, to some extent retracking
the ground which has been well-plowed over at the FCC in terms of
economic studies as to the loss to broadcasters and copyright
owners from additional carriage of signals by cable operators. It
would be basically economic data.
Mr. WIRTH. As you at the Copyright Commission review the FCC,
what do you do? What do you anticipate you would do in the face
of some kind of changes? What would you do?
PAGENO="0079"
75
Mr. BRENNAN. We would conduct a rate proceeding which would
provide for an increase in the copyright payments being made by
cable systems to reflect the additional signals they were authorized
to carry, or additional programs, as the case might be.
Mr. WIRTH. What is a rate proceeding?
Mr. BRENNAN. A rate proceeding would be one in which we took
testimony from various parties of interest in which they would
recommend to us a new fee schedule to be adopted to reflect these
developments.
Mr. WIRTH. Would you have funds to hire a recorder so that
there is a record of all of this proceeding?
Mr. BRENNAN. Yes. All of our proceedings are transcribed. That
is required under the APA.
Mr. WIRTH. And you have the capability for doing that, and you
as three commissioners--
Mr. BRENNAN. Five.
Mr. WIRTH. The five commissioners would then huddle and
decide what you are going to do?
Mr. BRENNAN. Of course, we would huddle in public under the
Sunshine Act, sir.
Mr. WIRTH. I was about to get to that. I am glad you anticipated
that, Mr. Brennan.
Mr. VAN DEERLIN. Mr. Luken makes a point that he doesn't
think we should miss any of this testimony; therefore, we should
all go vote and all come back, even though Mr. Swift is dashing at
his 440 pace to come back and take the gavel.
Mr. WIRTH. Can Mr. Brennan stay with us?
Mr. BRENNAN. I shall, sir.
Mr. VAN DEERLIN. Yes, he will stay.
[Brief recess.]
Mr. VAN DEERLIN. Did you have further questions, Mr. Wirth?
Mr. WIRTJI. Mr. Chairman, Mr. Luken and I have a whole series
of questions, but maybe other members of the panel might want to
jump in at this point and we could come back to it.
Mr. LUKEN. Mr. Chairman.
Mr. Brennan, would you say at the present time-do you have a
comment that the baseball or sports, the broadcasters and the
motion pictures who have been reserved about making claims, that
they are being dilatory in this process?
Mr. BRENNAN. No; to the contrary, Congressman. All the claim-
ants that you enumerated have taken part in the proceedings of
the Tribunal. They had better do so because the statute tolls. They
are required to file their claims in a certain month of each year,
and if they allow that opportunity to pass by, their claim is perma-
nently barred.
I am not aware of any major copyright owner who has not filed a
claim.
Mr. LUKEN. Well, didn't you say-and I am sorry I have not had
a chance to study your testimony-but didn't you indicate that
they were urging or who was urging that the commencement of
any formal proceedings to establish criteria or methodology should
be delayed?
Mr. BRENNAN. Those comments, Congressman,~ are focused on
the actual distribution proceeding. The Copyright ct requires that
PAGENO="0080"
76
the claims be filed in the month of July. In July of 1978 we
decided, since the copyright owners did not have timely access to
the reports filed by the cable operators, that equity would best be
served by a bare bones filing whereby the copyright owners pre-
served their rights.
Mr. LUKEN. Well, the effect of delaying is to delay the distribu-
tion and therefore to delay the carrying out of the purposes .of the
Copyright Act, is it not?
Mr. BRENNAN. The delay, to the extent there was a delay, had
the active support of all the copyright owners.
Mr. LUKEN. That is exactly what I asked you.
Mr. BRENNAN. Yes.
Mr. LUKEN. The active support of the delay by all the copyright
owners. Doesn't that signal that the copyright owners do not, in
effect, want a settlement under the terms of this legislation and
under your present guidelines and procedures? What other conclu-
sion would you come to?
Mr. BRENNAN. The conclusion which they advanced in our pro-
ceedings, namely, that they are seeking to achieve a voluntary
agreement as to how the copyright royalties shall be divided.
Mr. LUKEN. I asked you for your opinion, if you have one; not
just theirs.
Mr. BRENNAN. It is my opinion and one which is shared by all of
the commissioners that there has up to this time been a good faith
effort by the claimants to explore the prospects for a voluntary
agreement as was contemplated by the Congress.
Mr. LUKEN. Well, you are certainly aware of the testimony of all
of these participants before this committee, which was very strong-
ly critical of this legislation and these procedures at this time, and
urging radical change.
Mr. BRENNAN. As far as any comments about the procedures of
the CRT, I suggested in my prepared statement that it might be
instructive for this subcommittee to compare what was said by
witnesses here with what they were saying in our proceedings.
Mr. LUKEN. Would you help us in doing that since you are aware
of both?
Mr. BRENNAN. I should be glad to assist the counsel in doing
that.
Mr. LUKEN. Thank you. Could you give us some insight right
now?
Mr. BRENNAN. If you would turn, Congressman, to one page of
my prepared statement, I think we can give you a--
Mr. LUKEN. I might say in general, Mr. Brennan, at this point in
time that I know there are several of us on this panel who are
simply fascinated by everything you have to say because we are so
interested in the subject and because you are in a position to shed
light on the subject which we have discussed with others for so
long, and I mean ad nauseum we have discussed this. And we are
just intensely interested in everything that you have to say.
But when you came in and didn't read your testimony and we
haven't had a chance to read it, we are sort of fumbling around for
the questions. So don't hesitate to volunteer anything.
Mr. BRENNAN. In response to your question, Congressman, I call
your attention to page 6 of the prepared statement, which summa-
PAGENO="0081"
77
rizes some of the recommendations made to us by the major claim-
ants.
Mr. LUKEN. That part I had read. That is what prompts my
question.
Mr. BRENNAN. And the motivation? I have no reason to question
their good faith. The motivation was a desire to act as the Congress
contemplated, to explore the prospects for a voluntary agreement.
And while that exercise was still in progress, the claimants recom-
mended to us that it would not be useful for us to require much in
the way of justification because this could involve a lot of unneces-
sary work.
Mr. VAN DEERLIN. A lot of what?
Mr. BRENNAN. Unnecessary work. Assuming that there was a
voluntary agreement, you would have a lot of time and effort that
was consumed that would not really serve any practical purpose.
Mr. LUKEN. Well, you refer on page 7-you use the language "to
further encourage a voluntary settlement." What do you mean,
"settlement"?
Mr. BRENNAN. Under the Copyright Act, after the claims have
been filed with the Tribunal there is a period of time in which the
claimants may negotiate in an effort to reaOh a voluntary agree-
ment as to how the fees should be distributed. And to make
that--
Mr. LUKEN. Does distribution in that ease mean apportionment?
Mr. BRENNAN. Yes.
Mr. LUKEN. So there is no longer an argument as to the amount
of the fund. There is no longer an argument at this point in the
settlement procedure as to whether the proper amount has been
paid.
Mr. BRENNAN. Right.
Mr. LUKEN; It is only a question of the distribution amongst the
potential claimants, is that correct?
Mr. BRENNAN. That is correct. Actual claimants. Because this
would follow the filing of the claims.
Mr. LUKEN. All right, actual claimants. So then that is the
settlement to which we are referring.
Mr. BRENNAN. That is correct.
Mr. LUKEN. The controversy here as to the legislation is not so
much, would you agree, as to the distribution among actual claim-
ants but as to the amount that is to be paid in.
Mr. BRENNAN. It is more the question of the amount, but I
believe Mr. Norman Lear and some others testified as to what they
conceived to be problems with the fair distribution process.
Mr. LUKEN. Well, sir, I am not sure that I follow from your
testimony what you mean by your suggesting that we compare the
testimony. If we compared the testimony, what would be the gener-
al outlines of that comparison as you see it? Would there be a
contrast?
Mr. BRENNAN. That comment was addressed to the concerns that
were advanced here about the difficulties inherent in the distribu-
tion process, and the point of my comment was to call the subcom-
mittee's attention to the fact that the major claimants in our
proceedings have supported at every step of the process what has
been done or what has not been done, and the overriding concern
51-254 0 - 80 - 6
PAGENO="0082"
78
was to not take hasty actions which would require things being
done which perhaps need not be done in the event of a voluntary
agreement.
Mr LUKEN So the comparison might suggest that in their posi
tions before your Tribunal, they seem to be satisfied with the
~ , proceedings; whereas, in their testimony here, they are, to say the
least, dissatisfied.
Mr BRENNAN That color was left, yes, sir
Mr VAN DEERLIN Otherwise known as a "forked tongue"
Mr. LUKEN. Now, Mr. Wirth referred to the superstations, and
we have heard a great deal about the superstations changing the
entire picture Would you have any comments or would you please
comment-I think you answered the very limited question, the
rather narrow question Mr Wirth propounded on this subject But
has the advent of the superstations and the prospect of more
superstations in the future changed the picture, the whole environ
ment, so that we would look at a change in overall policy and
legislation? Would you comment on that? That is a change from
1976.
Mr BRENNAN The Congress in enacting the Copyright Act obvi
ously contemplated that there would be changes in communica
tions technology I do not recall any specific attention to the ques
tion of the superstation
Mr LUKEN But that is what I am asking you about now
Mr BRENNAN Yes
Mr LUKEN You did refer to the changes in FCC regulations
about bringing in more stations, and of course that is brought
about, that opportunity, by changes in technology, isn't it?
Mr BRENNAN That is correct
Mr LUKEN Go ahead I am sorry On the superstation issue
Mr BRENNAN We are getting to the point where I must enter a
mild caveat, in that, as I indicated in my prepared statement, there
are certain issues which will come before us under existing law in
a quasi judicial proceeding, and I have to be careful as to how far I
can go in saying what may be done and what may not be done
All I can say in response to your question is obviously the Con
gress anticipated that there would be changes in technology, not
only in the cable section but in other sections of the act It sought
to use language, terminology that would be sufficiently flexible to
adjust to these de ~elopments This objective was not fully imple
mented in all sections of the act
As I indicated to you before, this particular section of the act was
negotiated between major competing forces, and the Congress rati
fled that determination I do not believe it is the Tribunal's func
tion to give the Congress advice as to the superstation problem
Mr LUKEN Someone has got to give us advice We are not going
to be left to our own little resources Well, I guess I am talking
about the fairness If the superstations are sending signals out,
distant signals, and programing of a certain kind, and developing
certain programing which was not anticipated prior to the advent
of the superstations, it would not be anticipated that there would
be that kind of competition in local markets around the country
Do they have a point that it wasn't anticipated, that there really
isn't any way to compensate because whereas it may be a detri
PAGENO="0083"
79
ment to competition in those local markets they are going into, at
the same time there is no particular benefit to the sender of the
signal, so everybody loses. That is a sort of argument that is made,
is it not?
Mr. BRENNAN. I understand the argument and it is made, cer-
tainly. Unfortunately, the final version of the act does not permit
the measure of flexibility here that some of us would have pre-
ferred. But I did not have a vote.
Mr. LUKEN. Do you have a comment on the rate schedules?
Would you explain a little bit about the rate schedules?
Mr. BRENNAN. Yes. I indicate in the prepared statement that the
basic schedule in the act was not adopted by the Congress on the
basis of any exhaustive economic study or the collection of empiri-
cal data. The original objective on the Senate side was to initiate
cable television into a copyright payments system, to resolve
doubts, perhaps, on the side of lower rates rather than higher
rates, and to provide for an early objective review of the rates after
a period of practical experience.
This latter objective fell by the wayside as a result of the indus-
try agreement.
Mr. LUKEN. The industry agreement?
Mr. BRENNAN. Yes.
Mr. LUKEN. The industry agreement preceded the legislation.
Mr. BRENNAN. The agreement between NCTA and the Motion
Picture Association eliminated any jurisdiction for the Tribunal to
review the basic fee schedule other than to deal with the inflation
adjustment problem.
Mr. LUKEN. That occurred subsequent to the legislation?
Mr. BRENNAN. No. The first portion of my answer to your ques-
tion was in terms of the proceedings in the Senate.
Mr. LUKEN. Oh.
Mr. BRENNAN. In the Senate, the review authority existed. It was
deleted as a result of the industry agreement.
Mr. LUKEN. Well, didn't you say that if the FCC changes its rules
you can look at the basic rate structure?
Mr. BRENNAN. Yes, Congressman, but that is an entirely differ-
ent section. Again, both the Congress and the parties contemplated
that there might well be changes in these FCC rules, and therefore,
if that occurs there is a trigger mechanism whereby we can con-
duct proceedings in that area. That is separate from the basic fee
schedule.
The basic schedule we can only adjust in terms of the inflation
factor.
Mr. LUKEN. Mr. Chairman, I have no further questions at this
time.
Mr. VAN DEERLIN. Ms. Possner.
Ms. POSSNER. Mr. Brennan, I am sorry you did not take the
opportunity to summarize your statement because I found it very
interesting and very informative.
First, let me say that you are obviously an expert on the subject.
You state in the very first paragraph of your prepared statement
that prior to serving as commissioner on the Tribunal, you were
chief counsel to the Senate subcommittee which processed the copy-
PAGENO="0084"
80
right revision bill and were actively involved in cable regulatory
and copyright issues.
I think you are being very modest. You had a great deal to do
with crafting this legislation and the Tribunal, and we are fortu-
nate to have you as a witness.
Mr. VAN DEERLIN. You understand that staffers always speak
well of one another.
Ms. POSSNER. Even though it is Senate staff.
I would like to ask a few question based upon your prepared
statement, and I will try to keep them as short as possible. In
drafting H.R. 3333, and more recently in preparing for our hear-
ings on the bill, we attempted to do some research that would help
us learn more about the Tribunal, its authority under the current
law and its ability to deal with a changing regulatory environment
And frankly, there was very, very little material we could turn to.
That is one reason why a statement like yours is so valuable
because it does help us out.
In the law itself and both in the Senate and House reports, there
does not appear to be a great deal of descriptive information about
the Tribunal nor is their any guidance given with respect to its
authority and scope of its responsibility
Mr BRENNAN I would somewhat disagree, counsel, at least in
terms of the concerns of this subcommittee I believe the Congress,
in fact, was very explicit as to the extent of our jurisdiction in
cable television issues in contrast to other areas And the reason
for this having occurred, again, goes back to the industry agree
ment.
The parties made this deal and they were very careful to make
certain that both in the language in the act and the House commit
tee report, it reflected the terms of their understanding So I think
as far as cable is concerned, we have a pretty good understanding
as to what the Congress contemplated
Mr WIRTH [presiding] Mr Brennan, can you tell us what kind of
consultation you had with the subcommittee and staff in drafting
the rewrite of the Communications Act?
Mr BRENNAN I think, Congressman, that question could be an
swered better if I had served on the House side I had contact from
time to time with the counsel to the Senate Communications Sub
committee
Mr WIRTH How long have you been a member of the Tribunal?
Mr. BRENNAN. I have been a member of the Tribunal since late
1977. I assume that on the House side there was similar consulta-
tion between Chairman Kastenmeier and the chairman of this
subcommittee, and I assume at staff level you had similar consulta-
tion.
Mr. WIRTH. But you have no staff.
Mr. BRENNAN. I have no personal knowledge.
Mr. WIRTH. There is no staff for the Tribunal, so you wouldn't
have had staff contact. Supposedly you as a member of the Tribu-
nal would have been contacted as to whether retransmission would
work.
Mr. BRENNAN. I can flatly state there was no contact with the
Tribunal.
PAGENO="0085"
81
Mr. WIRTH. I am curious about that, particularly given the state-
ment you make at, I think, the end of your testimony, but in any
case, about the unworkable nature of retransmission consent. If I
can paraphrase your comments at the top of page 8 on section 453,
in which you refer to the Juke Box decision and the fact that that
was awfully cumbersome, and you were dealing with three provid-
ers at that point, is that correct?
Mr. BRENNAN. That is correct, sir.
Mr. WIRTH. And how many are we dealing with on this?
Mr. BRENNAN. Several hundred at the least, with various inter-
locking corporate relationships.
Mr. WIRTH. So your perspective, or your counsel, would have
been that the retransmission consent number doesn't work, is that
right?
Mr. BRENNAN. I read the proceedings of this hearing. I did not
discover in that transcript any new elements or new factors that
would alter the judgment which the Congress reached so recently.
Mr. WIRTH. You were never contacted about an area in which
there has been so much discussion about the Copyright Tribunal,
and the fact that it does not work or that it only meets once and so
on.
Mr. BRENNAN. That is correct.
Mr. WIRTH. Could you tell me how royalty payments currently
are set? Is it by law? Is that right? Is it set by agreement between
the various parties?
Mr. BRENNAN. The parties made their agreement. The House of
Representatives ratified that agreement in the cable section of the
Copyright Act. The Senate managers in conference yielded to the
House, so that the current act is essentially the House version of
the bill.
Mr. WIRTH. OK. So it was set by that agreement.
Mr. BRENNAN. It was set by the agreement of the National Cable
Television Association and the Motion Picture--
Mr. WIRTH. So that is the basis from which you are now operat-
ing?
Mr. BRENNAN. That is the basis and we cannot deviate from that
standard other than for the inflation adjustment.
Mr. WIRTH. Unless there is a significant change at the FCC, or
presumably by the Congress.
Mr. BRENNAN. Yes, but that was contemplated as a separate
question distinct from the basic rate schedule. But you are correct
that if there are these developments at the FCC--
Mr. WIRTH. You can meet again and reset the royalty payment
schedule, is that right?
Mr. BRENNAN. That is correct, except we can only do it in terms
of the additional signals or the additional programs. We can never
tinker with the basic schedule other than for the inflation factor.
Mr. WIRTH. The basic schedule meaning what? What is the dif-
ference between the basic schedule and others?
Mr. BRENNAN. The basic sthedule is the one that applies to the
number of signals that were carried by a cable system back in 1976
when the bill was passed.
Mr. WIRTH. Again, can you flesh out what that means? Wh~it
does that mean to Norman Lear?
PAGENO="0086"
82
Mr BRENNAN It means to Norman Lear that if the FCC should
dilute the exclusivity protection, he may well sustain a financial
loss because he would perhaps be receiving less money for pro-
grams in syndication. The Congress contemplated this possibility;
therefore, it gave us the jurisdiction to then conduct a proceeding
to, in essence, attempt to make the Norman Lears of this world
whole, to restore to them whatever financial loss they may sustain
as a result of the dilution.
Mr. WIRTH. So you cannot change it beyond the original fee
schedule
Mr BRENNAN We are shifting gears again, Congressman, in that
when I say we cannot change other than for inflation, I am talking
about the fees paid by cable television for the number of signals
that they were authorized to carry back in 1976 and under the
currently existing FCC rules.
However, if the FCC should modify the rules and allow addition-
al signal carriage, additional program carriage, then we have full
jurisdiction to conduct a proceeding to establish what payments
should be for those purposes.
Mr. WIRTH. In other words, if there is a change from what
existed in terms of the rules in 1976, you are then free to make
whatever changes you think appropriate, is that correct?
Mr BRENNAN I would say it is not a question of only being free,
there would be an obligation There was clearly a mandate
Mr. WIRTH. You are required to, so therefore you can change
them. The statement has been made-and I think Mr. Luken earli-
er referred to this-that there was a rigid structure that couldn't
be changed. That is not correct if there is a change in the FCC
regulations or the congressional legislation, is that right?
Mr BRENNAN Yes I think part of the problem with the testimo
ny was that people tend to pick the parts of the statute that
support their particular case.
Mr WIRTH There is an old saying that what you see depends
upon where you sit, right?
Mr. BRENNAN. Yes.
Mr WIRTH Has there been a change at the FCC since 1976, a
change occasioned by the Copyright Tribunal?
Mr. BRENNAN. No copyright owner has filed a petition with us in
response to any such developments.
Mr. WIRTH. Do you anticipate a change that would then occasion
petitions from copyright owners?
Mr BRENNAN I have not the slightest doubt but that if the FCC
should proceed in the direction they appear to be going, that at the
proper time under our statute, we would have a proceeding to deal
with this question And that would not require any further action
by the Congress
Mr WIRTH In 1978, how much did you collect in terms of royalty
payments?
Mr. BRENNAN. It is estimated the copyright payments for the
first full year by cable will be approximately $13 million. This is
about $4 or 5 million more than was projected in the House com-
mittee report. However, you have to take into account certain
factors, such as inflation and growth.
PAGENO="0087"
83
Mr. WIRTH. We are talking about, say, $13 million. Where is that
money now?
Mr. BRENNAN. The money physically is in a Treasury account
which is accruing interest, and it remains there until the distribu-
tion proceeding is completed.
Mr. WIRTH. Where is that distribution proceeding?
Mr. BRENNAN. The status is that under the Copyright Act we can
only conduct a proceeding in the fall of each calendar year follow-
ing the filing of claims during the month of July.
Mr. WIRTH. So by law, you cannot distribute the 1978 revenue
until the fall of 1979.
Mr. BRENNAN. The reason for that result was a practical one
having to do with the--
Mr. WIRTH. That is in the law? Go ahead and finish. I am sorry.
Mr. BRENNAN. Having to do with the practical problem that on
the first round in July of 1978, there was not adequate time for
copyright claimants--
Mr. WIRTH. Were there revenues collected into this fund in 1977?
Mr. BRENNAN. No. The act became effective generally--
Mr. WIRTH. People who have been complaining that the Copy-
right Tribunal has been delinquent, and has not distributed any of
these revenues are, in fact, not telling us the whole truth; is that
correct?
Mr. BRENNAN. Let me rephrase your question and attempt to
answer it. I have not been as upset, perhaps, as some of my
colleagues when they read or heard some of the comments made in
this subcommittee concerning the distribution procedures. I have
been around Washington long enough to know how the game is
played. I made the comment earlier-and I think Congressman
Luken took me up on this-that it might be useful for the staff, at
least, to review the filings which these claimants made in our
proceedings, and you will discover that at every step of the process
we did what they recommended for the reasons I previously de-
scribed.
Mr. WIRTH. It is not fair for some to say that the Copyright
Tribunal system has not been working. As I remember a number of
witnesses saying, none of that money has been distributed. They
don't know what they are doing. That is not fair. You were pre-
cluded from doing that until this fall; is that correct?
Mr. BRENNAN. If that testimony was heard by one of America's
most beloved figures, it might be described as the testimony of a
meathead.
Mr. WIRTH. We have part of the meathead syndrome going here.
Mr. LUKEN. How voluminous would those records be that you
have now twice suggested that we look at, those applications of
those claimants?
Mr. BRENNAN. I was not suggesting, sir, that you look at the
claims. I was suggesting that at least the staff might want to
review the comments filed by major claimants.
Mr. LUKEN. How voluminous would those comments be?
Mr. BRENNAN. They were concise. They could be--
Mr. LUKEN. How many pages, 20, 100?
Mr. BRENNAN. I would say between 50 and 75.
PAGENO="0088"
84
Mr. LUKEN. Mr. Chairman, I would ask unanimous consent that
the record be held open and that Mr. Brennan be requested to
furnish the committee for the record copies of those 50 to 75 pages
of comments he has described.
Mr. WIRTH. Without objection we will leave the record open for
the appropriate parts of that, and it will certainly be made availa-
ble for the committee.
[The material referred to was received by the subcommittee and
may be found in its files.]
Mr. LUKEN. Thank you, Mr. Brennan.
Mr. BRENNAN. Thank you.
Mr. WIRTH. Where are you in the process of designing the distri-
bution system? Maybe you have been through this and I have
missed it. It is something a number of us have been interested in.
Mr. BRENNAN. No; you are the first to ask that particular ques-
tion. We had a public proceeding in which we received testimony
from the major claimants concerning whether it would be helpful
to the claimants if the Tribunal plunged in at this stage, or going
back now about 6 months in time, and put forth our view of a
distribution formula and then requested claimants to document
their claims on the basis of that distribution formula.
All the major claimants were opposed to the Tribunal coming
forth at this posture with its own distribution formula.
Mr. WIRTH. Were you required by law to set up a distribution
formula, or is that an open issue?
Mr. BRENNAN. It is an open issue.
Mr. WIRTH. What does the law say about that?
Mr. BRENNAN. The law provides that after we have determined
that there is a controversy, we shall conduct a proceeding.
Mr. WIRTH. Have you determined there is a controversy?
Mr. BRENNAN. We have not, for the reason that the claims are
filed in July 1979, and therefore we have not reached--
Mr. WIRTH. Fine.
Mr. BRENNAN. I have no illusions about our decisions.
Mr. WIRTH. Do you think there probably will be a finding there
is a controversy over the distribution of this payment pool?
Mr. BRENNAN. It is a very likely result. I indicated earlier in my
testimony, however, that we would hope that whatever precedents
and determinations are made in the first distribution proceeding
would facilitate voluntary agreements subsequently.
Mr. WIRTH. Go ahead and sketch out what you do between now
and the fall. Would you do that?
Mr. BRENNAN. I would be glad to. In July the copyright owners
will file their claims For the first time we now are requiring them
to justify their claim Last year in the July 1978 filing it was a bare
bones filing because they lacked timely access to the reports filed
by the cable operators. -
Mr WIRTH Is this a claim for a piece of that $13 million, that
they say we should get such and such a share? Or do they say that
overall we deserve to get x amount?
Mr. BRENNAN. At this stage, for the first time we are asking
them to precisely state what share of the pie they are requesting.
Mr. WIRTH. A percentage share?
PAGENO="0089"
85
Mr. BRENNAN. It could be expressed either in a percentage or in
a dollar figure.
Mr. WIRTH. They will make that claim with you in July. How
many people do you anticipate will come in with a claim for that?
Mr. BRENNAN. In terms of the number of separate filings, it
would probably be between 300 and 350, but many of these claims
involve common agents who are filing on behalf of a number of
separate corporate entities.
Mr. WIRTH. What would be your best estimate of what the aggre-
gate claim would be from those 300 to 350 claimants? Is it going to
be $100 million that they claim they should have? What is your
sense of that?
Mr. BRENNAN. We, of course, don't--
Mr. WIRTH. Will it be more than $13 million?
Mr. BRENNAN. Oh, yes; there is no question of that.
Mr. WIRTH. In what magnitude would you guess?
Mr. BRENNAN. I would have no basis to make an--
Mr. WIRTH. You said "Oh, yes" to $13 million. You don't know if
it would be as high as $100 million or as low as $20 million? I am
trying to get a sense for what we are dealing with; how big is this
greased pig we are trying to get a handle on.
Mr. BRENNAN. The National Association of Broadcasters, accord-
ing to trade press accounts, in the private discussions has asserted
certain legal positions which, if mantained, would involve their
claiming a much larger share than other claimants had anticipat-
ed.
Mr. WIRTH. So you are anticipating that by sometime this fall,
October--
Mr. BRENNAN. Yes, sir.
Mr. WIRTH. You will have worked out a distribution system; is
that correct?
Mr. BRENNAN. We are anticipating there will be a controversy;
that we will commence a proceeding to resolve the controversy and
distribute the $13 million. Under the Copyright Act, that proceed-
ing must terminate within 1 year from the date of commencement.
Mr. WIRTH. Is it your impression that the resolution that you
will come to this fall, and in the following year, is going to be fair
to the parties involved?
Mr. BRENNAN. I would certainly hope that we would--
Mr. WIRTH. I am not talking about the proceeding itself, but the
result of the proceeding in terms of who receives what from the
royalty payments pool.
Mr. BRENNAN. Yes: and that is one of the reasons we have been
reluctant to get involved at an early stage in imposing a distribu-
tion formula. By following the method we have pursued, we will
allow the claimants their full day in court to advance whatever
theories they deem most appropriate.
Mr. WIRTH. Is it your sense that the Tribunal concept, as estab-
lished in law, is working?
Mr. BRENNAN. The jury is still out. It would be presumptuous to
reach a conclusion one way or the other. The act became effective
in 1978, and we are just now getting to the period in time where
the Tribunal activities become more important.
PAGENO="0090"
86
Mr WIRTH But, the jury is out only because of the age of the
Tribunal rather than because of inadequacies in the legislation.
Mr. BRENNAN. Right. It is out because of the age and also be-
cause of the timetable which the Congress has established as to
when certain proceedings shall be commenced
Mr WIRTH Let me shift, and ask you a question that involves
the testimony we had related to the amount of money the cable
industry pays a producer for a product, compared to the amount of
money that, say, a broadcaster pays Do you have any knowledge,
on a per viewer basis, of how royalty payments paid by cable
television compare to those paid by over the air broadcasting?
Mr. BRENNAN. No, I do not.
Mr WIRTH Will you have that kind of information at the Tribu
nal?
Mr BRENNAN Yes, this would certainly be a relevant factor in
our rate proceedings when we get to that stage.
Mr WIRTH How will you tease out that information? There are
only five of you with a secretarial staff
Mr. BRENNAN. That is correct. As I said earlier, the Congress
contemplated that we would hire consultants when and if the need
arose, and we anticipate doing that in regard to the 1980 royalty
proceedings.
Mr. WIRTH. How soon will you have available at least some
indications of the comparative data between what is paid by cable
and what is paid by over-the-air broadcasters?
Mr. BRENNAN. Unfortunately, Congressman, not at all in time to
be of assistance to the Congress in its current deliberations.
Mr. WIRTH. We are looking for all of the help we can get, as you
know, Mr. Brennan.
Mr BRENNAN Yes
Mr WIRTH Who has that kind of information? Who is an objec
tive third party which has that kind of data? Is there an objective
third party that has that kind of data?
Mr. BRENNAN. As the subcommittee is, I am sure, aware, there
have been exhaustive studies at the FCC as to the economic impact
of various regulations on broadcasters and copyright owners, and I
am sure the various parties have commissioned their studies.
Mr. WIRTH. Let me ask you a question about your statement in
the middle of page 3 that says, "I do not recall any congressional
dissent from the conclusion expressed in H.R. 94-1476 `that it
would be impractical and unduly burdensome to require every
cable system to negotiate with every copyright owner whose work
was retransmitted by a cable system.'"
Do you think that language is appropriate legislative history-
something that wouldn't be altered by the Tribunal?
Mr. BRENNAN. The statement is addressed to whether or not
there was dissent or minority opinions within the Congress on the
judgment reached in both bodies that it would not be feasible for
cable operators to negotiate individually in the marketplace with
copyright owners Anyone who wanted to document that conclusion
could simply read the history of the bill in the House and the
Senate, and you will not find dissenting points of view, which is not
too surprising
PAGENO="0091"
87
Mr. Valenti testified before the House subcommittee in 1975 and
said that in all honesty he had to admit that the mechanism just
did not exist whereby cable television could negotiate for licenses
with copyright owners.
Mr. WIRTH. Is there enough change in the development of, say-
again referring to the superstation concept-is there enough
change in the way in which signals are carried to occasion a
change in the way the Tribunal deals with the copyright royal-
ty--
Mr. BRENNAN. I will give you the same evasive answer I gave
Congressman Luken when he asked me that question earlier. We
don't think it is the function of the Tribunal to become involved in
these communication policy issues. The purpose of my appearance
is to respond to more technical questions.
Mr. WIRTH. Going back to what we were talking about before-
about what forces you to change the way royalty payments are
set-there has not been any kind of a change so far which would
occasion your resetting those rates.
Mr. BRENNAN. That is correct. And there is no special trigger
mechanism for the superstations.
Mr. WIRTH. There is no special trigger mechanism for the super-
stations? Do you think there should be?
Mr. BRENNAN. I think the Congress made a mistake when it
curtailed our rate review jurisdiction in cable. This is in contrast to
all of the other compulsory licenses where the Tribunal periodical-
ly has jurisdiction to review and possibly adjust the basic schedule.
We do not have that authority with regard to the cable fees. And I
think it was a mistake to deny us that authority.
I understand the reason it was done.
Mr. WIRTH. Good healthy politics.
Mr. BRENNAN. Yes, sir.
Mr. WUNDER. When Mr. Luken asked the question about super-
stations, which was just alluded to, and your response was: "The
Act does not permit the measure of flexibility that some would
have preferred," I take it you are one of those who would have
preferred it?
Mr. BRENNAN. Yes.
Mr. WUNDER. Your point is that the act, section 801, describes
the trigger as being a "change in the number of distant signals
that can be imported, or alternatively, a change in the sports
programs or syndicated exclusivity rules?"
Mr. BRENNAN. That is correct.
Mr. WUNDER. So other than that you cannot have a broad scale
review of the rates?
Mr. BRENNAN. That is correct, Counsel.
Mr. WUNDER. Now, also in response to Mr. Luken, you said you
were not privy to private statements with respect to the supersta-
tions. Were you aware of any public statements?
Mr. BRENNAN. No.
Mr. WUNDER. There were no public statements during any of the
discourse on this legislation that alluded to the prospect of a super-
station or superstations coming in?
Mr. BRENNAN. That was not surprising, Counsel, because as I
testified several times this morning, the final version of the act is
PAGENO="0092"
88
the House language. So, therefore, it is not surprising I was not a
party to that.
Mr WUNDER Sure You made numerous references to the indus
try agreement. That agreement was brought-a large blown-up
copy of what purported to be that agreement was brought into the
hearing room and on display. It appeared that the signatories to
that agreement were NCTA and MPAA by Mr. Valenti.
Mr. BRENNAN. That is correct. The broadcasters were not a party
to that agreement.
Mr. WUNDER. Your testimony today has been there would be 350
claimants in July of this year; is that right?
Mr. BRENNAN. Yes.
Mr. WUNDER. So, Mr. Valenti represents eight companies?
Mr. BRENNAN. Yes.
Mr. WUNDER. All the rest were not a party to the agreement
then?
Mr. BRENNAN. Yes; by far the largest single category of claim-
ants are local television and radio stations. They were not parties
to that agreement.
Mr. WUNDER. Was the NBA?
Mr. BRENNAN. No.
Mr. WUNDER. Was the NHL?
Mr. BRENNAN. No.
Mr. WUNDER. Was major league baseball?
Mr. BRENNAN. No.
Mr. WUNDER. Nor the NFL nor the NCAA?
Mr. BRENNAN. That is correct.
Mr WUNDER So, it was not an industry agreement, it was an
agreement between two parties, albeit principal parties?
Mr. BRENNAN. I said it was an agreement between the two
parties, which I identified.
Mr WUNDER OK I was wondering, if you were called upon to
set a new rate on the basis of changes in the distant signal impor-
tation rule or the syndicated exclusivity rule, the repeal of those
rules; how could you establish a new rate that would be equitable
and fair when what we know about what the rate is charged is for
an era in which those rules were in existence?
So, do we really have the kind of data that would put you in the
position of establishing a fair rate, which is one of the charges of
the Copyright Tribunal, "to afford the copyright owner a fair
return for his creative work and the copyright user a fair income
under the existing economic conditions." Do we have that? Does it
exist?
Mr. BRENNAN. It may exist but there is no reason for it to come
to the attention now of the Tribunal because we are barred under
the statute from conducting any proceedings in that area until
such time the Commission has acted and we have petitions filed
with us.
At that time I predict to you that if the Copyright Act remains
unchanged, that some of those who now say they could not possibly
conceive of how they could justify a proposed increase will testify
at great length before the Tribunal setting forth voluminous eco-
nomic data.
PAGENO="0093"
89
Mr. WUNDER. Well, there is one question that you address in
your statement and that was with respect to the one-time change.
The argument runs: If the rules are eliminated at point in time
"A," Mr. Brennan, that triggers your review, the Copyright Tribu-
nal's review, and then you establish a rate based upon that
change?
Mr. BRENNAN. That is correct.
Mr. WUNDER. If the rate that you make at some later point in
time is found to be inequitable, an inequitable rate, your testimony
is that you have a mechanism in the 5-year review for making that
rate into an equitable rate?
Mr. BRENNAN. That is correct, to consider whatever new evi-
dence may be presented.
Mr. WUNDER. Maybe it is not new evidence. Does it have to be on
the basis of new evidence?
Mr. BRENNAN. No, but if there is no new evidence, it is unlikely
there would be a change in the rate.
Mr. WUNDER. So, what we have, again, is another Government-
established rate.
Mr. BRENNAN. If the FCC acts to modify the rules and we have a
proceeding in 1981 to adjust rates to take into account these devel-
opments, we have authority under the act to reconsider that rate
in 1985 and at intervals thereafter.
Mr. WUNDER. That is section 804(b)?
Mr. BRENNAN. That is correct.
Mr. WUNDER. Thank you, Mr. Chairman. I have no further ques-
tions.
Mr. VAN DEERLIN. Mr. Moir.
Mr. M0IR. Thank you, Mr. Chairman. I have one quick question.
In your dialog with Congressman Wirth, he cited the report
language, which you mentioned in your testimony on page 3, about
its relevance as legislative history. You went into a long discussion
on the fact that you viewed it as legislative history.
Do you view then that concept, which is cited in the report and
which appears-at least in my reading-negative toward the con-
cept of retransmission consent, Mr. Brennan, as being legislative
history on the Tribunal in either of the two mechanisms we have
discussed: either the 5-year review, which is initiated in 1980; or on
the other aspect, which you have mentioned in your testimony and
you have discussed here, where there are significant changes at the
FCC and if a case has been brought to you, you may then hear it.
Do you find this is binding legislative history in either situation
and then something only left up to the jurisdiction of the Congress
to alter?
Mr. BRENNAN. We need not really be concerned with the lan-
guage in the committee report in terms of your question because
we deal directly with the statute. The Copyright Act gives cable
television a compulsory license to carry such signals as are author-
ized by the FCC, so you are not confronted, in the context of your
question, sir, with that analysis.
Mr. M0IR. OK. Thank you, Mr. Chairman.
Mr. VAN DEERLIN. Wrap-up questioning by Ms. Possner.
Ms. POSSNER. Just to follow up on Mr. Moir's question, we were
talking earlier about changes that may occur in the next few
PAGENO="0094"
90
months at the FCC with respect to signal carriage regulations and
exclusivity rules. You. also alluded to this in your prepared state-
ment.
According to Chairman Ferris, the FCC could eliminate its signal
carriage rules and its syndicated exclusivity rules by December 31,
1979, and the Tribunal is scheduled to conduct its first review of
royalty payments January 1, 1980, and then every 5 years thereaf-
ter.
Now, adjustments in royalties paid by the cable industry would
be based on rule changes at the FCC and/or changes in national
monetary inflation; is that correct?
Mr. BRENNAN. That is correct. The process is triggered by a
copyright owner who believes he or she has been damaged by the
FCC action filing a petition with us. We review the petition to
establish if the petitioner has a significant interest. If the petition-
er does, we then start the rate review.
Ms. POS5NER. You comment in your prepared statement on an
exchange or several exchanges that took place at our May 14
hearing with respect to changes in FCC cable rules that take place
in 1979: "Not only could the Tribunal make rate adjustments
during the 1980 examination, but it could indeed make rate adjust-
ments based on those 1979 rule changes in 1985, in 1990, in 1995, in
the year 2000," and on and on and on.
This puzzles me because we have had several witnesses testify
that there will only be one bite at the apple They have said that,
although the statute gives the Tribunal the authority to make rate
adjustments based on changes in FCC rules, the statute does not
appear to have anticipated elimination of the FCC rules or elimina-
tion of the FCC's authority to regulate cable television.
Can you comment on that one-bite-at-the-apple argument we
have heard from several witnesses?
Mr. BRENNAN. Yes; I think there was some confusion in the
testimony on this question, and I believe the minority counsel in
his question referred to the same subject. Let us assume that the
change in the FCC rules becomes effective in 1981. We commence a
proceeding to decide what additional compensation should be given
to copyright owners as the result of those changes.
Ms. POSSNER. In 1981 at the request of a copyright--
Mr. BRENNAN. At the request of a petitioner. We complete that
proceeding at the outside within 1 year. So that at some point in
1982 you have an adjustment of the rates applying to the addition-
al distant signals Come 1985 under the sentence, which the minor
ity counsel read into the record a few minutes ago, we have author-
ity to reconsider that 1982 determination
Ms. POSSNER. Does your authority to reconsider that 1982 deter-
mination extend to 1990 when you come up again for your next 5-
year review?
Mr. BRENNAN. Yes, that would carry forward every time.
Ms. POSSNER. So, in your opinion there would not be just one bite
at the apple?
Mr. BRENNAN. That is correct.
Ms. POSSNER. In your written statement you refer to a "bifurca-
tion of responsibility between the Tribunal and the Copyright
Office." I want to pursue that for a moment, but I would like to
PAGENO="0095"
`91
digress briefly. Earlier, Mr. Wirth asked. if.the subcommittee staff
had been in touch with you or anyone at the Tribunal during the
preparation of H.R. 3333. The record should reflect the fa~t that
the staff has been in constant touch with the Copyright Office
throughout the preparation of the bill. This leads me back to your
question concerning bifurcation of responsibility between the Tri-
bunal and the Copyright office.
Isn't it true that the Copyright Office has statutory responsibility
for doing all work in preparation for distribution of royalty fee
payments?
Mr. BRENNAN. It depends on which side of the question you are
dealing with. In terms of the reporting requirements--
Ms. POSSNER.They are set by the Copyright Office.
Mr. BRENNAN [continuing]. Of cable television owners, those re-
ports go to the Office.
Ms. POSSNER. Go to the office? The Copyright Office?
Mr. BRENNAN. Go to the Office. When you become involved with
the rights of the copyright owners and the filing of the claims, then
it is the Tribunal, not the Office.
Ms. POSSNER. Does the Tribunal deal with copyright infringe-
ment?
Mr. BRENNAN. Neither the Tribunal nor the Office.
Ms. POSSNER. So, its authority is limited to dealing with claims.
Mr. BRENNAN. That is correct.
Ms. POSSNER. So, we have the Office collecting data and specify-
ing what information is filed with respect to signals carried and
programing distributed.
Mr. BRENNAN. In consultation with the Tribunal.
Ms. POSSNER. But the Tribunal acts only in an advisory capacity?
Mr. BRENNAN. That is correct.
Ms. POSSNER. And the Office in fact collects the fees from cable
operators.
Mr. BRENNAN. That is correct.
Ms. POSSNER. So, the principal function of the Tribunal is distrib-
uting the moneys?
Mr. BRENNAN. Distributing the moneys and also, of course, the
royalty adjustments.
Ms. POSSNER. That raises another question. You mentioned earli-
er that according to the statute, claimants were authorized or were
required tp make their first statement of claim in July of 1978, the
act having gone into effect in January.
But the cable industry was not requ~ired to make its first pay-
ment until August. That seems backwards. Forgive me for being so
confused, but on what information did the claimants base their
claims if nothing had been filed by the cable industry?
Mr. BRENNAN. Well, that was undoubtedly due to deficiencies in
the operation of the House of Representatives because--
Ms. POSSNER. Thank you for bringing it to our attention.
Mr. BRENNAN. Because that is the reason we had to forego any
distribution in 1978.
Ms. P055NER.Who decided to forego distribution that first year?
The Tribunal itself or the Tribunal in consultation with the Copy-
right Office?
PAGENO="0096"
92
Mr. BRENNAN. The Office was not involved in that determina-
tion.
Ms. POSSNER. So it was just the Tribunal deciding not to distrib-
ute moneys that first year?
Mr. BRENNAN. The Tribunal published a notice in the Register
inviting claimants to comment on the various options that were
open to us. Because of the technical problem that you have enu-
merated, we decided that it would be extremely unfair to copyright
owners to expect them to document their claim when under the act
they did not have access to the reports filed by cable television
operators.
Consequently, all that was required was for them to file a piece
of paper which preserved their rights.
Ms. POSSNER. So, the Tribunal made the decision to postpone
distribution?
Mr. BRENNAN. We made the decision in consultation with the
claimants.
Ms. POSSNER. All of the claimants?
Mr. BRENNAN. We had a public notice in the Register and we
had written comments in response to that notice from all of the
major claimants.
Ms. POSSNER. How many major claimants are there?
Mr. BRENNAN. I would describe the major claimants as the
Motion Picture Association--
Ms. P055NER. The number is sufficient. You do not have to name
them.
Mr. BRENNAN. Five or six.
Ms. PO5SNER. In an earlier discussion with the chairman of the
Tribunal, I was told approximately 200 to 300 claims have been
filed. A few minutes ago you said there probably had been about
350.
Mr. BRENNAN. No, we were talking, I think, in terms of predic-
tions as to the number of claims--
Ms. POSSNER. How many claims have been filed so far?
Mr. BRENNAN. It is under 300.
Ms. POS5NER. Close to 300?
Mr. BRENNAN. 260.
Ms. POSSNER. So as a result of discussions with about five or six
major claimants the Tribunal decided to put off distribution of the
funds the first year because it would have been unfair to require
claimants--
Mr. BRENNAN. Yes, and one of the parties to that determination
was the NAB, which to some extent reflected the interests of many
individual broadcaster claimants.
Ms. POSSNER. In fact, several witnesses testified on the 14th that
in no way has the Tribunal been derelict in distributing the royalty
fees, but has delayed distribution at the request of claimants.
Mr. BRENNAN. That is correct.
Ms. POSSNER. We have heard repeatedly that our program con-
sent provision would require every cable operator in the United
States-and there are now over 4,000-to negotiate directly with
every program owner and/or broadcaster in order to obtain pro-
gram consent.
PAGENO="0097"
93
That is not what the bill says, and I am not even sure that that
would be a ncecessary result of the provision. What does concern
me is the prospect of almost 300 individual claimants, of which
there are five or six dominant ones, coming together and agreeing
on a method of distribution that all perceive to be fair.
I raise this issue because you have said that the Tribunal has not
made any preparations for distribution in the hope that the claim-
ants will voluntarily adopt a scheme of their own design. You have
suggested that if a voluntary scheme were adopted, any work done
by the Tribunal would have been in effect, wasted work.
But you also said you anticipate, as of August, that the claimants
will not have been able to reach agreement and that you will have
to state, as the statute requires, that a controversy exists. My
question is-if the Tribunal has not done any work to finalize or
even to formulate a distribution scheme, and you have a statutory
cap of 1 year on how long the proceeding can take, then we have
moneys collected in 1978 and 1979, no voluntary distribution agree-
ment, and no distribution plan at the Tribunal.
What happens in August? Does the Tribunal hire consultants
with economic expertise and ask them to design a distribution
mechanism?
Mr. BRENNAN. The new rule which governs the July 1979 filing
for the first time requires claimants to justify their claim either by
a percentage of the total pot or by a dollar amount. And we
anticipate that claimants will attempt to justify their price tag by
citing various formulas which we should consider in the distribu-
tion controversy.
The Commissioners obviously are aware of what the options are.
There aren't that many alternatives in terms of distribution formu-
las. But we determined that we did not wish, prior to the July
filing, to commit ourselves to a particular distribution formula.
Ms. POSSNER. Are one or two of the Tribunal members econo-
mists? I believe you have an accountant.
Mr. BRENNAN. We do not have an economist. We have two attor-
neys; we have one accountant; we have one Commissioner with a
background in broadcasting, and we have a Commissioner with a
background in free lance writing.
Ms. POSSNER. An eclectic group.
The moneys are collected, deposited in the Treasury and are
invested in interest bearing Government securities. I understand
that the cost of any proceeding resulting from a controvery comes
out of that fund. Is that true?
Mr. BRENNAN. That is another incentive to the parties~
Ms. POSSNER. Not only is that an incentive to reach agreement
voluntarily, it is a disincentive to find fault with such an agree-
ment. Isn t the fund further diminished by the Copyright Office
which is permitted to recover costs from the fund before the fees
are deposited in the Treasury?
Mr. BRENNAN. Under other provisions of the act, the Office is
required to deduct the cost of its services in filing these reports
from cable television operators.
Ms. POSSNER. As one of the craftsmen of the legislation, could
you tell us why the Copyright Office is permitted to recover its
costs before the fund is deposited.
51-254 0 - 80 - 7
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94
If the principal is diminished initially by the Copyright Office,
there is less--
Mr. BRENNAN. I would imagine the practical answer would be
that the funds were to be passed out of the hands of the Copyright
Office. They had performed their function under the act. Their
duties were now completed. So, before depositing the funds in the
Treasury, they deduct the costs of their services. And then they are
no longer involved with the distribution.
Ms. POSSNER. Thank you, Mr. Brennan.
Mr. VAN DEERLIN. We have five more witnesses. We are obvious-
ly going to run into some people's lunch hour. Mr. Cole, would you
rather proceed now or come back?
Mr. COLE. Whatever you wish.
Mr. VAN DEERLIN. I am as wide open as they come. What is your
preference? Do you want to come back after lunch?
Mr. COLE. Fine.
Mr. VAN DEERLIN. All right, in that case, we will resume at 1:30
p.m.
[Whereupon at 12:40 p.m., the subcommittee was recessed until
1:30 p.m. the same day.]
AFTER RECESS
[The subcommittee resumed at 1:30 p.m., Hon. Lionel Van Deer-
lin, chairman, presiding.]
Mr. VAN DEERLIN. The hearing will resume. Dr. Cole has gra-
ciously agreed to wait longer in the interest of permitting Professor
Warren and Mr. Nunn from the University of Delaware, College of
Urban Affairs, to testify and catch a train at 3 o'clock.
All of this is in the interest of Amtrak really. Welcome to the
subcommittee.
STATEMENT OF ROBERT WARREN AND SAM NUNN, COLLEGE
OF URBAN AFFAIRS AND PUBLIC POLICY, UNIVERSITY OF
DELAWARE
Mr. WARREN. We appreciate the opportunity to appear here and
we thank very much Professor Cole and others who have let us go
ahead of the schedule. My colleague, Sam Nunn, and I have been
conducting research concerning the television allocation policies
that have been enacted and are indicated under the rewrite and
while the statement we have, I think, overlaps titles II and IV, I
think there is a relevant concern with the mandate of the Commu-
nications Regulatory Commission.
And for the remainder of the presentation, Sam Nunn will pre-
sent the comments.
STATEMENT OF SAM NUNN
Mr. NUNN. Thank you. Since we did not get the comments to you
until this morning, I think it appropriate we go ahead and read
them. It shouldn't take too long. We will read the comments so you
have a chance to look over them as I go through them.
Broadcasting and communications policy in the United States is
approaching a crucial juncture. Decisions made on various aspects
of the proposed Communications Act of 1979 will affect the future
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structure of the broadcasting industry, the various means by which
broadcasting services can be delivered, and the spatial scale at
which these services will be provided.
Technologies currently exist that are capable of pushing the
television broadcast system in several directions. Communications
satellites have opened the way for the development of regional
superstations, while cable technology, translators, and improve-
ments in low-power broadcasting provide a means of establishing
decentralized, small-scale television broadcast systems.
Existing Federal policy has specifically fostered local television
services. Frequencies have been allocated to many local communi-
ties across the United States, along with regulatory mandates to
provide service oriented toward citizens within the local communi-
ty.
Behind this policy of localism resides a belief in the benefits of
broadcast services generated by local outlets and at least an implic-
it commitment to a decentralized system of urban communities.
Emphasis placed on local service requirements suggested a fear
that, without such a mandate, little or no local orientation would
be forthcoming.
Relevant sections of the Communications Act of 1979 suggest
that the concern for television broadcast service spatially tied to
distinct local communities has been eroded and that the existing
policy of local frequency assignments and local service obligations
to specific cities will be reversed.
The desire to expose television broadcasting to an unregulated
market implies a belief that if market forces do not elicit a system
of local broadcast outlets committed to local service, but rather a
system of regional or national stations, the public interest is best
served. Or, if the market dictates that certain cities presently
without television frequencies remain without allocations then,
again, it must be believed such behavior is in the best interests of
the public.
The absence of any explicit requirement that particular cities
receive at least the potential to possess local television outlets
seriously constrains the opportunity to enhance local capacity to
produce community programing.
Certainly, cities without television allocations suffer costs in the
form of benefits foregone due to the lack of a local broadcast outlet:
Local news, forums for public issues, coverage of local election
campaigns, and advertising opportunities for local businesses with
rates scaled to the appropriate marketing area may all be more
difficult or costly to obtain without a local television outlet.
And it is interesting to note that a recent poll by Yankelovich,
Skelly, & White indicated that the majority of those interviewed
considered local news to be of most interest. Cities without local
television programing are simply at a serious disadvantage in their
information environments in terms of both equity and competitive
position with cities that do have local television outlets.
Within the 1979 act, the final arbiters of which cities, States, and
regions can serve as local broadcast outlets will be the National
Telecommunications Agency, NTA, and the Communications Regu-
latory Commission, CRC. The NTA shall be responsible for assign-
ing the amount and location of spectrum available for television
PAGENO="0100"
96
broadcasting, while the CRC will assign frequencies for individual
stations, determine their time and power of operation, and select
the station's location.
However, the NTA's evaluation of. the spatial distribution of
electromagnetic radiation will not be completed for 4 years and a
similar study of major television market areas proposed for the
CRC will not be completed for at least 9 years. This suggests that if
the broadcast provisions of the 1979 act are adopted and its policies
accepted, the existing pattern of television frequency allocations
will be accepted as the de facto starting point for a new Communi-
cations Act.
The present spatial distribution of allocations would be essential-
ly locked in for a period following passage of present legislation,
without any explicit mandate to reevaluate it.
It is this issue with which our early research efforts have been
concerned. Given the existing policy's emphasis on local television
outlets and now the possibility that such concerns may in part be
eliminated by the 1979 rewrite, it seemed odd that, with few excep-
tions, little or no information was available that evaluated the
existing spatial distribution of television allocations from the per-
spective of cities that had or did not have assigned frequencies.
Believing that there are benefits generated by local television
outlets that might be lost with a change in policy, we felt that
serious questions of equity would be raised if a significant subset of
cities of various sizes had not been granted television frequencies.
With this in mind, we have recently undertaken an examination of
the distribution of television frequency allocations in the United
States.
Despite the early stage at which our examinations currently
stand, certain preliminary findings can be presented that may be
of some interest to the committee. Using 1975 and 1976 population
estimates and the 1976 Table of Assignments, certain trends in the
data have emerged which suggest that the populations of a signifi-
cant number of cities across the United States have been denied
access to the benefits of local broadcast outlets.
A new Communications Act, by blanketing in the existing pat-
tern and changing the criteria by which licenses are awarded,
could seriously increase the incidence of such inequities.
Our data has indicated that from the perspective of urban areas,
the most serious discrepancies in the distribution of total alloca-
tions exist for cities within the size range of 25,000 to 100,000
population. More than one-half of all cities in this size category are
without a single television allocation.
And if only those allocations which are currently operating are
considered, less than 25 percent of the cities in this size category
are presently receiving the benefits of local origination. In addition,
there are a number of cities in the United States, 30, with popula-
tions over 100,000 that are without even one television allocation.
Thus, if we look at the distribution of allocations for only the
larger cities of the Nation-those with at least 50,000 population,
the requirement for a central city as defined by the Bureau of the
Census-we find that as many as 149 cities are without a local
television outlet.
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Similar findings have emerged from an early examination of
major market areas. For example, in the top five television mar-
kets, only 26 percent of the 96 cities between 50,000 and 250,000
have television allocations. Twelve cities between 100,000 and
250,000 in these five major market areas have not been allocated a
single television frequency.
A primary reason for the exclusion of these cities is likely to be
their suburban status relative to the largest central city in the
market. Most allocations to the market may be concentrated in the
central city, with the surrounding suburbs therefore excluded from
possession of an allocation even though this is in violation of stated
FCC policy dating from 1952.
While the data is in the earliest phase of analysis, it is nonethe-
less clear that certain inequities exist in the extent to which all
cities share equally the benefits of local broadcasting outlets. Re-
gretfully, there appears to be little concern within the 1979 bill for
this issue, its magnitude or how its effects can be lessened or
eliminated.
It is therefore our view that the language within the 1979 re-
write be altered to reflect the policy conclusions which flow from
some of our early findings. There should be first, and above all, an
explicit reaffirmation of the commitment to maximize the number
of local broadcast outlets; at a minimum, this means section
413(a)(1) should include some reference to local television outlets.
Further, section 413(a)(2) could include language mandating a
maximum number of local television stations, rather than the "at
least one commercial VHF per state" requirement.
Second, consideration should be given to the intrametropolitan
redistribution of television frequency assignments. The concentra-
tion of allocations in larger central cities precludes local origina-
tion capacity for many large suburban communities; language con-
tained within sections 461(c)(1) and 707(b)(1) should recommend an
examination of the feasibility of redistributing allocations on a
metropolitan basis in order to satisfy the broadcast needs of grow-
ing suburban communities.
Finally, language should be included that explicitly promotes the
development of technologies and policies which will expand the
number of broadcasting outlets, such as low-power television sta-
tions and translators for smaller urban communities presently
without allocations and underserved rural areas.
Such language could be contained within sections dealing with
the promotion of new technologies, for example, section 707(a)(1)(B)
or 707(a)(2)(B).
An additional recommendation concerns cable television. Since
cable may be the only way to provide the local origination capacity
for community programing in cities without local television alloca-
tions, some provisions must be made to assure cable systems pro-
vide opportunities to broadcast locally-oriented programing.
Section 453(b) should therefore contain language which allows
local governments to require cable systems to provide local pro-
graming and origination capacity under certain circumstances, for
example, when the community does not otherwise possess a local
television outlet.
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98
Finally, language contained within section 461 concerning the
transition to indefinite license periods should be eliminated, and
the 5-year license period retained. The opportunity to periodically
and predictably challenge the renewal of a license is a critical
aspect of assuring licensees remain responsive to local broadcast
needs.
For this reason, an indefinite license period would be unsatisfac-
tory from the standpoint of providing citizen input into the broad-
cast renewal process.
I think initially there were data which we did not present, which
did indicate that even within the group of cities that do have
allocations, and within a group of cities of any given size or class,
there are significant differences in the number and type of alloca-
tions they receive.
For example, cities in the 250,000 to 500,000 size, category, might
have as few as one single allocation and as many as 10. So there
are differences in terms of equal treatment of equal cities from this
perspective.
Mr. VAN DEERLIN. Yes; perfect equality, of course, would be
difficult to achieve, but you would think there could be minimum
standards, even to the point of requiring reassignment, if neces-
sary?
Mr. NUNN. It is hard to visualize every city in the United States
defined as such, as having a television allocation.
If you go back to 1952, the development of television, when the
FCC initially established their localism policy, I think one of their
policy goals was specifically to provide that as many communities
as possible receive a television outlet. Their first goal, I think, was
that each community receive at least a television service. But
following that, in priority, was as many cities as possible to receive
a local outlet. Following that through, I think the FCC has tended
to uphold that policy with the suburban doctrine dealing with
radio services, where the FCC has been unwilling to grant licenses
to suburban communities where, to the best of the FCC's knowl-
edge, it could be determined that service was really going to be
oriented to the larger central city; first, local service.
So I think one of the primary recommendations could be that
there be some thought given to the possibility of redistributing
allocations, especially in metropolitan areas, to account for the
tremendous suburban growth that has occurred since 1952 and
since the initial distribution of city sizes the Commission was con-
cerned with at that time.
Mr. VAN DEERLIN. What is the population of Wilmington?
Mr. NUNN. Essentially, 75,000, and it has a couple of allocations.
Mr. VAN DEERLIN. It is the biggest city in Delaware, isn't it?
Mr. NUNN. Yes.
Mr. VAN DEERLIN. You can see how it happened, even though it
shouldn't have.
Mr. WARREN. I think another aspect that is a matter of concern
is that it clearly is not possible to provide over-the-air service to
every city and even cities beyond a certain point; but we simply do
not have an adequate understanding of the existing pattern, and
who does, and who does not, and why. No one has an understand-
ing of these things.
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In many cases I am sure it is for technical reasons that some
cities do and some cities don't; but at least in our analysis up to
this point that can't be the sole explanation.
Mr. VAN DEERLIN. Well, no, I should think it far more likely the
economic reasons, isn't it?
Mr. WARREN. That may be true. This is. something we have been
concerned with because a fairly common explanation is, if a city
has an allocation and it is not operating, it may be for economic
reasons. It may also be because the central city in the area has six
allocations; and it simply is unfeasible, not because there is not a
market, Mr. Chairman. The market does not exist because the
concentration of allocations prevents it from operating.
And in other cases we are not sure why cities which do not have
allocations have not been the site for efforts on the part of various
entrepreneurs to acquire the location there.
It seems to me the reasons why can't be attributed to the failure
of a market response. I think we need better facts as to why,
because entry into the market is not that open.
Mr. VAN DEERLIN. Miss Possner?
Ms. POSSNER. Mr. Nunn, you were discussing the sixth report
and order adopted by the Commission in 1952. At that time, when
~the table of allocations was designed, what research did the Com-
mission do with respect to the minimum audience base necessary
for the survival of a television station? Was there some minimum
population density that had to be present in order for an allocation
to be made?
Mr. NUNN. To my knowledge, no, there was not.
Ms. POSSNER. Was not?
Mr. NUNN. No. It seems to me that the major kinds of reasoning
they were using were that the larger cities, of course, at that time
should be granted the largest number of allocations; and they did, I
think, break into some census data that indicated what the city
size distributions were at that time.
Ms. POSSNER. One of the flaws in the table of allocations that is
mentioned repeatedly is that the population base on which the
Commission designed its table was too optimistic, resulting in fewer
local television outlets than the Commission had hoped would be
created. In your opinion, was the table of allocations too optimistic?
Mr. NUNN. Well, no, I see what you are saying. But going back to
the 1952 report and order, I am not sure of the exact number at
that time, but the number of cities that were finally granted alloca-
tions at that time was over 1,000.
Now the research we have done so far--
Ms. PO5SNER. And far fewer now?
Mr. NUNN. Yes, Presently only 800 cities have allocations.
Now, there are cities with populations as small as 750 that have
television allocation. Specifically, one I am thinking about is one in
Alabama and, obviously, it is an educational UHF allocation, But
there are a significant number of cities under 5,000 that have
received allocations.
I used the term "de facto" earlier. The de facto criteria might
have been in 1952 that the city that was the smallest to receive an
allocation. I think in our research efforts that is what we arrived
at.
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But to get back to your original question, from what I read of the
report and order, there was no specific reference to "market
thresholds" and "support capacities" that would mandate the allo-
cation of a frequency.
Ms. POSSNER. I am going to assume there is some relationship
between the subject you have chosen to study and the fact you
study at the University of Delaware. Obviously, Delaware presents
a unique situation in this area. The State of Delaware does have a
number of UHF allocations, is that true?
Mr. NUNN. Yes.
Ms. POSSNER. How many of them are operating?
*Mr. WARREN. There is one which two broadcasters are competing
for at the present time.
Ms. POSSNER. Seaford, channel 38.
Mr. WARREN. And also, I believe there are two companies also
seeking the UHF allocation in Wilmington now.
Ms. POSSNER. I have one last question: You testified that one way
to rectify such a situation is to restructure the table of allocations
and you are concerned that H.R. 3333 does not go far enough in
that direction.
I am concerned and wonder if you share my concern, that when
you get down to a city that is small, or a suburb of a city, or
whatever, the medium of broadcasting may not be the most appro-
priate or technologically efficient way to distribute information to
a community. Perhaps residents in such an area should turn to
either low-power broadcast stations or translators or cable televi-
sion to distribute information. The bill recognizes that by deregu-
lating some technologies, perhaps gaps in television coverage today
might be taken up by other technologies that might be more appro-
priate for service to those areas.
Would you care to comment?
Mr. WARREN. Perhaps. Let me comment first, I think there is no
question that a variety of technologies and technology mixes could
be utilized, but I think the absence of some mandate or indication
that this should be a matter of concern is going to make it much
less likely to happen. And I would also indicate that the size of
cities-that we are not talking be necessarily all small cities. For
example, one of the original reasons for my concern for this was
coming out of the Los Angeles area, where you have 20 cities over
50,000 in Los Angeles County, in the immediate area, that do not
have television allocations. So you have the City of Long Beach,
with 340,000 or 350,000 people, without an allocation; you have
Pasadena; you have Glendale and several other cities of well over
100,000.
Ms. POSSNER. Do you think each of those communities should
have a VHF outlet? Do you think that would be the best way to
meet the needs and interests of those communities?
Mr. WARREN. Well, a VHF outlet, not necessarily; but I think if
they get cable systems with local generating capacity, or if there
are low-power stations which require some reallocation, these
would be possible options.
But it would seem to me this would have to be indicated as a
matter of policy and national concern, to give some impetus to
move in this direction
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Ms. POSSNER. Some people have suggested that the State of Dela-
ware should have at least one VHF allocation to call its own.
Would you care to comment on the prospects for UHF develop-
ment in the State of Delaware if there were a VHF station serving
a sizeable portion of the State?
What would happen, for example, to channel 38 in Seaford and
other UHF stations that might be activated in the future?
Mr. WARREN. I think other things being equal, they would be put
at a competitive disadvantage. But part of the situation would
depend on the degree of cable penetration, which is very high in
New Castle County, particularly, and I think that would certainly
aid the UHF channels.
Ms. POSSNER. One last and very brief question:
You were saying that in areas where over-the-air television
broadcasting is unavailable, cable television operators should be
required to provide local programing.
I can understand regulating broadcasters because they use the
spectrum, which is a scarce and valuable resource, but on what
would you base the requirement that the cable television industry
provide local programing and local origination opportunities?
If the only "resource" cable television operators use are local
streets and rights-of-way, and a franchise has been granted for
such use, on what foundation can such a requirement be based?
Mr. WARREN. Well, I think, as the law stands at the present
time, there is a clear basis; they are regulated as utilities by State
and local governments.
Ms. POSSNER. Rather than as multichannel broadcasters?
Mr. WARREN. Yes; and I think that is clearly one, and the other
is, I think, in the Supreme Court decision, which struck down the
FCC requirement for public access on cable systems; it was based
primarily on the lack of FCC authority.
So it seems to me it could be a matter of national policy to
enhance the information generating capacity at the local level; and
this would be one of the few means by which it could be done in
the absence of over-the-air transmission.
Ms. P055NER. Just a followup: Do you think the decision to
regulate cable television systems should be made on the local,
State, or Federal level?
Mr. WARREN. I think it is a very difficult problem. It seems to
me that the States have been very uneven and localities have been
very uneven, and the FCC has been very uneven in its response;
and ideally there should be national standards or guidelines, per-
haps with some triggering capacity at the local level for regulation
if it is chosen.
Mr. VAN DEERLIN. Thank you, to both of you, for sharing this
time with us.
Our next witness is Dr. Barry Cole, late of the FCC, and noted
author.
STATEMENT OF BARRY COLE, ANNENBERG SCHOOL OF
COMMUNICATIONS, UNIVERSITY OF PENNSYLVANIA
Mr. COLE. Thank you, Mr. Chairman. I appreciate the invitation
to again discuss H.R. 3333, this time the title II provisions regard-
ing reform of and restructuring what is now the FCC.
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During last year's hearings I submitted a lengthy statement with
specific suggestions about the provisions in title II of the 1978 bill,
some of which were incorporated into this year's version. I under-
stand that these hearings are designed to discuss the differences
between the two bills, rather than to resubmit and reargue previ-
ous suggestions.
Given that mandate, and your reminder regarding time con-
straints, I will limit my remarks to one of the changes that appears
in H.R. 3333-the provisions in section 244 relating to reimburse-
ment.
Last year I endorsed inclusion of explicit statutory language
enabling the Commission-whether it be called FCC or CRC-to
compensate members of the public for costs of participation in
Commission proceedings.
I am happy that this year's bill includes language to permit
reimbursement for participation in general rulemakings.
Although the bill permits reimbursement in ratemaking and
rulemaking proceedings, section 244(b)(2) states that the reimburse-
ment provisions "shall not be construed to apply to any hearing
relating to the revocation of a license * * * or to any hearing
relating to a petition to deny."
Fewer than 6 out of every 100 petitions to deny license renewals
and fewer than 3 out of every 100 stations challenged by such
petitions have been designated for renewal hearing. Yet the bill as
now written explicitly precludes reimbursement only in the few
hearings relating to petitions to deny.
The section-by-section analysis of H.R. 3333 states, "The Commis-
sion * * * is explicitly precluded from providing reimbursement for
participation in license renewal and license revocation challenges."
In the following discussion of the reimbursement provision in
section 244 I am assuming that the statement in the analysis
correctly interprets the true intention of the bill, and that what is
really being proposed is to make it impossible for the Commission
to ever reimburse a petitioner for expenses incurred relating to a
petition to deny or a petition to revoke-regardless of whether that
petition results in an FCC hearing or even in a decision by the
Commission that the licensee should lose his license.
Public monitoring of local station operations is needed because,
as Warren Burger wrote in the 1966 landmark WLBT decision
which granted standing to citizen groups, "unless the Commission
is to be given staff and resources to perform the enormously com-
plex and prohibitively expensive task of maintaining constant sur-
veillance over every licensee, some mechanism must be developed
so that the legitimate interests of listeners can be made a part of
the record which the Commission evaluates."
In "Reluctant Regulators: The FCC and the Broadcast Audience"
we documented that after the WLBT decision citizens have become
very active in monitoring the performance of broadcasters and
often have had more influence on licensee behavior at renewal
time than the Commission.
Some citizens who become involved in the renewal process act in
a manner referred to by Chief Justice Burger as "legitimate listen-
er representatives fulfilling the role of private attorneys general."
Unfortunately, Commissioner James Quello has correctly charac-
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terized others as people "who use legal processes to promulgate
their own private, self-serving versions of the public interest."
Some petitions are frivolous; others raise significant public inter-
est questions.
Given these realities, it would obviously be a mistake to take one
extreme and allow the Commission to reimburse expenses incurred
by all those filing petitions to deny or petitions to revoke licenses.
But I believe it would also be a mistake to take the other ex-
treme, as has been done in the bill, and preclude the Commission
from ever reimbursing members of the public for costs related to
such petitions.
Is there a rational middle position between the two extremes
that will further the public interest? I would argue that it would be
appropriate and extremely beneficial to enable the Commission to
consider reimbursing expenses of petitioners when a petition leads
to a hearing-that is, when the Commission has found that the
petitioner has performed a valuable public service as a "private
attorney general" and has raised a "substantial and material ques-
tion" affecting whether the station should retain its license.
I think the change would help alleviate two concerns of mine
which were echoed by several key FCC officials in recent off-the-
record conversations: First, in some instances renewal hearings
that should take place-in order to enable the Commission to make
sure the licensee should be renewed-don't take place because the
petitioner withdraws, of necessity.
The public interest lawyers' resources are spread very thin with-
out the additional expenditures of time and money for renewal
hearings. There is presently no way for the petitioners or their
attorneys to get reimbursed by the Commission, and the Commis-
sion lacks the legal authority to require that the licensee provide
reimbursement.
The only way such reimbursement will take place is if the licens-
ee agrees to provide it voluntarily, and the only way a licensee will
do that is if the petitioner agrees to withdraw from the scene. Such
withdrawals are not uncommon and have occurred even in cases
when both the petitioner and the broadcaster think the petitioner's
case is strong and a hearing is likely or at least quite possible.
I would readily admit and willingly cite examples of how in some
cases everyone benefits from agreements between the parties that
avoid a renewal hearing; however, sometimes the public interest
can better be served by holding a hearing; and sometimes, even
though the FCC's broadcast bureau may be anxious to proceed with
the case, the petitioners pull out, not because they want to, but
because they feel they must.
The petitioners' decision to withdraw cannot be faulted. A public
interest law firm must decide whether or not to attempt to stop
one renewal in the face of expenditure of resources which could
threaten the firm's existence. For the petitioners, the issue can be
one of perhaps winning the battle but losing their war for more
responsible broadcasting in the process.
The second concern is that when the petitioners do not withdraw
their petition and the renewal or revocation hearing takes place,
their contribution and their case suffer because the Commission
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lacks the authority to compensate them for costs incurred relating
to the hearing.
There are currently Commission policies to help reduce this fi-
nancial burden. The law judge has the power to allow the petition-
ers to file fewer copies of relevant pleadings and to obtain less
costly access to transcripts. The hearing division can subpoena
witnesses who support the petitioners' views and pay those wit-
nesses the standard Government witness fee.
But the remaining expenses of the petitioner cannot be reim-
bursed by the Commission. The law firm cannot get money to hire
any more people to help in handling its increased workload.
Yet, the firm and the citizen groups-who may have spent years
just trying to get the case to hearing-often end up in the hearing
taking the lead from the FCC's hearing division in the presenting
of certain issues to the law judge.
The need for active participation by petitioners and their counsel
in a license hearing, to work alongside the broadcast bureau, will
be even greater if H.R. 3333 becomes law, when petitions to revoke
will be the only means of getting a licensee into a hearing.
To the extent those petitions are successful, whenever a revoca-
tion hearing is held, all of the burdens of proof and evidence-
unlike a renewal hearing-would be on the petitioner and the
FCC's hearing division.
For these reasons, Mr. Chairman, I would urge that section
244(a)(1) had been met. Section 244(d)(2) of the bill should also be
burse costs accrued by members of the public in the filing and
pursuing of a petition to deny or petition to revoke if the Commis-
sion has designated that petition for hearing, and if the Commis-
sion deems the reimbursement to be appropriate.
Before making this decision, the Commission would have to be
certain that the general conditions for compensation in section
244)a)(1) had been met. Section 244(d)(2) of the bill should also be
amended to require the Commission to report to Congress specify-
ing the instances in which such compensation has been granted.
One final thought: I share what must be your disappointment
that neither of the bills now under discussion in the Senate regard-
ing the changes in the Communications Act have an equivalent for
title II. No FCC reform is being proposed in the Senate, let alone
creation of a new Communications Regulatory Commission.
I hope that the many valuable proposals relating to Commission
reform-whether the Commission in question be the FCC or the
CRC-will someday become realities, and that section II becomes
law.
But I would point out that some of the provisions in section II-
and some related provisions in section V of the bill-could be
implemented without new legislation. For example, section 511(c)
requires the Commission to complete any rulemaking within 1 year
from the notice of proposed rulemaking.
If the Commission fails to meet that deadline, the rulemaking
must be terminated, and under section 241(g)(2) a report must be
made to Congress as to why the deadline was not met.
This procedure should and could be implemented immediately
through order and effective oversight of this committee, regardless
of the fate of H.R. 3333.
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105
Similarly, Chairman Ferris has indicated that he plans to in-
clude a line item in the next FCC budget for funds for reimburse-
ment of citizen participation in rulemakings. The Chairman told a
conference of researchers last year that he would consider approval
of the line item sufficient official go-ahead from the Congress to
have the FCC begin reimbursement under stated conditions.
Through support of the line-item request which Chairman Ferris
apparently intends to make, this committee can help effectuate the
reimbursement outlined in section 244, even if that section has not
yet been enacted.
Mr. Chairman, I thank you for again inviting me back. I wish
you well in your efforts to reform the Commission. It is a noble
task indeed.
[Testimony resumes on p. 114.]
[Mr. Cole's prepared statement follows:]
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STATEMENT OF BARRY COLE
PROFESSOR AT ANNENBERO SCHOOL OF COMMUNICATIONS
UNIVERSITY OF PENNSYLVANIA
I appreciate the invitation to again discuss H.R. 3333 -~ this time
the Title II provisions regarding reform of and restructuring what is now
the FCC. During last year's hearings I submitted a lengthy statement with
specific suggestions about the provisions in Title II of the 1978 bill, some
of which were incorporated into this year's version. I understand that these
hearings are designed to discuss the differences between the two bills
rather than to re-submit and re-argue previous suggestions. Given that
mandate and the official time constraints, I will limit my remarks to one
of the changes that appears in H.R. 3333 -- the provisions in Section 244
relating to reimbursement.
Last year I endorsed inclusion of explicit statutory language enabling
the Commission (whether it be called FCC or CRC) to compeneate members of
the public for costs of participation in Commission proceedings.
I am happy that this year's bill includes language to permit reimbursement
for participation in general rulemaking. In Reluctant Regulators: The FCC and
the Broadcast Audience, we discussed how constructive input from members
of the public can be decisive to the outcome of a Commission rulemaking. One
example concerned the public availability of the program logs of television
stations. In a special oral argument on the proposal, broadcasters and their
Washington attorneys told the Commissioners that making the logs public would
be an undue burden of little value to the public. Citizens -- all of them
paying their own travel expenses to Washington, some coming from as far away
as California -- aegued the opposite. Because of their persuasive arguments,
the Commission unanimously decided to revise its previous rather limited
proposed rule and make the logs readily available for public inspection.
(It later did the same thing with radio logs.) Under H.R. 3333, the public
PAGENO="0111"
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participants in the oral argument could have been reimbursed f or at least
their travel expenses.
Although the bill permits reimbursement in ratemaking and rulemaking
proceedings, Section 244 (b) (2) states that tI~e reimbursement provisions
"shall not be construed to apply to any hearing relating to the revocation
of a license. . . or to any hearing relating to a petition to deny any
television broadcast station license application. . . ."
Fewer than 6 out of every 100 petitions to deny license renewals and
fewer than 3 out of every 100 stations challenged by such petitions have been
designated for renewal hearing. Yet the bill as now written explicitly precludes
reimbursement only in the few hearings relating to petitions to deny and does
not explicitly preclude reimbursement in the 94 percent plus instances in
which the Commission has decided the petitioner `has not made its case for a.
renewal hearing. Also, the bill does not limit the Commission's authority
to reimburse costs associated with petitions to deny radio broadcast
applications filed during the one renewal period all radio licensees must
face under H.R. 3333 before getting their indefinite licenses.
The Section-By~~Section Analysis of H.R. 3333 states, "The Commission.
is explicitly precluded from providing reimbursement for participation in
license renewal and license revocation challenges." In the following discussion
of the reimbursement provision in Section 244, I am assuming that the statement
in the Analysis correctly interprets the real intention of the bill and that
what is really being proposed is to make it impossible for the Commission to
ever reimburse a petitioner for expenses incurred relating to a petition to
deny or a petition to revoke regardless of whether that petition results in
an FCC hearing or even in a decision by the Commission that the licensee should
lose his license.
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108
Public monitoring of local station operations is needed because, as Warren
Burger wrote in the 1966 landmark WLBT decision which granted standing to
citizen groups, "unless the Commission is to be given staff and resources
to perform the enormously complex and prohibitively expensive task of
maintaining constant surveillance over every licensee, some mechanism
must be developed so that the legitimate interests of listeners can be made a
part of the record which the eommission evaluates." Burger had earlier
indicated that the interests of listeners were legitimate because it is the
listeners "who are most directly concerned with and intimately affected by
the performance of a licensee."
Reluctant Regulators documented that after the WLBT decision, citizens
have become very active in monitoring the performance of broadcasters and often
have had more influence on licensee behavior at renewal time than the Commission.
The FCC has encouraged such participation, at least officially: "Establishing
and maintaining quality broadcasting services in a community is. . . a matter
in which members of the community have a vital concern and in which they can
and should play a prominent role."
Some citizens who become involved in the renewal process act in a manner
`referred to by Burger as "legitimate listener representatives fulfilling the
role of private attorneys general. Unfortunately, Commissioner James Quello
has correctly characterized others as people "who use legal processes to
promulgate their own private, self..servingversions of the public interest.
Some petitions are frivolous. Others raise significant public interest questions.
Given these realities, it would obviously be a mistake to' take one extreme and
allow the Commission to reimburse expenses incurred by all those filing
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109
petitions to deny or petitions to revoke licenses.. (The latter petition is
very uncommon now, but would become much more prgn,inent as the current license
renewal process is discarded.)
* It would also be a mistake to take the other extreme and preclude the
Commission from ever reimbursing members of the public for costs related to
such petitions.
Is there a rational middle position between the two extremes that will
further the public interest? I would argue that it would be appropriate and
extremely beneficial to enable the Commission to consider reimbursing expenses
of petitioners when a petition leads to a hearing that is, when the Commission
has found that the petitioner has performed a valuable service as a "private
attorney general" and has raised a "substantial and material question" affecting
whether the station should retain its license.
That has not happened very often. The reasons fewer than only 3 out of
every 100 stations challenged by petitions to deny renewals must face a renewal
hearing are discussed in our book. Some of the~e reasons relate to the Commission's
"mind-set." The FCC has traditionally acted as a neutral judge trying to decide
whether the petitioner has proved its case, rather than, in the words of former
Commissioner Benjamin Hooks (now Executive Director of the NAACP), acting as
"the principal monitors of broadcast performance who have the obligation to
look behind the scenes. ..through means of formal or informal investigations...
and determine whether there is some basis in fact for the petition's allegation."
Most Commissioners have agreed with their Chief of the Renewal and Transfer
Division of the Broadcast Bureau that a renewal hearing is "a last resort" -
something which takes place "when there is just nothing else to do." The
51-254 0 - 80 - 8
PAGENO="0114"
110
Commission has not gone to this `last resort unless the petitioners have made
a very powerful case which cannot be ignored.
Once the petitioners have overcome the hurdles created by this mindset
once the Commission has been convinced that their petition raises problems
and questions that bear directly on the public interest and have not been
satisfactorily answered by the broadcaster, then it would seem the petitioners
have demonstrated that they do in fact represent what Burger refers to as
"the legitimate interests of listeners" and not the people Quello accuses as just
wanting to "promulgate their own private, self.serving versions of the public
interest." Once this happens, I think the Commission should have the flexibility
to reimburse some of the expenses incurred by those petitioners in their
role as private attorneys general during and, when appropriate, even before
the renewal hearing.
I think the change would help alleviate two concerns expressed by
several key FCC officials in recent off..the-record conversations.
(1) Renewal hearings that should take place (in order to enable the
Commission to make sure the licensee should be renewed) don't take place because
the petitioner withdraws.
In Reluctant~Regulators there is reference to constant jokes within the
public interest law community about how the Commission could quickly put them
out of business by holding some hearings. The public..intereet lawyers'
resources are spread very thin *ithoüt the additional expenditures of time and
money for these hearings (A six..day week, 70 hours plus work schedule
for these lawyers is not uncommon.) There is presently no way for the
petitioners or their attorneys to get reimbursed by the Commission and the
Commission lacks the legal authority to require that the licensee provide
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111
reimbursement The only way such reimbursement will take place is if the
licensee agrees to provide it voluntarily, and the only way a licensee will do
that is if the petitioner agrees to withdraw from the scene. Such withdrawals
have become fairly common, even in cases when both the petitioner and the
broadcaster think the petitioner's case is strong and a hearing is likely or
at least quite possible
I would readily admit and willingly cite examples of how in some cases
everyone benefits from agreements between the parties that avoid a renewal
hearing. However, sometimes the public interest can better be served by, holding
a hearing; and sometimes, even though the FCC's Broadcast Bureau may be
anxious to proceed with the case, the petitioner pulls out not because he wants
to but because he feels he must.' The petitioner~s decision to pull out cannot
be faulted A public-interest law firm must decide whether or not to
attempt to stop one renewal in the face of expenditure of resources which
could threaten the firm's existence For the petitioners, the issue can be
one of perhaps winning the battle, but losing their war for more responsible
broadcasting in the process.
(2) When the petitioners do not withdraw their petition and the renewal
or revocation hearing takes place, their contribution and their case suffers
because the Commission lacks the authority to compensate them for costs incurred
during the hearing
There are current Commission policies to help reduce this financial
burden. The law judge has the power to allow the petitioners to file fewer
copies of relevant pleadings and to obtain less costly access to transcripts
The Hearing Division can subpoena witnesses who support the petitioner's
PAGENO="0116"
112
views and pay those witnesses the standard government witness f cc. (I assume
these powers would not change under H.R. 3333 -~ although there may be some
conflict between Section 242 (b) of the bill and the staff analysis of
Section 244 (b).) But the remaining expenses of the petitioner cannot be
reimbursed by the Commission. The law firm cannot get money to hire any more
people to help in handling its increased work load. Also, the firm and the
citizen group (s) -- who often have spent ~ just trying to get the case
to hearing often end up taking the lead from the FCC's Hearing Division
in the presenting of certain issues to the Law Judge during the hearing.
Warren Burger noted in his WLBT decision thirteen years ago that: "The
theory that the Commission can always effectively represent the listener interests
in a renewal proceeding without the aid and participation tof those interest~
is no longer a valid assumption which stands up under the realities of actual
experience. . . ." The need for active participation by petitioners with
council in a license hearing, to work alongside the~ Broadcast Bureau, will be
even greater if H.R. 3333 becomes law. If the renewal process is eliminated,
petitions to deny renewal will become a thing of the past and petitions to revoke
will be the only means of getting a licensee into a hearing. To the extent
those petitions are successful, whenever a revocation hearing is held, all
of the burdens of proof and evidence (unlike a renewal hearing) would be on
the petitioner and the FCC's Hearing Division.
For all these reasons, Mr. Chairman, I would urge that Section 244 (b) (2)
be re-drafted to give the Commission the ability to reimburse costs accrued
by members of the public in the filing and pursuing of a petition to deny or
petition to revoke if the Commission has designated that petition for hearing
and if the Commission deems the reimbursement to be appropriate. Before
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113
making this decision, the Conuission would have to be certain that the general
conditions for compensation in Section 224 (a) (1) had been met. Section 244 (4) (2)
of the bill should also be amended to require the Commission to report to
Congress specifying the instances in which such compensation has been granted.
One final thought. I share what mus'~ be your disappointment that
neither of the bills now under discussion in the Senate regarding the changes
in the Communications Act have an equivalent for Title II. No FCC reform is
being proposed in the Senate, let alone creation of a new Communications
Regulatory Commission. And there is talk of separating out those portions
of your bill dealing with common carrier and delaying Congressional consideration
of the other portions of the bill.
I hope that the many valuable proposals relating to Commission reform --
whether the Commission in question be the FCC or CRC will someday become
realities. I hope that Section II will not be forgotten. But I would point
out that some of the provisions in Section II (and some related provisions in
Section V of the bill) could be implemented without new legislation. For
example, Section 511 (c) requires the Commission to complete rulemaking
within one year from the notice of proposed rulemaking. If the Commission
fails to meet that deadline, the rulemaking must be terminated, and under
Section 241 (g) (2) a report must be made to Congress as to why the deadline
was not met. This procedure should and could be implemented immediately through
order and effective oversight of this committee, regardless of the fate of
H.R. 3333.
Similarly, Chairman Ferris has indicated that he plans to include a
line item in the next FCC budget for funds for reimbursement of citizen
participation in rulemakings. The Chairman told a conference of researchers
last year that he would consider approval of the line item sufficient official
go-ahead from the Congress to have the FCC begin reimbursement under stated
conditions. Through support of the line item request which Chairman Ferris
apparently intends to make, this Committee can help effectuate the reimbursement
outlined in Section 244, even if that Section has not yet become law.
Mr. Chairman, I thank you for again inviting me back. I wish you well
in your efforts to reform the Commission. It is a noble task indeed.
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Mr. VAN DEERLIN. Thank you, Dr. Cole.
Ms. Possner?
Ms. POSSNER. Dr. Cole, you mentioned at the end of your state-
ment that Chairman Ferris intends to include a line item in the
Commission's proposed budget relating to intervenor funding and
that he would consider approval tantamount to a grant of authori-
ty. Do you know if that is a change in Commission policy in this
area? At some point did either Chairman Ferris or the previous
chairman, Chairman Wiley, or the Commission claim that explicit
statutory authority was necessary to proceed with intervenor fund-
ing?
Mr. COLE. As you know, in the past there has been a difference of
opinion within the Government as to whether the FCC h~s that
statutory authority.
The Commission has issued a notice of inquiry about reimburse-
ment. One of the questions is, does the FCC have the authority
under existing law.
Chairman Ferris indicated at a conference last year that one
way, of testing the will of Congress on the matter is to put a line
item in the budget; and if Congress tells the FCC reimbursement
exceeds the Commission's legal authority and/or should not be
implemented, the Commission will not go ahead with a reimbuse-
ment program.
But if the Congress does not prevent that line item from going
into effect, Ferris would consider that sufficient go-ahead for reim-
bursement.
This would not be done in a sneaky fashion without anybody
knowing about it. I am sure Mr. Ferris will point out to the
Appropriations Subcommittee, "Look, we are planning to do this;
do you have any reactions?"
Ms. POSSNER. I raised this because in response to a question
about whether the Commission has the authority to proceed with
such a program, Chairman Ferris, in an earlier hearing, said that
he would feel more comfortable with an explicit statutory mandate.
Mr. COLE. I am sure he would; but, the statement to which I
refer was also made publicly. He was asked, "Do you think you
have the authority?" and he said, "I am not sure." He was then
asked "Do you think you should test that authority?" and he said,
"I think it would be useful in the next Appropriations Committee
hearings, to put a line item for reimbursement in the budget."
Ferris was later asked, "If Congress OK'd that line item, would
you go ahead and in fact start appropriating some of that money?"
and he said, "Yes, I would."
Of course he was representing only himself in this, and there is a
question whether or not he has the support of a majority of the
Commission. But the Commission's budget, as you know, Ms.
Possner, is traditionally drawn up in the Chairman's office.
Ms. POSSNER. One final question: You propose extending the
Commission's authority to grant intervenor funding in broadcast
license challenges to those petitions designated for hearing
If the possibility exists that meritorious petitions could be
funded, do you believe this would encourage the filing of peti-
tions-both meritorious and frivolous?
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Mr Coi~ I honestly do not think it would have a noticeable
effect, because I think most petitioners realize the odds of success
are slim And if the bill were enacted leaving only petitions to
revoke in the law, all the burdens would be on the petitioners and
the odds would be even slimmer
I think the difference would not be so much in the numbers of
petitions filed, but rather that some of the licensee petitioner
agreements now being reached would no longer be reached In
some instances the public interest law firms would say "We think
we have a strong case here and we may get a renewal hearing And
if it does go to hearing, there may not be an additional burden on
us, because we can get compensated"
Ms POSSNER So, in your opinion, public interest groups would
take a chance and file a petition, rather than rely on citizen
broadcaster agreements9
Mr COLE In some cases only Much of this, as Henry Geller
mentioned earlier this morning, has to do with the public interest
law firms You need a lawyer, an experienced lawyer, to be success
ful in a renewal hearing There is a hearing in which a nonlawyer,
with the help of the broadcaster bureau's hearing division, is trying
to prosecute a case But in general you need a lawyer
As you know, there are only a few public interest law firms
which deal on a continuing basis in the area of petitions to deny
They include Citizens Communications Center and Media Access
Project
A shortage of resources at these law firms has existed from the
very beginning For example, Citizens Communications Center
worked with local citizens in Sandersville, Ga, on a petition to
deny The petition led to the Commission designating the station's
renewal application for hearing The action surprised Citizens Com
munications Center for this was the first petition to deny since
WLBT that led to a hearing order I think what CCC director
Albert Kramer and most people expected was that, like every other
petition to deny, the Sandersville petition would be denied, and
Kramer could take his case to court A court appeal would have
been an easier process than a long renewal hearing
When the petition was designated for hearing, the petitioners got
together with the licensee Both wanted to avoid a hearing, and an
agreement was reached Because of the agreement, the FCC agreed
to cancel the hearing
What I am saying is, in certain cases this is fine, but in other
cases it is to the general public's benefit to have a renewal hearing
Just because the petitioners are able to reach an agreement to
avoid a hearing does not necessarily mean the licensee is capable of
being a responsible public trustee
The major change would not necessarily be in the number of
petitions that were filed Your odds of success, in getting the FCC
to decide to order a renewal hearing would be no better But at
present, if you are a public interest law firm-even with a good
chance of getting a hearing-you want to avoid that hearing be
cause that hearing is liable to completely finish you
With the possibility of reimbursement, I think in some cases
where the law firm now tells the petitioners "Look, if we went to
hearing, we might win, but we can't afford to go to hearing," they
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would say, "We think we can get a hearing; let's have the Commis-
sion rule on this." I think you would start getting a few more
petitions, not a great number, but a few more petitions, going to
hearing.
Ms. POSSNER. You mention public interest law firms as well as
citizen reform groups.
Would you comment on what advantages or disadvantages there
might be to putting a cap on the amount of intervenor funding any
one petitioner can receive in 1 year? Do you think that a cap would
restrict the activities of those public interest law firms that are in
the forefront of license challenges-or any other group for that
matter?
Mr. COLE. I would not put a cap on until experience suggested
the imbalance of reimbursement warranted a cap. For this
reason-suppose all of us in the room here today were black, and
were in a city in which half the city was black. We file a petition to
deny against licensee "X." The petition is filed on behalf of all
blacks, the 50 percent of blacks in the community. It claims we
blacks are not being served by the licensee.
Once the Commission has made the judgment that our petition
raises material, substantial question of fact and the licensee's re-
sponses to our allegations are not satisfactory and a renewal hear-
ing is necessary, then I feel our group and our attorney should
have the possibility of being reimbursed.
Now, it is true that our attorney may be the same attorney used
by many other petitioners. But if we have successfully made our
case with his help, and 25 other groups around the country have
successfully made their case with his help, I can't see putting a cap
on how much that attorney and his firm can be reimbursed for
work relating to those 26 renewal hearings.
Ms. POSSNER. Thank you very much, Mr. Chairman.
Mr. VAN DEERLIN. Mr. Wunder?
Mr. WUNDER. Thank you, Mr. Chairman.
I take it that you would also not want to see standards written
into the legislation as to who should receive funding, intervenor
funding?
Mr. Cou~. I would go along--
Mr. WUNDER. Anybody that the Commission chooses?
Mr. COLE. No, not at all. I would go along with the standards you
have in section 244(a)(1) of the bill. But what has happened now is,
you have said, "Here are standards qualifying people for reim-
bursement. But in any challenge regarding petitions to deny or
petitions to revoke, these standards do not apply, nothing applies.
You cannot reimburse at all."
I would apply the same standards you have for reimbursement in
general rule makings to petitions to deny or revoke, if the petition
is designated for hearing. Some of the questions raised earlier
today with Mr. Geller are legitimate questions of how do you know
a particular person is really representing the people, et cetera.
My feeling is, once a petition results in a renewal hearing, the
petitioner-whether a single citizen, or leader of a group of 100,000
people-has demonstrated he has raised legitimate concerns requir-
ing Commission investigation. He has demonstrated he has an
ability to discover and articulate those concerns. And then you can
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apply the same conditions in section 244 you do for reimbursement
in other proceedings.
Mr. WUNDER. So yours would always be predicated to some ini-
tial determination by the Commission that the petitioner seeking
to intervene has raised a question that ought to be considered?
Mr. COLE. Correct.
Mr. WUNDER. This is your way of dealing with the frivolous
petition issue?
Mr. COLE. Yes; I think that is a reasonable compromise. I think
you would have problems, as discussed earlier, if you simply said,
"OK, let's permit the Commission to have a pot and start giving
money to citizen groups; and if you have given money to one
citizen's group in a community, you had better give money to any
other." That is a never, never land and the Commission would
have terrible trouble administering such a reimbursement ap-
proach.
Mr. WUNDER. How do you deal with the argument Senator Dan-
forth raised recently, that the people who seem to be getting the
money at the FTC are the people who tend to support that which
the FTC is attempting to do?
Mr. COLE. The Commission's mind set-and I think that we
document this in our book-has traditionally been that of a judge.
If any petitioner indicates that you, the licensee, has not been
doing your job--
Mr. WUNDER. Let me stop you right there, because the mind set
at the FTC may have been different when Cal Collier was Chair-
man than when Mike Perchuck is Chairman.
Mr. COLE. Well, the FCC mind set has never really changed.
There have been only about 25 petitions to deny which led to a
hearing in the history of the agency. I think the interesting thing
is, if you started going down a list of why the 25 led to a hearing,
you soon recognize the FCC really had no other alternative. The
licensee had refused to fill out the form properly, or there was a
specific allegation that was almost totally proven to be true, and
the Commission had no other choice but to move ahead to a formal
renewal hearing.
I could cite a number of examples to demonstrate a consistent
FCC mind set. The Commission has never taken a license away in
its history since 1934 for a lack of local programing, for a lack of
public service or informational programing, et cetera.
The Commission's track record on this, regardless of whether
there was a Republican or Democrat majority, has been terribly
consistent.
Under existing law at renewal time, in theory, the burden is
upon the licensee to demonstrate it is in the public interest to have
his license renewed for 3 years.
What I am saying is, in the history of the agency the Commis-
sion has never said, "You haven't proved your burden regarding
local and public service programing."
So, in effect, the burden has been on the petitioner to come in
and say, "There is a material and substantial question of fact
here." That burden has only been met with respect to three out of
every 100 stations that have been challenged.
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The petition to deny process only came about because the courts
forced it to come about. Since that time the Commission has con-
sistently sat back as a judge and agreed with its chief of renewal
and transfer and Chief of the broadcast bureau: "Hearings are a
last resort. You don't do them unless there is nothing else to do."
In effect, the Commissioners have consistently said unless the
petitioner has proven his case we are not going to set the renewal
for hearing.
So there is a tremendous burden upon the petitioner. But once
that burden has been met, then I think the Commission has made
a determination that the petitioner represents more than just him
self-whatever he calls himself, whatever may be his official title
or the number of people in his organization
Mr WUNDER That is an interesting question You see, you have
posed the threshold at such a level that the Commission can say,
"Yes, you have raised a sigrnficant issue" Even if that were raised
to a level of finding and that decision was appealable the determi
nation to be made by the court on appeal would be that the
Commission's determination was arbitrary and capricious
So you set a fairly low threshold, and what I want to get to is the
standing, which you were about to raise Do you believe as a
matter of public policy that a single individual, as you alluded to
just now, should be granted standing to intervene?
Mr CoLe I think the only thing that is relevant is the issue
raised in the petition. I don't care if that person represents himself
or that person represents a million people, the important point is
the issue raised Even under the new bill, there are certain things
you can revoke a license for, a licensee must do certain things, and
if one person can come to the Commission-and, again, the odds of
him doing that have been very, very slim--
Mr. WUNDER. You see that is not really relevant, the odds and
past track record.
Mr. Cou~. Well, I am setting an exceedingly high threshold.
What I am saying is the petitioner has two hurdles: First, his
petition must be one of the very few that lead to a hearing; second,
he must meet the standards set in section 244(a)(1)
Mr. VAN DEERLIN. Would you yield?
Isn't it likely that limitations on agency staff would provide the
limitation on the number of cases that could be set for hearing?
Mr. COLE. Yes, I think in reality that is the case; and I can't see
that my amendment would increase the number of hearings signifi-
cantly.
Mr WUNDER Thank you
Mr VAN DEERLIN On one other subject, since your authority is
much wider than the matter of reimbursement fees, you have
heard the testimony this morning from the NTIA witnesses about
their recommendation for the nonrenewability of Commission
terms of appointment What was your feeling, or what is your
feeling, on that?
Mr COLE I agree with Henry Geller, that you shouldn't ban
reappointment, because I can think of cases where reappointment
would have been salutary
What concerns me, Mr Chairman, is that in this year's bill you
have gone even further in the opposite direction Under last year's
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119
bill, you could be reappointed to the CRC if you had served less
than 5 years. Now you can only be reappointed if you served less
than 2 years.
I think you should at least move back to a middle ground, if you
are not going to permit indefinite reappointments, which I would
opt for.
I would think the most effective way to handle reappointment
would be to indicate in the committee report that you are not
banning additional reappointments, because there may be a case
which really merits it; but that before someone is reappointed, the
President should think very carefully and make sure this is the
best person for the job, et cetera.
But if you are not going to do that, I would like at least to see
you permit someone who has served less than 5 years to be reap-
pointed.
* To limit reappointment to those who have served less than 24
months defeats the rationale for a 10-year term included in the
staff analysis of H.R. 3333. As the analysis suggests, it does take a
few years to get familiar with the job.
Mr. VAN DEERLIN. Miss Possner is hankering to ask one more
question. Should we let her do it?
Ms. POSSNER. You agree that it takes 2 to 3 years to become
familiar with the issues and be able to make a significant contribu-
tion to the Commission. And you think that reappointment should
not be ruled out. What is your feeling about Mr. Geller's comment
this morning, that a commissioner might "shade" his or her behav-
ior because the promise or threat of reappointment exists? What
you have then is a 2- to 3-year learning period at the beginning of
the appointment and possibly a 1- or 2- or 3-year period toward the
end of a term when reappointment is a possibility. What are you
left with, 4 or 5 years?
Mr. Coi~. I think the key is good people. I think that historically
some of the best commissioners have been those that only served
for 3 or 4 years; and maybe that is unfortunate. Maybe the system
makes them tired and they burn themselves out. I am afraid you
cannot legislate an appointment process that will guarantee you
good people.
My answer in theory to your question, Ms. Possner, would be
that if the quality of the appointment were high, the problems you
raise would not really be problems. In actual fact, there may be
problems and the bill may alleviate some of them. But the other
half of the coin is, the bill prevents you from getting, say, a Ken
Cox reappointed. Cox was an excellent commissioner and wanted
reappointment, but could not because a Republican President came
in. The balance of Commissioners was four to three Democratic,
and the end of Cox's term was the Republicans' chance to get a
Republican majority.
Under the existing law there would have been a chance for Cox,
if Humphrey was elected in 1968.
Under the new law, Cox wouldn't have had a chance of reap-
pointment, even if Humphrey had come into office and had said,
"Here is a great Commissioner and he has done an excellent job."
PAGENO="0124"
120
So I think whenever you start legislating the appointment proc-
ess you lose something and gain something. The key is still good
people.
I wish you could legislate a process which would guarantee the
appointment of good people.
Mr. VAN DEERLIN. And Congress sometimes is reluctant to think
in terms of limitations on terms anyhow.
Mr COLE Mr Chairman, if I could make one other point quick
ly--
I think in addition to importance of good people for improving
things, is the importance of effective oversight by the Congress
Having worked in the FCC's chairman's office, I know what can
happen at the Commission when a couple of good questions are
raised by Members of Congress, or a good oversight hearing is
about to take place. This has certainly happened more frequently
under your regime, but I think a number of the problems which
have occurred historically at the Commission could have been re-
medied by effective, consistent oversight.
At the time I was there we did not even always have oversight
every year. Once a year is not enough. You need congressional
monitoring on a continuous basis.
As a closing comment, I would suggest that if you want to
improve the agency, there are certain things you can do in the
law-but a lot will depend on whether you have good people down
there, whether you call it the CRC or the FCC, and whether you
have seven Commissioners or five Commissioners. And a lot will
depend on the effectiveness of the oversight by Congress
Mr. VAN DEERLIN. On that note, I thank you.
We will step down long enough to go over and vote
[Brief recess I
Mr VAN DEERLIN Our next witnesses are Mr Howard J
Symons and Ms Nancy Drabble representing Congress Watch
STATEMENT OF HOWARD J SYMONS, AND NANCY DRABBLE,
PUBLIC CITIZEN'S CONGRESS WATCH
Mr SYMONS Thank you, Mr Chairman
Nancy will speak on the public participation aspect She has
been working on that generally for* the last couple of years.
Ms. DRABBLE. I will summarize our statement briefly since other
witnesses have gone over the public participation points pretty
well. This isn't a new issue to Public Citizen. We have been work-
ing with Congress and the administrative agencies for the last
several years to try to encourage them to start up public participa
tion programs.
As you know, public participation really is critical to a fair and
balanced decisionmaking process. It is not enough to have standing
to participate. The FCC proceedings in particular are so technical
and complex that it is nearly impossible to participate unless you
have the engineers, the lawyers, the economists that you need in
order to make an effective case. Citizen's groups and small busi-
nesses just can't afford to hire those people.
This was recognized in the landmark WLBT case in which Chief
Justice Burger, then Circuit Judge Burger, dismissed the argument
that the FCC could represent the public interest and somehow
PAGENO="0125"
121
discern exactly what the public interest was. He wrote that it was
"no longer a valid assumption" that the FCC could perform thai
function without help from the public. Instead, he found that the
FCC needs to get people in from all points of view and get as much
information as possible in order to make an intelligent decision
about a particular issue.
Mr. VAN DEERLIN. While simultaneously monitoring nearly
10,000 licensees?
Ms. DRABBLE. Yes. We all know that the FCC is not omniscient.
There is a clear need to hear from outside parties. The documenta-
tion of the need for public participation has also been growing over
the last several years. The most systematic study was one by the
Senate Governmental Affairs Committee, completed in 1977.
In that study, which surveyed several independent agencies, they
found that in half the proceedings there wasn't "any public partici-
pation at all." I think that is a critical statistic and it is really a
disgrace that we don't get the public in to half those proceedings.
The regulators are sitting as judges. The regulated industry is one
party. They have their lawyers. But there is an empty chair on the
other side. In particular, there are some striking statistics at the
FCC.
In 1975, for example, A.T. & T. reported to the FCC that they
spent more than $2.25 million on Commission proceedings. In adju-
dications the Governmental Affairs Committee asked the FCC
which had been their most significant adjudications, and the FCC
sent back a list of 30. And of those 30 adjudications there had been
public participation in only 3 of them.
In the two dockets in which the A.T. & T. was requesting an
increase in its rate of return, the A.T. & T. spent $800,000. Obvi-
ously these were questions of great concern to consumers. But
there was no public participation in either one of those proceed-
ings.
Mr. VAN DEERLIN. What about public utility commissions?
Ms. DRABBLE. Actually I am not sure whether they did partici-
pate. These were private groups they were counting up. I don't
think the governmental entities would have been included in their
list of public participants.
Mr. SYMONS. And, as we testified last month, there is a problem
even in the State commissions. The public is underrepresented
there, too. A.T. & T. is able to send lawyers and economists before
the public utility commissions, and oftentimes those commissions
will only hear the industry side. Recently a number of States
established ombudsmen or public counsel but--
Mr. VAN DEERLIN. I sometimes wonder if the word "public"
shouldn't be deleted.
Mr. SYMONS. From the name "public service commission." Yes.
Ms. DRABBLE. Also, there was the Moss report that came out of
this committeee a couple of years ago which also recommended the
institution of public participation funding across the board in the
Government. And as you may know, there is a public participation
funding provision included in a few of the regulatory reform bills
that are pending in the Judiciary Committee. The FCC itself has
acknowledged the need to look into the question of public participa-
tion funding in its notice of inquiry last summer.
PAGENO="0126"
122
Also, there are several precedents of public participation funding
in other agencies. As the minority counsel mentioned earlier, there
is a program at the FTC. It is the oldest one. It has been in
existence since the Magnuson-Moss Act of 1975. That program has
the same standards as the one proposed in this bill. It provides a
model for the other programs that have gone into effect.
I think it important at this point to point out what the standards
are for public participation funding programs The eligibility stand
ards are the crux of any public participation funding program In
order to even be considered for public participation funding the
applicant has to show three things.
First, he must prove he is making a contribution to the proceed
ing that is necessary to a fair determination of the outcome. That
is quite a high standard We would suggest that the requirement
that the contribution be necessary be amended to a requirement
that the contribution be a substantial one. An unsympathetic
agency could find that no one's contribution is necessary to a
proceeding, whereas a substantial contribution standard is strict
but fair. -
The second eligibility criteria is that that contribution is not
being made by someone else, including the Commission staff, other
industry participants, or other consumer participants.
The third standard is that the applicant must have insufficient
resources to participate without an award.
The financial means test is also a critical part.
In many of the questions that are raised in opposition to public
participation funding, I think that if you refer to the standards,
you will find that the answers are right there The eligibility
standards are tough and they eliminate applications that should
not be granted.
I would like to offer a brief summary of the FTC program. In the
last 3 years they have funded 68 groups, 50 of whom had never
participated in FTC proceedings before. So they have gotten new
people into their rulemakings. Also, 27 percent of the groups that
have been funded have been small businesses.
It is sometimes suggested that consumer groups are the only
ones who are getting this money. It has not been the case with the
other public participation programs and I suspect it would not be
the case at the FCC
The previous witness discussed the need to extend the public
participation funding proposal to adjudications. We would just echo
that suggestion. We think that important policy is made in adjudi-
cations We think that it is important to also have the ability to
fund citizen intervenors in license challenges The WLBT case, the
landmark case in the area of citizen participation, was an adjudica-
tion. Under your bill the citizen intervenors in that proceeding
would not even have been able to apply for funds. We think that at
least the FCC should have the authority to consider applications in
adjudications Maybe they will choose to give most of the money to
participants in rulemakings, but at least they should have the
opportunity in appropriate cases to use funds for license chal
lenges.
Thank you.
[Testimony resumes on p. 139.]
PAGENO="0127"
123
[Mr Symons' and Ms Drabble's prepared statement and attach
ment follows I
PAGENO="0128"
124
STATEMENT OF HOWARD SYMONS AND NANCY DRABBLE
PUBLIC CITIZEN'S CONGRESS WATCH
Before the
SUBCOMMITTEE ON COMMUNICATIONS,
HOUSE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
On
HR 3333 (CommunicatiOns Act of 1979)
June 12, 1979
Mr. Chairman, Members of the Subcommittee;
We appreciate the opportunity to testify this morning on the administrative
provisions in HR 3333. We are particularly interested in Sec. 244, "Compensation
1/
for Cost of Participation in Certain Proceedings."
Public Citizen has been working for several years to encourage agencies and
Congress to adopt public participation funding programs. Thus we were very
pleased to see a funding provision included in the Communications Act of
1979. Citizen participation in agency proceedings is crucial to a fair and
balanced decision-making process. But as you are well aware, the right of
citizens to participate is often insufficient by itself. FCC proceedings are
so highly complex that it is nearly impossible to participate effectively
without engineers and economists -- which small citizen groups and sisal].
businesses simply cannot afford to hire. The Commission itself recognized
this problem in its recent Notice of Inquiry on public participation reimburse-
ment:
Because of lack of resources, the public has often been
limited to partioipating in FCC proceedings through
legal arguments only, rather than being able to provide
us with the necessary underlying economic, statistical
and other data and analysis that would be most helpful.~f
1/In passing, a number of other sections stand out: Sec. 212--We question
the constitutionality of giving either House of Congress the power to veto the
president's choice for chair of the Communications Regulatory Commission.
Sec. 215--We support the upgrading of the Office of Consumer Affairs as one
means of recognizing that the consumer viewpoint is essential to telecommunications
policymaking.
Fed. Reg. 30834, 30835 (July 18, 1978).
PAGENO="0129"
125
But while we generally support Sec. 244, we are disappointed that you
have chosen to limit public participation funding to tariff hearings and
rulemakings. The public impact of adjudicatio~is can be just as great as the
effect of rulemakings, and citizen intervention in an adjudicatory proceeding
may provide the agency with information that the interested firm either
cannot or wili not supply to the regulators. Particularly at the FCC,
intervenors in license renewal proceedings can alert the commissioners to
shortcomings in public affairs prograxnminc; and zzo compliance. A reimbursement
program limited to rulemakings is insufficient.
The Need for Public Participation Funding at the FCC
In admtnistrative proceedings in general and in FCC proceedings
particularly, there is a dramatic imbalance between the resources of regulated
industries on one hand and those of citizens. and citizen groups on the other.
The most systematic study to date of industry and consumer representation
before federal agencies was completed in July 1977 by the Senate Committee
3/
on Governmental Affairs.
The Committee found that industry participation dramatically overshadowed
citizen participation:
In agency after agency, participation by regulated industry predominates--
often overwhelmingly. Organized public interest representation
accounts for a very small percentage of participation before rederal
regulatory agencies. In more than half of the proceedings, there is
no such participation whatsoever. In those proceedings where
participation by public groups does take, place, typically,
it is a small fraction of the participation by the regulated 4/
industry. One-tenth is not uncommon; sometimes it is even less than that.
Financial resources devoted to agency proceedings were similarly imbalanced:
3/Senate Committee on Governmental Affairs, 95th Congress, 1st Session,
Study on Federal Regulation, Vol. III (Comm. Print 1977).
4/Senate stg~,, ~ at 16.
51-254 0 - 80 - 9
PAGENO="0130"
126
Comparing public interest group costs to industry costs is
like comparing David to Goliath. Time after time, industry
is able to spend 10, or 50, or 100 times as much money
on participation as public interest groups.5/
With the growing awareness of the gross imbalance of representation in
agency proceedings has come an increased recognition of the value of greater
public participation. This recognition is based on a realistic perception of
the limits of an agency's ability to discern the "public interest," particularly
where the regulators are not exposed to all sides on an issue. In a landmark
case involving the FCC itself, Office of Communications of United Church of
Christ v.FCC, 359 F. 2d 994 (D.C. Cir. 1966), Chief Justice (then Chief
Circuit Judge) Warren Burger dismissed the theory that the regulatory agency
can always effectively represent the citizens affected by regulations. That
6/
theory, wrote Burger, is "no longer a valid assumption." If it does not
hear consumer viewpoints, the agency cannot be expected to reflect them --
no matter how diligently the agency's statute mandates that the regulators
promote the "public interest."
FCC proceedings illustrate the striking disparity between citizen and
industry participation. According to the Senate study, for instance, "for
the year ending December 31, 1975, A.T.&.T. reported over $2,255,000 in FCC
7/
expenses. Of this total, $1,800,000 was incurred in just three dockets."
The study found citizen participation in the three ruleisakings cited by the
FCC as significant, but noted ratios of industry to public interest groups of
5/Id., at 22.
6/359 F.2d 994, 1003.
7/Senate St~4y~, ~ at 21.
PAGENO="0131"
127
8/
64 to 14, 33 to 4, and 3 to 4. The Committee could not secure cost figures
for the industry, but the Media Access Project estimated that its participation
in the Fairness boctrine rulemaking cost $l6,000--and this was only for
attorneys fees and out-of-pocket expenses.
The Senate's findings on FCC proceedings other than rulemakings were
even more striking. For example, public participants were involved in only
9/
three of the 30 most recent broadcast application proceedings. This is a
dismal record. In two other proceedings, A~f&T requested increases in its
rate of return. The FCC eventually garnted the requests. AT&T spent $800,000
on this docket--with its obvious and important impact on consumers--but there
10/
was a total absence of public interest representation. Citizen groups
simply cannot afford the gigantic legal costs involved in such a proceeding
and their views go unheard. Public participation funding is the only
realistic answer to the present insurmountable financial barriers at the FCC.
Successful Public Participation Funding Precedents
There are seven successful public participation funding programs already
in operation. Although procedural details vary, the central focus of each
is the funding of in-depth presentations by individuals, small businesses,
and citizen groups whose participation will contribute to full consideration
of important public issues.
The oldest public participation funding program is at the FTC. It was
established under the Magnuson-Moss Act of 1975 to reimburse eligible
participants in rulemaking proceedings. The Act authorized the FTC to
8/Senate Study, ~ at 14.
9/Id., at 16.
10/Id., at 21.
PAGENO="0132"
128
disburse up to $1 million per year to persons who meet strict standards. With
Congressional appropriations of $500,000 to $750,000 yearly, the program has
worked well since its inception. FTC hearings have included crucial testimony
from small businesses, senior citizens, consumer groups, and others who would
have been closed out of the decisionmaking process were it not for funding.
Congress has also specifically authorized public participation
support in Toxic Substance and State Department proceedings. Last summer,
House and Senate conferees agreed to fund programs at the National Highway
Traffic Safety Administration (NHTSA) and the Civil Aeronautics Board (CAB).
Spurred on by the favorable results of existing programs, several other agencies
have announced that they are considering establishment of similar public participa-
11/
tion reimbursement efforts.
Complementary to these agency efforts is Congressional consideration
of legislation that would standardize existing programs and establish funding
for other agencies. The Carter Administration is actively supporting a $20 mil-
lion public participation funding provision in its regulatory reform bill covering
12/
all regulatory agencies.
Scope of the Funding Program in HR 3333
Reimbursement must be available to intervenors in adjudications
as well as to participants in rulemakings and tariff hearings. Historically,
the general public's interest in FCC affairs has not varied with the form of the
proceeding. The seminal case on public participation, after all, arose from
an adjudicatory proceeding involving the renewal of the license of WLBT, Jackson,
11/Food and Drug Administration, the Department c~f Transportation,
the Mine Safety Administration, the Department of the Interior, the Department
of Agriculture, and the Department of Energy are considering reimbursing citizen
and small business participants. Attached to our statement is a summary of all
current and pending public participation programs and their general requirements.
12/See S. 755, S. 262, H.R. 3263, and H.R. 2596.
PAGENO="0133"
129
13/
Mississippi. Adjudications as much as rulemakings result in the formulation
of agency policy that will guide decisionmakers in future cases. The FCC's
Notice of Inquiry on reimbursement acknowledges that public participation in
both rulemakings and adjudications may bring the benefits of a fuller administtaticre
record and diversity of views before the Commission. In considering the scope
of HR 3333's reimbursement program, this subcommittee should consider the
experience of agencies that already have such programs. The National Oceanic
and Atmospheric Administration (NOAh), for instance, has recognized adjudication
as an appropriate type of proceeding in which to provide reimbursement. And NHTSA
has recommended that its program be extended tO cover all types of administrative
proceedings.
In particular, reimbursement is necessary and appropriate when
citizen groups challenge broadcasting licensees. Citizen interve~ors in license
challenges are generally not competing with the incumbent licensee for a
frequency. Rather, the intervenors (like the United Church of Christ in the
WLBT case) are providing information on licensee shortcomings that are evident
to the community, unknown to the Commission, and essential to a full and fair
resolution of the challenge.. The United Church of Christ's indormation eventually
persuaded the Court of Appeals to deny WLBT's application for renewal. Other
citizen groups should be given the wherewithal to provide the Commission and the
courts with the case studies of licensee performance so necessary in the event
of petitions to deny or revoke.
Thank you.
13/Office of Communications of United Church of Christ v. FCC,
359 F.2d 994 (D.C. Cir. 1966).
PAGENO="0134"
130
Summary of Public Participation Fun~i~jr~~s
at Federal Agencies
In the last few years, several federal agencies have begun
public participation funding programs, some with specific
Congres.r'~'1 ~uthori~a15.on and others on their own initiative.
This me~u a&~seribes whac has occurred in twenty agencies that.~.'
have considered the question of public participation funding.
In awn,. seven agencies have operating programs, three have
announced that they will defir4tely start programs, six' are
still considering the question, *one has rejeOted the.idea, and
three have been prohibited `from operating programs.
1. Department of Agriculture
Status. On January 29, 1978 Secretary Bergi.and directed
that a P~i~lic `Participation Plan be established'by a new Special
Assistant for Citizen Participation within 120 days. Secretary's
Memorandum No. 1931, Establishment of Departmental Focus for
Citizen Participation. In February, 1978 the Public Participation
Steering Committee submitted areport,"A Public Participation
Program. in the Department of Agriculture:' which described a
comprehensive program, including the option of reimbursement of
certain particLpante. On September 18, 1978 the Conference
Report on Appropriations for Agriculture, Rural Developmónt,
and Related Agency Programs appropriated $220,000 to.,staff. a
Departmental Office of Public Participation and direOted the
Department to report to the Committee within 90 days of~ enact-'
ment of the Act with various details about any proposed funding
progrmin. The report and a proposed rule is expected in the
Federal Register in the early part of next year. It also stated
that no program could be begun until regulations were promul~-
gated and that no expert witness could receive compensation
unless he was a resident of the locality to be affected and
only if he sought to represent an interest which was not already
represented.
Eli.~ibility Test. Under the Appropriations bill, the
Department's eligibill'ty test must comply with the Comptroller
General's requirements. Thus, a person may be eligible if
(1) he does not represent an interest whi~ch is already adequately
represented, and (2) his representation will substantially. con-
tribute to a fair determination of the proceedings, `and (3) he
lacks sufficient resources to participate effectively in the
proceeding absent funding.
Administ~ati'on. The Department has set up'ą'oentral,
Public Participation Office which will provide' direction `to
public participation officers in each of the agencies and will
make final decisions on all grants.
PAGENO="0135"
131
2. Clvii Aeronautics Board . `
Status. The final rule allowing coTepensation of public
participanti~*as effective November 28, 1978.
~iblW~ Thst. .
(1) The applicant represents an interest whose repre~
sentation can reasonably be expected to contribute substantially
to a full `and fair determination of the proceeding, in light
of the number and complexity of the issues prelented, the impor~
tance of public participation, and the need for representation.
of a fair balance of interests; *. .
(2). Participation by the applicant is reasonably
necessary to represent that interest adequately;
(3) It i~ reasonably probable that the applicant can
competently represent, the interests it espouses w~thin the time
available for the proceeding; . .. . :
(k) The applicant does not have. a~railįble,, and cannot
reasonably obtain `mother ways, enough money to participate
effecti~ely in. the proceeding without compensation under this.
part; and .. ...
(5) The applicant's economic interest tn the outcome
of the prooeedi~g is small th.cornparison'wjth the arden~of~.
effective participation, except that if the applicant"..i~;.a~:'.'
group or'organization, the Committee need.,only find that the
economic interest of a substantial majority of its individual
members is small in, comparison with the burden of effective.
participation. . , . .
(b) , In determining whether an' applicant would be.unable
to participate effectively without compensation, the Committee...
will require the `applicant to demonstrate that its current,.
assetS (cash, accounts `receivable, and marketable securittes
that are not in reserves, budgeted for other use, or otherwise
restricted, for withdrawal) less current liabilities, a4justed by
any anticipated operating loss or profit over "the rele t' year,
are less than the' amount needed for participation', .`.Sal'aries.
paid to employees of an applicant in excess of. salaries paid
to Board employees for comparable services will be disallowed.
in thi~a computation. ` . .
(c) The `committee may waive the "small economic interest"
requirement of paragraph (a) (5). of this section if it finds
that the applicant's `participation ~n the proceeding wo~4d be
exceptionally, important. .. .. ,, `
PAGENO="0136"
132
Administrat. Applications are considered by a
Public Participation Evaluation Committee, which will be composed
of the Managing Director, the Director of the Office of Economic
Analysis, and the General Counsel. The Evaluation Committee may
only communicate with Board staff involved in the proceeding
to determine whether the presentation of an applicant is' likely
to dup1~cate `the presentation of the staff. Any person can
submit an answer to a compensation application. A person whose
application has been disapproved in wh9le or in part may
petition the Board for review of the Committee's decision
within' 10 days. Compensation is limited to costs reasonably
incurred and in no case can be greater than the amounts normally
paid by the Board fur comparable goods and services.
3. Consumer Product Safety Commission
Status. An interim regulation allowing compensation
~ ~u L~a~WA~e anu related proceedings went into effect
.on May 31, 1978'. k3 P.R. 22560. The Commission plans to issue
a regulation that will apply to its formal rulemakings and
adjudications, and until that time, will consider on an ad hoc
basis requests for. compensation in those proceedings.
The new CPSC authorization allows public participation
funding in the development of~ a safety standard when the
Commission chooses not to use the offeror process. The offeror
process is a system under which outside parties develop safety
standards. Now' the Commission has the ability to defray the
costs~ of persons participating in the offeror process"or in
Commisaion.~developed standards if (1) the person's contribution
is likely to result in a more satisfactory standard, and (2) the
person is financially responsible.
Eligibility Test. The Commission may authorize
financial compensation only for participants who meet all of
the following criterias
(1) The participant represents a particular interest
or point of view' that can reasonably be expected to `contribute
substantially to a full an, fair determination of' the issues
involved in the proceeding.
(2) The economic interest of the participant in any
Commission determination related to the proceeding is small
in comparison to the participant's costs of effective participa-
tion in the proceeding. If the participant consists of more
than one individual or group, the economic interest of each of
the `individuals or groups comprising the participant shall
also be considered, if'practicable and appropriate.
PAGENO="0137"
133
A4rninistration. The Office o1~ Public Participation
processes and evaluates the applications, but ±`inai decisions
are made by the Commission. Participants are compensated ~or~
reasonable costs, with market rates and rates normally paid
by the CommIssion for oomparable goods and. aervices used as a
guideline.
k. ~partrnentof ~ .. .~ `~`*
~atus. t~OE ,alrnouneed ~that it' was deve]~Qpi~g reguiatLo~i~
for, a. department~wide pt~b1ic partioipation funding prOgraxn'o..
DOE Releaįe Oėt. Ii, l97~, Advance Notice of Proposed Rule-
making should appear' in the Federal Register by early next
year according to the attorney drafting the regulation.
~~jgibiiity Test. ~ecause this program will be devčtoped
under the. Departmint' ~ Inherent autho~ity the eligibility test
must.comp1~r'wi~h the Comptroller General's ruling.
5 ~ Administration
______ ``The House appropriations bill prohibited
expendi~~e.:9z. public participation funding. The Senate
deleted" t1ze~pr&hibitozYy language, but reoe4~d to the House in
Confe~?npe;~Cornmjttee. Report No. 9$..125l,. ;`H.R. 12932.
Prior to this prohibition, ERA l~ad issued guidelines
for paid p~ib1ic. participation in its. homebeating oil proceedings.
The guidelines specifically provided ~for. payment of participation
costs to nón..profit organizations `~whose,, principal function
involves the furtherance of consumer'jntereata," Economic
Regulato,.y Administration, DOE, Notice of Adoption of Monitoring
System, L~3, F.R.,..29l7 (Jan. l978)~'
6. ~~Irorunentai Proteotion Age~
~ A fundix~g program is ii~ operation for pro..
ceedings under the. Toxic Substances Cqntrol ~Aet, 15 U.S ~
2605 (a) (A). An Advance Notice of Proposed Rulemaking `is
pending f or an agency-~wide program, Z~2 P.R. 1L~92, Jan * 7, 1977,
The Clea~Wa~er.ar~d..,cie~c Air Offices expec~.to begin funding
programs using,. contracting authority around. the. beginning of
the ye~x'~ ,.` :` ,.~., , . .* .
Test in Toxic Substances Progra~
Compensat~may,be provided to any persons `
PAGENO="0138"
134
(1) Who represents an interest which would substantially
contribute to a fair determination of the. issues to be resolved
in the proceeding, and
(2) ifs (a) The economic interest of such person is
small in oomp~rison to the coats of effective~participation
in the proceeding by such person, or
(b) Such person demonstrates to the satisfaction of.
the Administrator. that such person dpes not have sufficient
resources adequately to participate in the proceeding without
compensation under this subparagraph.
44minigtx~;tion. The Assistant Administrator for Toxic
Substances rules ōri~applications, but the EPA Administrator has
the final authority. Up to 25% of the public participation funds
can go to regulatedinterests.
.7~ Federal Communication~emmiss~pn
Statns. The FCC began a Notice of Inquiry on July 10,
1978, J~3F.RQ 955~5, to consider the question of public par'ticipa-
tion funding~ All comments and replies have now been received.
There is a good possibility that a public participation funding
provision will be included in the House bill which will be
introduced in the 96th Congress to re-write the Communications
Act of l9:34~
8. Food and D~~inistration
~tatus. An Advance Notice of Proposed Rulemaking was
published'T~'1~l F.R~ 3$8L~. Like the USDA, the FDA was instructed
by the Appropriations Committee to report the details of any
funding progra~. within 90 days of enactment of the Act. The
Committee report stated that no program could be started until
regulations were promulgated and that no expert witness could
receive compensation unless he was a resident of the locality
affected,
Eligibilijy~Test. According to the Appropriation
Committee, the F'DA mui~tollow the ComptrOller General's standards
in writing its eligibility test.
9, ederal Energy ~WL22~i~iQn .
Status. The appropriation bill for this agency of DOE
prohibited the agency from spending money on public participa-
tion funding. Prior to this, under an informal program with
no written guidelines, the agency had reimbursed two consumer
groups that had submitted petitions for compensation. Consumers
PAGENO="0139"
135
Union of the United States, Inc., ~tashington, D.C., 5 YEA `1187, oi~~
(March 3; 1977). Consumer Federation of America, Washington, D.D.,
YEA ¶87,0~o (May 5, 1977),.laler amended in5 YEA `1187,051 (June
10, 1977). See also letter dated February 17, 1978, from John
O'Leary, Deputy Secretary, to Tersh Boasberg, Es4. and Case No.
DSG.~0Oj.L~ (March 101 1978).
10, ~deral Trade Commission
at~s. The FTC public participaiior~ program has been in oper..
ation fQr more than three years and has served as a successful
model for other programs.
The Magnusen-Moss Warr~nty FTC Improvements Act of 1975
expressly allows funding for costs of participation in rule--
making proceedings. §202(h) authorizes the Commission to spend
up to $1 million per fiscal year forrpersons who meet statutory
requirements. Under this authority, Congress has appropriatea
~750,000 for comp~nsation funds for the 1979 fiscal year.
E~gibilitj~r Test. Applicants can only receive funds if they
couI~ not. participate in the proceeding because they can't afford
to pay their costs and they have a presentation to make which'
is necessary to a fair determination of the proceeding. Their
contribution must not be duplicative of other participants.
A detailed application must be filed, proving how the applicant
fulfills the statutory requirements, stating why representation
of the applicant's interest is necessary to a fair proceeding,
including a list of expenses to be. incurred and a statement
of the group's organizational and financial status.
Administration. Compensation funds can be authorized
for reas~I~xpens~ of participation; for example, funds
could be awarded for the costs of conducting a survey, investi-
gation or other research, hiring an expert witness to testify,.
or reimbursing a staff attorney for reasonable fees.
As of June 1, 1978, the FTC had obligated $l,l99,7L~6.79
for public participant compensation. 60 groups have partici-
pated in this program in 16 different proceedings; awards
have ranged from $173 to an Iowa consumer group leader to pay
his fare to an FTC hearing to $91,000 to. the National Consumer
Law Center for its participation in the investigation of unfair
credit practices, The program has been particularly helpful
to small, grassroots groups who could never afford to come to
Washington without a program like this. Individual citizens
and small businesses have also been compensated for their.
~ntributions.
PAGENO="0140"
136
U ~partment of Housin~and Urban DevelQpment
Status A petition by the Center f~r Auto Safety to
start ~ ?üncLtng program in mobile home proceedings was denied
on June 1 1977 In th~ denial letter Secretary
Harris said that the Department would consider development of
a consumer participation funding p~'oposal for fiscal. year 1979
or 1980.
12. ~partment of Interior
Upon petition of the Council of Southern Mountains,
the Department published a request for comments on the establish-
ment of a public participation funding program 43 F R 12339,
Mar. 24,: 1978. It is likely that the Secretary will oon
announce a decision on the petition though any program
will probably be an experimental one limited to surface mining
proceedings. .
* `Eiigibili~ Test. Because the Department would be
adting under it~ nherčnt statutory.authority, it would have
to follow the Comptroller General's eligibility standards.
13. ~~rnal Revenue Service
Status. Tax Analysts and.Advocates petitioned. the
IRS to establish a funding program in its rule-making proceedings
on June 24, 1977.. The petition was recently referred to the
Tax Legislative Division for a recommendation, but has not been
acted upon.
14. I~terstate Commerce Commission
Status.The ICC denied a request by the Institute for
Public &~I~t Representation to establish a funding program.
It does have the Office of Rail Publiō Counsel, which provides
an independent advc~cate for consumer, user, and community
interests in rail matters.
15. ~gtional Highway Traffic Safety Administration
Status. NHTSA's one-year demonstration program was
extended.ińdeflnitcly. 42 F~R. 2864 Jan. 13, 1977. It has
a fiscal year 1979 appropriation of ~l5O,00O.
Eli~g1bilit~j~est.. The ey~aluation board may approve an
applicatI~n, in whole or in part, if it finds that:
(1) The applicant represents an interest whose representa-
tion contributes or can reasonably be expected to contribute *
PAGENO="0141"
137
substantially to a full and fair determination ccf the issues
involved in the proceeding, tak~ing into consideration ,the
number, complexity, and, potential significance of the issues
affected by the proceeding, arid the novelty, significance and
complexity of the ideas advanced by the applicant
(2) Pet'ticipation by the applicant is reasonably
necessary to represent that interest adequately;
/
(3) It is reasonably probable that the applicant can
competently represent the interests it espouses, when assessed
under the criteria of this regtilation; and
(Lb) The applicant does not have available, and cannot
reasonably obtain in other ways,sufficient resources to partici-
pate effectively in the proceeding in the absence of funding
under this program.
In deter~nining whether an applicant would beunable to
participate effectively, the evaluation board examines the
applicant's proposed expenditures for preparing its presentation
in the proceeding, decides whether these projec~,ed costs are
reasonable and compares them to the applicant's income and
expenditures, including anticipated future income and expenditures,
for the current fiscal year,
,~dministration. In its first year, NHTSA funded 21
applicants in 6 proceedings. 56% of.the applications were approved,
including submissions in proceedings on fuel economy standards,
occupant crash protection, electric vehicles safety standards
and bumper standards, The average award was $3,993,99.
The program covers all types of proceedings. Applications
are processed by an Evaluation Committee, which has two NHTSA
representatives and one from the Secretary's Consumer Office,
16, ?iational Oceanic and Atmo~pherie ~ (DePartment
of Comriérce)
~ A funding program went into effect April .6,
1978., L~3 F .R ~ 17806, covering all agency proceedings,
~ibi1ity Test. . .
* (1) The. person represents an interest the representation
of which con~ributes or can reasonably be expected to contribute
substantially to a fair determination of the proceeding, taking
into accounts . . .
(a) Whether the person'represents an interest which is
not adequately represented by a participant other than the
agency itself;
PAGENO="0142"
138
(b) The number and complexity of the issues presented;
(cr) The importance of public participation;
(a) The need to encourage participation by segments
of the public who as individuals may have little economic
incentive to participate
(e) The need for representatior~ of a fair balance of
interests, and
(2) The person demonstrates to the satisfaction of
the Administrator that such person does not have Sufficient
resources available to participate effectively in the proceedings
in the absence of compensation.
Administrati~. The Administrator decides on applications.
Compensation is based on reasonablemarket rates, but no com-
pensation is. higher than rates paid by NOAA for comparable
services Limited awards have been made to date
17. Nuclear Re~lįto~y~CommissJ
Status. The appropriations bill for fiscal year 1979
prohibits theNRC from reimbursing public participants.
18. State Dffipar.tment
* Status.. Public participation funding is authorized
up to a $250,000 limit in §113 of P.L. 95-105 for all Departmental.
proceedings. . .
Eligibilit~r Tes~. To be eligible for financial assis-
tance * to ~art~ cipate. i~ a Department of State proceeding,
advisory committee, or delegation, a determination must be
made that the organization or persons
(1) Is representing an interest which would otherwise
not be adequately represented and whose participation is necessary.
for fair determination of the issues taken as a whole; and
(2) Would otherwise be unable to participate because such
organization or person cannot afford to pay the costs of such
partiōipation. . . .
Administration. A few awards have been made to consumer
groups participat~ing~in international avtation negotiations.
PAGENO="0143"
139
19. P~partment of Transportation
S~tus. A Notice of Proposed Rulemaking for a Department~
wide programT[s expected in a few weeks. ANPRM, L~2 P.R. l1~92.
E1j~ibi1jty Test, Because, this program wi].l.be under
the Departmen+Ts inherent statutory authority, it `must. adhere
to the Comptroller General's decisions~,n eligibility.
20. Toxic Substances
Status. See discussion under EPA.
December 5, 1978
Mr. VAN DEERLIN. Thank you.
Do you have anything to add to that, Mr. Symons?
Mr. SYMONS. No, I don't, Mr. Chairman.
Mr. VAN DEERLIN. Ms. Possner.
Ms. POSSNER. One very brief question.
Mr. Symons, you mentioned that public participation is not terri-
bly evident on the State level. Do either you or Ms. Drabble believe
that it would be advisable for us to provide for intervenor funding
on the State level through State commissions? And if so, would you
be able to provide us with some guidance with respect to any
precedent for intervenor funding at the State level?
Mr. SYMONS. Yes, I think it would be advisable to fund public
participants on the State level. In our common carrier testimony a
number of weeks ago we talked about the creation of telecommuni-
cations consumer action groups in each State. These groups would
facilitate citizen involvement with the State regulatory agencies. In
addition, there is a precedent for federally mandating public par-
ticipation funding on the State level: Last year's Public Utility
Regulatory Policy Act. PURPA established a number of Federal
guidelines for electric utilities, ordered the States to consider those
guidelines, and established the consumer's right to participate in
those State deliberations.
PURPA went on to provide that either:
First. The utility pay the cost of citizen participation in the
deliberations; or
Second. The state mandate some other means of funding public
participation, in which case the utility need not pay the cost of
public participation.
Ms. POSSNER. Were you recommending Telecags, as I think you
referred to them, as substitutes for intervenor funding?
Mr. SYMONS. As an alternative. We assumed that a successful
Telecag would have sufficient funding and wouldn't need public
participation funding.
Ms. POSSNER. To the extent Telecags do not receive such funding,
intervenor funding on the State level---
Mr. SYMONS. Should be provided.
Ms. POSSNER. We would appreciate whatever assistance you can
provide in this area.
Mr. SYMONS. I would be happy to supply them.
[The following information was subsequently received for the
record:]
PAGENO="0144"
140
FEDERALLY MANDATED. INTERVENOR FUNDING AT THE STATE LEVEL: THE PUBLIC
UTILITY REGULATORY POLICIES ACT OF 1978
With the enactment of the Public Utility Regulatory Policies
Act of 1978 (P.L. 95-'6l7, November 9, 1978), the Federal government
required the States under certain circumstances to reimburse consumers
who appeared at State utility commission hearings. This mend will
discuss PURPA and its applicability to the Communications Act of 1979.
The Public Utility Regulatory Policies Act (PURPA)
PURPA Sec. 111(d) establishes a number of Federal standards for
electric utility rates, including cost of service, declining block rates,
and tixne-of-day rates. Section 111(a) imposes on each State regulatory
authority the obligation to "consider each standard established by
subsection (d) Similarly, PURPA Sec. 113(b) establishes five
Federal standards for the operation of electric utilities According to
Sec. 113(a), each State regulatory authority must within two years "conduct
a hearing respecting the standards established by subsection (b) and...
adopt the standards" if the State authority determines that adoption will
encourage equitable rates to electric consumers.
Section 121(a) grants consumers a broad right to intervene and
participate in the hearings at which the State authorities consider the
standards of Secs 111 and 113 Section 122 makes the right to intervene
meaningful by mandating compensation to consumers who participate at
the hearings. Either the State must guarantee a "means for providing
adequate compensation" to persons who meet criteria almost identical to
the criteria set forth in HR 3333's Sec. 244(a)--or the electric utility
PAGENO="0145"
141
itself must compensate consumers who participate before the State regulatory
1/
authority.
The Communications Act of 1979
The analogy between PURPA and the Communications Act of 1979 is clear.
HR 3333 establisheS fundamentals of common carrier service--~reasonable rates,
reliable service (both in Sec. 311), and jntraexchange access charges
(Sec. 324)--which will in part be the responsibilitY of the State regu-
2/
latory commissions. State. commissions, in short, will play a crucial
role in implementing our national telecommunications policy--just as they
do in implementing our national energy policy. Congress recognized the
importance of State commissions to energy policy, and passed PURPA. Now
Congress must take the same step in telecommunications. It must ensure
the broadest possible participation in national telecommunications
policymaking--even when State bodies are making the policy. Intervenor
funding at both the State and Federal levels will guarantee that telecom-
munications policy reflects the interests of a wide range of citizens and
small businesses, and nOt just the interests of a few communications giants.
1/ Section 122(b) states: -
Compensation shall nt be required /from the electric utilit~/
if the State.. .has provided an alternate meana for providing adequate compensa-
tion to persOrLs-
(1) who have, or represent, an interest--
(A) which would not otherwise be atlequately represented in
the proceeding, and
(B) representation of which is necessary for a fair determina-
tion in the proceeding, and
(2) who are.. .unable to effectively participate or intervene in the
proceeding because such persons cannot afford. . .reasonable costs of pre-
paring for, and participating or intervening in, such proceeding.
2/ HR 3333 should include additional fundamentals of a national
common carrier policy--such as a renewed commitment to universal service, and
a recognition that consumer needs iii an information society extend beyond basic
voice-grade telephone service. Of course, State commission determinations of
rates and access charges will affect the speed with which this broad notion
of universal service becomes a reality.
51-254 0 - 80 - 10
PAGENO="0146"
142
Ms DRABBLE One thing I didn't mention earlier is that we have
attached to our testimony a summary of the public participation
funding programs in the seven agencies that have programs [See
p 130]
Mr SYMONS May I add one thing9 There has been a lot of talk
in Congress during the last few months of making agencies more
responsible to the public We believe that enabling the public to
participate in agency determinations would probably be the most
fundamental way of insuring that agency rulemakings and adjudi
cations are responsive to public concerns
Mr VAN DEERLIN Mr Wunder
Mr WUNDER Mr Symons, you keep using the term "the public"
You are not talking about the public You are talking about special
interest groups like your group9
Mr SYMONS We are talking about groups that have no direct
financial stake in an agency proceeding I think for convenience
sake they have been labeled "public groups" I don't think it neces
sary to argue about the semantics
Mr WUNDER Well, who you purport to represent is a significant
thing I mean, you are not a public group You don't represent the
public interest. You represent special interests. And I don't know
what your membership is now--
Mr SYMONS Public Citizen last year had about 75,000 contribu
tors
Mr WUNDER What percentage of the U S population is 75,000~
Mr DRABBLE I think that in discussing the question of public
participation the critical query should be not how many people
belong to the group but what kind of information and what kind of
contribution they are offering There may be just a small group in
a community except they may have something very important to
say about how the local television station has been performing.
On the other hand, there may be a group that has a membership
of 1 million people Bu~ the question is, are they bringing argu
ments and are they offering evidence that is really going to make a
difference to the proceeding9
I don't think we would want to choose public participants or the
recipients of public participation funding by coLnting up how many
members they have
This kind of public participation funding program should not be
a financial aid pi ogram for impoverished groups that have the
most members Instead, it is a program to try to get the informa
tion to the agency so it can make the best decision
There has been an historical debate about what a public interest
group is I think a public interest group is most easily defined by
looking at what it isn't It isn't a group that has an economic stake
in the decision That is the crucial point People who do not have
an economic stake in the decision--
Mr WUNDER But they do, haven't they9
Ms DRABBLE It will be either nonexistent or small, and there
fore hard to identify Take the example of someone who might
want to participate in an ICC proceeding The rates that truckers
can charge for moving goods eventually affects consumers economi
cally in how much they pay for a can of tuna But because that
stake is hard to identify, consumers don't have much of an incen
PAGENO="0147"
143
tive to organize themselves together to participate in ICC proceed-
ings. The same kind of argument applies at the FCC. That is the
traditional reason why consumer groups and groups with nonecon-
omic interest have had difficulty obtaining money, because people
don't have that economic incentive.
Economists call it the free rider effect. Somebody else is doing it
so you don't have to contribute to that group because you are
depending on them to represent issues that don't affect you in your
pocketbook in a substantial way.
Mr. WUNDER. Let me ask this question. Let's assume that group
"X" petitions the FCC for funding under an intervenor funding
program and they allege certain things in their petition and the
FCC grants them funding and grants them standing, and then they
privately get in touch with a broadcaster and say: "If you will do
the following six things, we will withdraw this petition." And the
broadcaster unwilling to go to the expense of continuing this pro-
ceeding, especially against a group that is now being subsidized by
the Federal Government, says: "Yes, I will agree to five of those
six."
Five of those six may not even be in the public interest. And this
is in the shadow of night and they are agreeing to this simply
because they don't want to be strung out in a lengthy proceeding
before the FCC. And if this group withdraws its petition, they will
be home free. How do we protect against that kind of a situation?
Ms. DRABBLE. Well, I don't think there is any direct way you can
ever protect against those kinds of negotiations---
Mr. WUNDER. But to encourage it by providing funding for
the---
Ms. DRABBLE. I don't think it would be that much of an encour-
agement. At least in looking at the seven other agencies with
public participation funding, there have been many allegations
about public participation funding, but the one you make is new to
me in the 3 years I have been working on this.
Mr. WUNDER. It is not applicable to the FTC or the others. I
mean, we are dealing with a unique thing when you are talking
about a braodcast license renewal. That is the point I was making
to Mr. Geller this morning. It is not the same as rulemaking. before
the FTC or adjudication before the FTC.
Ms. DRABBLE. Well, as part of the question you posit the notion
that five or six of the points on which they might have made their
application would not be in the public interest. But I think the
point is that the FCC would have made a decision that this group
has a substantial contribution to make and they were offering
something important--
Mr. WUNDER. They contend they are.
Ms. DRABBLE. But the FCC would have had to make that finding
in order to decide to fund them; that their contribution was neces-
sary to the proceeding. So they would have to be offering some-
thing important to that proceeding.
Mr. WUNDER. Thank you very much.
Mr. VAN DEERLIN. In your statement that you prepared and
submitted I presume you also address the question of whether this
assistance should extend to license renewal actions and petitions to
deny rather than just to rulemakings?
PAGENO="0148"
144
Mr SYMONS Right Ms Drabble alluded to that very briefly We
think the scope of the public participation funding ought to be
extended I think the other witnesses who have addressed them
selves to that agree with it.
Mr VAN DEERLIN As you can judge, not only from Mr Wunder's
questioning but also from questioning you heard from Congress
man Moorhead this morning-and I don't mean to say it is all on
that side, there is much on our side, too-this is one of the difficult
and controversial parts of the bill and you have provided some
eminently good testimony on it I thank you for being here
Our final witness for today's hearing will be Mr Vincent Con
nery, national president of the National Treasury Employees
Union, which represents, I understand, many employees of the
FCC
STATEMENT OF JOSEPH W MIHUC, SECRETARY FCC CHAPTER
209, NATIONAL TREASURY EMPLOYEES UNION, ACCOMPA
NIED BY SUSAN McKENZIE, LEGISLATIVE LIAISON
Mr MIHuc Mr Chairman, I have a statement of the National
Treasury Employees Union by Vincent L Connery, president,
which I would like to enter into the record
Mr VAN DEERLIN Maybe you had better identify yourselves for
the record
Mr MIHuc I am Joseph W Mihuc, secretary of the FCC chapter
209 of the National Treasury Employees Union. This is Susan
McKenzie of the NTEU headquarters
NTEU is the exclusive representative of nearly 115,000 Federal
workers, including all the employees of the FCC
Mr VAN DEERLIN Does your jurisdiction extend to the FCC as a
result of a vote by the employees?
Mr MIHUC Yes We are deeply concerned with the effect this
legislation may have on telecommunications in this country If
enacted in its present form, we believe it can cause substantial
deterioration of service to the public as well as seriously and ad-
versely affecting employees of the FCC
In effect, H R 3333 would replace the existing structure of the
FCC with two new agencies, the Communications Regulatory Com
mission (CRC) which would possess general authority to administer
and enforce the provisions of the act, and the National Telecommu
nications Agency (NTA) which would assume telecommunications
policymaking and planning functions
The roles of both of these agencies, however, would be substan
tially different than that of the present FCC H R 3333 would
abolish many of the regulatory provisions under current law relat
ing to telecommunications in favor of competition The bill states
as a general principle that regulatory powers are to be used only to
the extent marketplace forces are deficient If this proposal were to
be implemented, much of the technical expertise and legal prece
\dents developed by the FCC over the last 45 years would be lost
~ In reality, the idea of competition in the telecommunications
field is nothing new Such competition existed for years among
telegraph and telephone companies in the late 19th and early 20th
centuries Because of the fragmented, inconsistent rate system that
developed beween 1866 and 1933 the Federal Government was
PAGENO="0149"
145
forced to take an increasingly larger role in monitoring interstate
communication.
The Federal Communications Commission was established in
1934. The Commission was charged with regulating interstate and
international communications in order to provide the public with a
rapid, efficient system that guaranteed adequate facilities and serv-
ice at a reasonable rate. This is still our mandate.
Despite the criticisms that have been leveled at the FCC from
time to time, we believe that the Commission and its employees
have carried out their regulatory responsibilities admirably since
1934.
Telecommunications technology has evolved dramatically during
this period and the FCC has adapted its functions to meet and
encourage these developments. Through its various decisions and
past policy, the FCC has made certain that the public benefitted
from technological advances in such areas as telecommunications,
television, AM-FM radio broadcasting, cable television, underseas
cables, coaxial cables, microwave, wave guides, laser, and electronic
exchanges.
An example of the benefits of regulation to the public can be
found in a recent rate case involving the Communications Satellite
Corporation (COMSAT). In its decision, the FCC found that a sub-
stantial reduction in COMSAT rates was appropriate and the
result was a refund of $100 million to COMSAT's customers. With-
out regulation, we doubt that this rebate would have taken place.
Furthermore, under the present regulatory system, competition
has not been thwarted. In point of fact, many of the changes
advocated in H.R. 3333 have been accomplished under the present
system without the disruptive effects of a total reorganization or
abolishment of the Commission. Over the past 20 years numerous
FCC decisions have been issued which have promoted innovation in
the communications field.
Though the idea of unrestricted competition in the communica-
tions field may have a certain surface appeal to some, we are
convinced that the basic flaw of H.R. 3333 is that it places too great
a reliance on "marketplace forces" with little protection of the
public interest. Unlike the Communications Act of 1934, H. R. 3333
contains no statutory mandate that the public interest be protected
by either the CRC or NTA. We find it deplorable that the bill does
not emphasize the public interest.
We are not alone in our misgivings over the lack of public
interest statement in H.R. 3333. This issue was also raised last year
in the testimony of the present FCC Commissioners, a panel of
former FCC Chairmen, and the National Association of Regulatory
Utility Commissioners, among others. Each group urged that the
protection of the public interest be specifically delineated in H.R.
3333 and that the bill's objective of increased competition in the
telecommunications field be further clarified.
Chairman Charles D. Ferris, for example, stated that "Competi-
tion is a valid tool to achieve the public interest," `but added that it
is only one tool and should not be relied on to replace regulation as
the general practice. Commissioner Tyrone Brown also expessed his
concern with the fact that H.R. 3333 would "completely abandon
the public interest standard."
PAGENO="0150"
146
We are also very concerned with title VII of the bill which would
create the National Telecommunications Agency within the execu-
tive branch. This agency will be charged with formulating national
telecommunications policy as well as serving as the President's
principal adviser on telecommunications matters.
In addition, NTA would exercise primary responsibility for allo-
cation of the electromagnetic frequency spectrum, arbitrate differ-
ences in telecommunications matters between Government agen-
cies, and perform a variety of administrative functions dealing
with international, governmental and public communications, pro-
curement and research. Presently, most of these functions are per-
formed by the FCC.
We have serious reservations about the advisability of placing
telecommunications policy and planning responsibilities in an
agency so directly responsible to the President. Obviously, this
would greatly increase the possibility of political pressure from the
White House improperly influencing policy decisions in this very
important area. At present, the existence of the independent FCC
helps insure a much greater degree of insulation from the political
process in the development and administration of telecommunica-
tions policy.
The present structure also requires that telecommunications poli-
cymaking and implementation of that policy are vested in one
independent body. In this manner, communication between those
who formulate policy and those who carry it out is facilitated and
the expertise developed over the years by FCC employees who work
in this area is put to the maximum advantage.
We believe splitting these functions could be very detrimental to
the productive system that now exists. It could create needless
problems in coordination and cooperation between the two agencies
with a concomitant waste of time, money and employee expertise.
As former FCC Chairman Dean Burch warned in his testimony,
problems between the CRC and NTA would be "inevitable and
inherent." We, therefore, urge the committee to strike the provi-
sions creating the NTA and restore telecommunication policymak-
ing authority to an independent commission.
Finally, we are also deeply concerned over the effects H.R. 3333
would have on the employees of the FCC. The sponsors of the
Communications Act of 1979 have estimated that the bill would
reduce the staff of the FCC by as much as 25 percent. If this
number of employees are affected by transfers, reassignments, or
even dismissals, the cost to the Government could be exceedingly
high, not only in human terms, but also in the loss of continuity of
operation and service to the public.
In addition, we are disappointed that title VIII of H.R. 3333
contains a provision that could do further injustice to the employ-
ees affected by the reorganization. Section 801(a) provides that the
"transfer of personnel under this subsection shall be without reduc-
tion in classification or compensation for 1 year after such transfer,
except that the chairman of the Commission shall have full author-
ity to assign personnel during such 1-year period in order to effi-
ciently carry out functions transferred to the Commission under
this section."
PAGENO="0151"
147
We believe that this provision is in clear conflict with existing
law The Civil Service Reform Act of 1978 (Public Law 95-454)
provides that Federal employees who suffer the~ adverse impact of a
reorganization or restructuring of their~ agencies shall retain their
pay and grade for 2 years, not the 1-year period called for in H.R.
3333. Since Congress has already worked its will in mandating that
Federal employees be given this :2~year protection, we urge the
subcommittee to amend H.R. 3333 to conform with existing statute.
In conclusion, we believe that much of H.R. 3333 is not in the
best interest of the public, the government, or the FCC employees.
Though the principle of additional competition in the telecommuni-
cations field may be valid, we believe that any steps to implement
such action should be phased in slowly and carefully as part of the
present FCC regulatory system. To do less would be a gross disserv-
ice to the American public that has benefited from the current
system of regulatory oversight and supervision. We urge you to
reconsider the provisions in H.R. 3833 which affect FCC employees
adversely.
Mr. VAN DEERLIN. Thank you.
I assure you on the 1 year versus 2 years, whatever is already in
effect will supersede. And we can certainly make that change. I
represent a good many Federal workers, as you may know, in San
Diego. And I make it a point and always find it possible to support
their usually legitimate aspirations.
I must say that on the first side of Mr. Connery's testimony he
puts his finger right on the purpose of the legislation that is under
consideration and that is "to do away with many of the legal
precedents developed by the FCC over the last 45 years."
We think that this is very much jn order precisely because of the
factors that are referred to in this testimony. And especially
toward the end of page 2 where it says: "The FCC has adapted its
functions to meet and encourage technologieal developments."
I should think if there is one reference that would have been
omitted from the testimony it would have been the development of
FM, which almost solely because of the regulatory restraints im-
posed by the FCC, was the better part of two decades in being
certificated and licensed. We could have doubled the number of
radio stations immediately before World War II had it not been for
the refusal of the FCC to do so under the 1934 act.
There is a reference in that same line to cable television. It was
no agency other than the FCC for which you speak, which imposed
a temporary freeze which lasted 5½ years, all the way from 1967 to
1972.
So I must say on that portion of the testimony which refers to
"other than the direct interest of the employees," in which I join
your commitment,~ I must say that the testimony raises a great
many more questions than it answers.
At the top of page 3 "competition has not been thwarted." Obvi-
ously, this was written without any mental reservations regarding
the small Earth station decision which finally was brought about
because of the intervention of the small cable association, CATA,
which persuaded the FcC, after many, many~ many months, that
to require massive ~Earth stations,. that were costing hundreds of
thousands of dollars, as some sort of public protection was simply
PAGENO="0152"
148
to ignore the opportunity for small cable systems to construct such
Earth stations and to greatly vary and expand the programing
they were able to offer in local communities.
The record of the Commission, however, cannot be hung upon
the shoulders of the employees, who have done what they are
supposed to do, I am sure, under the 1934 act.
Does your represent employees of the Civil Aeronautics Board?
Ms. MCKENZIE. No, Mr. Chairman, we don't.
Mr. VAN DEERLIN. The deregulation there, as you know, has
been very close to total since the 1978 legislation which practically
gets the Government out of scheduling and rate regulation of air-
lines. And whereas the employees of that agency in the year that
the legislation was passed numbered 802, the reduction for 1979
has been to 799, which is only a reduction of 3. And the amended
request for 1980 still holds at 743. The anticipated savings for 1979
and 1980 reach only $2.7 million.
So I guess deregulation hasn't been too hard on the employees
there. And I would judge that any estimates of 25 percent reduc-
tions at the FCC as the result of this legislation may be rather
sanguine.
Mr. MIHTJC. We are glad to hear that, Mr. Chairman.
Mr. VAN DEERLIN. Well, I have always felt that we should pro-
tect the individual but not the job slot. If we decide that firemen
are really not needed on diesel locomotives, we should protect the
job future of the fireman who is presently employed, but not pro-
tect the slot of a fireman on a diesel or locomotive.
Mr. MIHUC. We are not against innovation and changes in ad-
ministration of any law that is proposed for the Commission. But
the drastic nature of abolishing the Commission leaves some ques-
tions to be answered for the employees that haven't been answered.
That was our problem.
Mr. VAN DEERLIN. But as a fellow unionist, you would also
recognize-if we really open up technology and competition-the
possible generation of jobs is so much greater in the total commu-
nications picture than the myoptic consideration of a handful of
jobs down at a regulatory commission. Shouldn't we bear this in
mind, too?
Mr. MIHUC. Yes. And we are looking after the public interest in
that respect. We feel if the economy can be expanded by innova-
tions in telecommunications, we are not against it. But we believe
a lot of the segments of the telecommunications market represents
a public utility and since that there is only one major supplier, Mr.
Chairman, that there should be some oversight of those public
utility operations.
Mr. VAN DEERLIN. Well, you will be happy to know that we
provide that continued oversight of the dominant carrier in tele-
communications, A.T. & T., for not less than 10 years unless the
Commission comes in before that time to tell the Congress that it is
no longer necessary.
I understand what you were attempting to convey in your testi-
mony and I appreciate getting it. I just couldn't let those few
references pass because the larger picture-what we are trying to
accomplish-is really much greater than job maintenance in one
Federal agency.
PAGENO="0153"
149
Does staff have questions?
Miss Possner?
Ms. POSSNER. Very briefly, and if you don't have the information
with you, perhaps you could supply it for the record at a later date.
Could you tell us how many employees at the Commission you
represent?
Mr. Mrnuc. We represent the bargaining unit employees. That
would exclude management and supervisory employees. And that
is approximately 1,500~ Now, not all of those are union members, of
course, but according to the law, they are automatically represent-
ed-but we are the exclusive bargaining agent for the Commission.
Ms. POSSNER. So out of the total employee population at the
Commission, how many do you represent?
Mr. Mrnuc. Well, there are roughly 2,200 in the Commission. We
represent about 1,500.
Mr. VAN DEERLIN. Excuse me, do you mean there are only 1,500
within the jurisdiction as a bargaining unit or are there 1,500
members?
Mr. MIHtJc. There are 1,500 bargaining members, not all of
whom are union members.
Mr. VAN DEERLIN. Has there been a notable increase in union
membership in the last 2 years?
Mr. MIHUC. Since we are a relatively new union-we only started
last year-we are increasing union membership every day.
Ms. POSSNER. Can you tell us how many FCC employees either
retire annually or leave the Commission and go on to other jobs?
Obviously what I am getting at is if this bill were enacted resulting
in a 25-percent reduction in the work force, how much of that 25
percent might be taken up with normal attrition?
Mr. Mrnuc. Well, that is hard to answer, but currently we are
having reorganizations within the Commission. And some of these
are major reorganizations. And one of the problems that has
cropped up during those reorgnaizations is early retirement. There
is a question whether people are eligible for early retirement. And
a number of people would like to have that, but there is some
administrative problem in getting early retirement under the types
of reorganizations that we have at the present time.
[The following information was received for the record:]
Fiscal year
Total
employees
Left
FCC
Retired
1916
2,093
2,100
2,116
246
199
246
52
40
36
1977
1918
* Ms. POSSNER. For example, it is our understanding that the cable
television bureau is either going to be eliminated in the not too
distant future or melded with the common carrier bureau or the
broadcast bureau. Would your union take part in this reorganiza-
tion? I think approximately 80 employees would be involved.
Mr. MIHUC. Well, we would represent them as far as the reorga-
nization is concerned. As it impacts employees, if they have a
PAGENO="0154"
150
grievance and their jobs are abolished, then we can represent those
employees whether they are union members or not.
Ms. POSSNER. In the case of the cable television bureau either the
Chairman or the former Chief of the Bureau has stated that every
attempt would be made to find slots within the Commission for
those employees whose jobs were eliminated as a result of reorgani-
zation of the cable television bureau.
Mr. MIHuc. Well, that is part of the problem in that as they
abolish bureaus there is the problem of finding jobs in other bu-
reaus for those employees. And employees are being somewhat
dispossessed of maybe other jobs within those old bureaus.
So there is a limited number of slots that are av~iilable unless
there are other statutory provisions to be regulated.
Ms. POSSNER. Finally, as the Chairman mentioned earlier, this
bill would increase substantially regulatory surveillance over the
dominant carrier resulting in an increase in the number of
common carrier bureau employees. The bill also would create a
consumer assistance office. That is something that doesn't exist in
the statute today. So new employment opportunities at the Com-
mission would probably result if this bill were enacted.
Mr. Mrnuc. We hope that is true, but like anything that is new,
there is the matter of development. And information getting to the
employees at the present time they are not quite sure what is
going to happen. And since we are having reorganizations at the
present time, there is a lot of uncertainty within the Commission
itself as to what will happen in the future.
Ms. POSSNER. Thank you.
Mr. VAN DEERLIN. Was there a union at the Commission before
last year?
Mr. MIHUC. No, this is a landmark within the Commission. This
is the first union that they have had. We are currently negotiating
our first labor contract.
Mr. VAN DEERLIN. Was there some reason? How did this come
about last year?
Ms. MCKENZIE. Well, it came about as it does in any kind of
representation situation. We go to an agency and distribute show-
ing of interest forms. When we get a showing of interest of 30
percent of the eligible employees, then we can hold an election
under the auspices of the Labor Department.
Mr. VAN DEERLIN. Had the union made an earlier try at the
FCC?
Mr. MIHUC. We had not. I think there was one earlier try several
years ago by AFGE. And at that time they were unsuccessful.
Mr. VAN DEERLIN. What percentage of response did you get or is
that not public information?
Ms. MCKENZIE. I could find that information for you. Would you
like to know the vote count also, in the representation election?
Mr. VAN DEE~RLIN. Yes.
[The following information was received for the record:]
Out of a bargaining unit of 1,720, 523 FCC employees signed a petition stating
that they wanted a chance to vote on union representation. That is slightly over 30
percent, which is 517. However, the number of signatures on the petition is not
particularly significant, since we stop gathering signatures after we reach the
required 30~percent.
PAGENO="0155"
151
Of more significance is the turnout of voters, which was 68 percent of those
eligible. Of the 1,720 in the unit, 729 chose representation by NTEU while 449 voted
for no union representation.
Mr. VAN DEERLIN. I sure thank you both for being with us. I am
sorry you had to wait so long in order to testify.
Mr. Mrnuc. Thank you.
Mr. VAN DEERLIN. The hearing will resume tomorrow at 9:30
a.m. in 2167, Rayburn House Office Building.
[Whereupon, at 3:30 p.m., the hearing adjourned, to reconvene at
9:30 a.m., Wednesday, June 13, 1979.]
PAGENO="0156"
PAGENO="0157"
THE COMMUNICATIONS ACT OF 1979
WEDNESDAY, JUNE 13, 1979
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON COMMUNICATIONS,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C.
The committee met, pursuant to notice, at 9:85 a.in., in room
2167, Rayburn House Office Building, the Hon. Lionel Van Deerlin,
chairman, presiding.
Mr. VAN DEERLIN. Good morning. The subcommittee hearing will
resume.
Yesterday we heard a good deal of testimony on proposals for a
public participation or reimbursement program for the Federal
Communications Commission. Today we shall hear how a similar
program has been working in another Government agency, the
Federal Trade Commission.
We are privileged to hear from, as opening witnesses, Mr. Wil-
ham J. Baer, Assistant General Counsel for Legislation at the FTC,
and Ms. Bonnie Naradzay. Is that right?
Ms. NARADZAY. Yes.
Mr. VAN DEERLIN. Also from the Commission. We welcome you
both here this morning and appreciate your testimony. You may
proceed.
STATEMENT OF WILLIAM J. BAER, ASSISTANT GENERAL COUN-
SEL FOR LEGISLATION, FEDERAL TRADE COMMISSION, AC-
COMPANIED BY BONNIE NARADZAY, SPECIAL ASSISTANT
FOR PUBLIC PARTICIPATION
Mr. BAER. Thank you, Mr. Chairman.
We are pleased to be here to talk a little about our experience
with public participation over the last 4 or 5 years. I should note at
the outset that Bonnie and I are staff members and our views do
not necessarily reflect those of the Commission or its individual
members.
Mr. Chairman, we propose briefly to outline our experience, dis-
cuss its effectiveness, and we believe the program has been of great
assistance to the Commission, and then make ourselves available
for any questions you or your colleagues may have.
The FTC's public participation program was created in 1975 with
the passage of the Magnuson-Moss Act. That statute gave the
Commission rulemaking powers to define unfair and deceptive acts
or practices.
The new Magnuson-Moss Act also established that FTC's public
participation program. The statutory provisions of that program
(153)
PAGENO="0158"
154
are almost identical to those contained in H R 3333 The Commis
sion under its statutory authority may compensate individuals or
groups who participate in our rulemakings if they represent an
interest that otherwise would not be represented and representa
tion of that interest is determined to be necessary if the Commis
sion is to make a fair determination on the issues, and finally, if
the individual or group cannot afford to participate without some
compensation from our agency
Since the program began operation in mid 1975, we have compen
sated over 65 different groups and individuals who participated in
18 different FTC rulemaking proceedings Over 55 of the recipi
ents-and that is slightly in excess of 84 percent of those groups
funded-had never participated before in FTC rulemakrngs, and we
think this is particularly significant We have been able to use
these funds to get advice, counsel and factual expertise into our
agency from groups and individuals who previously had not been
appearing before the agency
The range and types of groups, the form of their presentation
and participation has varied widely They range from an award to
the National Consumer Law Center, a Boston based group who
prepared information in conjunction with our credit practices rule
concerning local community credit practice experiences to a $200
grant to a retiree who participated in our standards and certifica
tions rulemaking proceeding He was given $200 to cover copying
and travel costs to come to San Francisco and explain how his
attempt to market an adjustable golf club had in his mind been
thwarted by unreasonably restrictive standards established by the
PGA and the USGA.
A sizable amount of the funds we have distributed have gone to
small business groups, and we think that that is an important
element of our program. Over $150,000 has been awarded to 16
groups, individuals and associations who were representing small
business interests
I suppose the most important question and the one we have been
asked frequently in other Hill hearings is has this program made a
difference, has it helped the agency make a better determination
on questions before it in rulemaking proposals, have those groups
offered us information, ideas, points of view we otherwise would
not have received?
The answer at the Commission, we believe, is a resounding yes,
they have made a substantial contribution In recent testimony,
the Chairman of the Commission called public participation the
centerpiece of regulatory reform, and we think our experience
bears that out
I would like, if I may, to take a few minutes to review a couple of
examples of how the program has helped A couple of years back I
was a staff attorney working on a rulemaking proceeding involving
hearing aids We proposed a rule that would require hearing aid
retailers to give elderly purchasers of hearing aids 30 days to try
out the aid The grounds for the rule proposal were that elderly
hearing impaired people really did not know whether an aid would
suit them or not without a chance to try out the hearing aid in
their home and office environment.
PAGENO="0159"
155
While obviously that proposal has a critical impact on elderly
hearing-impaired people, it also has a potentially serious impact on
the small businessmen, the retailers of hearing aids who would
have to bear the cost. of providing that 3Q~.day free home trial. We
funded two groups in that proceeding.
The first was the National Council of Senior Citizens, which
represents over 3.5 million elderly Americans. We approved their
request for funds to survey their members and determine what
experiences they had had with purchases of hearing aids, what
sorts of difficulties they had had adjusting to hearing aids. As staff
~persons, we were just not able ourselves to get at that information,
to get out in the grass roots to find people who had had those sorts
of experiences.
The National Council of Senior Citizens quite successfully was
able to get out and survey its local membership, and they produced
over 100 affidavits detailing individual experiences with the pur-
chase of and adjustment to hearing aids. They ~also brought in some
economists to talk about the economic impact and some gerontolo-
gists to talk about the particular problems of hearing-impaired
Americans.
They also used their funds to compensate their counsel who
cross-examined other witnesses and helped to forcefully make
known to the Commission and the other ~interests in that proceed-
ing the points of view of elderly hearing-impaired citizens.
At the same time, we funded the National Hearing Aid Society
with a comparable amount of money. That group represents the
3,600 or so hearing aid retailers, the people who would really have
to shell out whatever costs this rule wOuld impose on them.
They participated in one-half of that rulemaking proceeding
through contributions of their members and nearly went bankrupt
because of the cost of presenting an effective case. They came to us
to ask for compensation, and we provided them with approximately
$50,000. They were able to use those funds to obtain extraordinar-
ily competent counsel, to prepare final comments to the Commis-
sion on what they thought the record showed and what they
thought ought to go into the rulemaking.
Mr. VAN DEERLIN~. Did you tell us how muth you had given the
senior citizens?
Mr. BAER. Roughly the same. Roughly $50,000, Mr. Chairman.
A second example, which I will go through a little more briefly,
involves our eyeglass advertising rule, the first trade regulation
rule adopted by the Commission. That rule essentially freed up
ophthalmologists and optometrists to advertise if they wanted to.
A number of States, approximately 40, had previously banned
advertising by these professionals. In that proceeding we funded a
San Francisco-based group that did a study of the cost~ of eyeglasses
in States which had restrictions on advertising ąr~d compared it to
the cost of eyeglasses in States which did not, and they showed a
price differential of up to 43 percent, information which was essen
tial to the Commission if it was to make an informed judgment as
to whether or not we should really go to all of the trouble of
promulgating this rule.
PAGENO="0160"
156
The factual information they presented showed it could make a
significant difference in States which currently banned advertising
if ophthalmologists and opticians were freed up to advertise.
A procedure which has evolved at the Commission since getting
into rulemaking allows all participants at the end of the proceed-
ing to come in, sit around the Commission table with the five
Commissioners, and make their views known, to summarize their
views as to what the final rule ought to look like.
We have had four of these oral presentations at the end of
proceedings: In our eyeglasses rule, our vocational schools rule, our
insulation rule, and our funeral proceedings rule. In all of the
cases, the publicly funded groups played an important role in sum-
marizing evidence, in helping to assist the Commission before it
went into markup on the final rule proposal.
They criticized the staff proposals for both going too far and not
far enough. They criticized other groups for factual or logical insuf-
ficiencies in their presentations. They really helped highlight and
focus for the Commission what the final rule ought to look like.
It is important, we believe at the Commission, if we are going to
administer a program like this, that we have adequate safeguards
established to make sure that funds are only awarded to groups
who meet the statutory criteria, and that once awarded those
funds, the groups spend them only for the approved purposes.
This is a novel proposition for the Government, and we believe
we have a special responsibility to show that the funds are used
only for approved purposes and provided only to groups authorized
by the statute.
We have developed some procedures which I would like to review
briefly that show how we have tried to maintain the integrity of
the program. The location of the program is in our general coun-
sel's office. Bonnie Naradzay is our special administrator for the
program. We have separated the decisionmaking on applications
for funding from the Bureau of Consumer Protection, which is the
bureau responsible for proposing and developing FTC rules, to
make sure there is no influence by the staff or undue influence on
who those funds go to or how the funds are distributed.
We think that ensuring independence yet locating the funding
authority within the agency is important so that the general coun-
sel might be in a position to make informed judgments on who
ought to get the money and what additional information is neces-
sary for a fully informed factual record.
We have developed outreach efforts to make sure this program
does not become a bonanza for Washington-based groups which
otherwise might be participating in our proceedings. Bonnie has
developed a series of booklets that explain in detail how the pro-
gram works and how people can make application, and we include
sample forms and descriptions of what information we need to
make a judgment.
We have sponsored conferences in outlying areas to inform small
business and consumer groups of the existence of the program, the
rules pending at the agency, and how groups might apply if they
believe they have an interest which otherwise would not be repre-
sented.
PAGENO="0161"
157
Each time we propose a rule, the staff comes up with a list of
contacts they have made of groups that would likely be eligible so
we can send out information on the rule, and its impact and on
availability of the program.
When applications come in-and we do get a number of applica-
tions-we often are forced to send them back to require more
information so the Commission has enough to make a solid, in-
formed judgment that this group really does have something to
offer.
We require detailed information on the financial status of the
organization, the nature of the group, its membership, and why it
believes it represents an interest which otherwise would not be
adequately represented. We then go to the presiding officer, the
individual who chairs our rulemaking proceedings, and ask him to
review the application to determine whether or not this group is
really offering something not already covered by another group.
He makes a report under our rules to the general counsel de-
scribing in what ways he thinks this group may or may not make a
difference. We then have a compensation committee that consists
of Bonnie as its staff person, representatives from the General
Counsel's Office, the Executive Director's Office, Bureau of Con-
sumer Protection, and survey experts from our Office of Policy
Planning, and elsewhere who review, critique, and evaluate the
applications, again, often sending the applications back for more
information so that we are sure we know what we are doing when
we make our decision.
Finally, the General Counsel gets the recommendations of that
committee and determines whether or not to provide funds. If we
decide to provide funds, we send a letter specifying in detail what
funds have been approved and for what purposes. In about half the
cases, we deny parts or substantially all of the application because
we do not think those funds are really necessary to assist us in
making the decision, but some small aspect of the proposal might
be. That is spelled out in a letter. We include a detailed line item
budget so the group knows how much it has for each element of its
participation.
We give them written guidelines of how the funds are to be
expended, what records must be kept, and we give them a notice
that at the end of the proceeding we are going to come in with our
auditors and do a field audit on their books.
To date we have audited approximately 30 percent of some 65
groups that have received funds, and we expect to audit 100 per-
cent of the groups by the end of the next fiscal year.
Finally, when a group has expended money for a particular
project, we require them to submit a voucher detailing what the
expenditure is for and including receipts that indicate that the
money has been spent only for an approved purpose. And we have
developed a procedure so that the next time a group wants to
participate in a different rulemaking, we seek the input of the
presiding officer and the staff to make sure this group has done a
competent job the first time around. And if they have not, that
weighs against any subsequent application for additional funds.
That concludes my prepared remarks. To summarize, I would
simply like to say that although it takes a lot of care and diligence
51-254 0 - 80 - 11
PAGENO="0162"
158
on the Commission's part, I think I do speak for all of the commis-
sioners in saying that this program has proved invaluable to us in
making some very tough determination~ on some very difficult
rulemaking issues, and we would strongly support the inclusion of
a similar program in H.R. 3333.
Thank you, Mr. Chairman.
Mr. VAN DEERLIN. Thank you.
Has the program at FTC stayed within the financial restraints
placed upon it at the outset?
Mr. BAER. Yes, it has, Mr. Chairman. We have been funded
$500,000 through the first 3 years of the program. In the current
fiscal year we are receiving $750,000 and we are requesting the
same amount, $750,000, during the next fiscal year. The authorized
level for the program is $1 million.
Mr. VAN DEERLIN. One element that is a little different, when we
consider the FCC, is that here is a body which performs a licensing
function which, I assume, in no sense applies to the FTC.
Mr. BAER. We hope not, sir.
Mr. VAN DEERLIN. And in the legislation we drew a line between
public participation at public expense in rulemaking matters and
in licensing procedures to meet the fear that such assistance could
be used to help finance so-called fishing expeditions against li-
censes.
Have you given any thought to whether this separation is wise or
whether you think that we should go whole hog and fund participa-
tion in license challenges as well?
Mr. BAER. Mr. Chairman, I have given it some thought, but I
should confess to not being very knowledgeable about the different
procedures at the FCC. And to the extent I have views, I suspect
they are not very informed. My sense is that if there is a danger of
some sort of fishing expedition in renewal applications or the like,
that perhaps a threshold test might be established whereby if a
group wanted to challenge or in some other fashion involve itself
with the more adjudicative licensing-type function, that if an appli-
cation were filed or some sort of filing made which on its face
seemed to be meritorious, or to pass some sort of threshold, that
perhaps funds could be made available.
That is the most I think I ought to offer on that subject. I just do
not know.
Mr. VAN DEERLIN. Thank you.
Are there staff questions for Mr. Baer or Ms. Naradzay?
Ms. POSSNER. For either Mr. Baer or Ms. Naradzay: Returning
for a moment to the question the chairman just asked about pro-
viding reimbursement for adjudicative matters as well as for rule-
making matters, your so-called uniformed opinion meshes pretty
well with an expert opinion we received yesterday from another
witness, Dr. Barry Cole. He suggested as a middle ground-that we
not statutorily bar the FCC from making awards in licensing mat-
ters but instead leave the door open, and if a petition to deny or
petition to revoke is deemed meritorious by the Commission-and
the test of that would be that it had been designated for hearing-
then the petitioner would be eligible for reimbursement.
Is that the sort of threshold test you were just referring to?
PAGENO="0163"
159
Mr. BAER. Yes. That seems to me one possible way to deal with
the problem.
Ms. POSSNER. You mentioned in your testimony that since the
FTC's program was inaugurated, 65 different groups have received
funding in 18 rulemaking proceedings, and over 55 of those 65-84
percent-had never participated before in FTC rulemaking mat-
ters. Do certain groups make application regularly? Do you see the
same Washington-based groups again and again, or are the 65
representative of groups from all over the United States?
Mr. BAER. There is a wide range. We have tried to count them,
and either directly through an application coming from a State or
through membership located in States, basically, every State is
represented in these funding grants we have made.
There are some Washington-based groups who have some special
expertise to offer or some groups from other areas that have done a
very competent job in a particular area and they have gotten more
than one grant, and we believe that is appropriate. The key thing
is to make sure that the statutory test is met-that the group
really does have something to offer and their offering cannot be
made through their own funds.
Ms. POSSNER. Does your statute place a cap on the amount of
funding that parties with a financial interest in the outcome of a
rulemaking may receive in any one year?
Mr. BAER. Yes. The wording is similar to H.R. 3333, and the
percentage, that is, 25 percent, to groups who would be affected by
the rule or regulated by the rule.
Ms. POSSNER. In Magnuson-Moss or in your own rules, is there a
cap on the amount any one group can receive in a fiscal year?
Mr. BAER. There is not at present, Ms. Possner, but the House
Interstate and Foreign Commerce Committee 3 weeks ago reported
out our authorization for fiscal years 1980, 1981, and 1982. Con-
tained in that version of the authorization is a $75,000 cap on the
amount any one group can receive in any 1 year, and a $75,000 cap
on the amount any one group can receive during the course of any
one proceeding.
Ms. POSSNER. What is the average amount of awards you have
made so far?
Mr. BAER. I think it is roughly $25,000.
[Ms. Naradzay nods affirmatively.]
Ms. POSSNER. What is the largest single award you have ever
made?
Mr. BAER. About $120,000, I think, for the National Consumer
Law Center for the study I mentioned of local credit practices.
Maybe I should have Bonnie answer.
Ms. NARADZAY. The National Consumer Law Center is based in
Boston, Mass., and it services the legal aid societies throughout the
country. For our credit practices rulemaking proceeding, at which
the banks and other financial institutions were well represented,
the National Consumer Law Center was designated by the presid-
ing officer to be the representative during hearings for cross-exami-
nation purposes of the consumer group, because the presiding offi-
cer does group the interests participating in the proceeding.
Therefore, in addition to producing quite a few statistical studies
which were very important evidence for the proceeding, the Na-
PAGENO="0164"
160
tional Consumer Law Center involved its member legal aid services
around the country in the six different hearings that were held
around the country.
Those legal aid attorneys and their clients participated in the
hearings and did a very good job of explaining what they had
learned from representing over 100,000 clients who were low
income and had credit problems Those are some of the ways in
which the money has been used.
I may add that that figure includes participating throughout the
proceeding It includes production of a great deal of evidence and
cross-examination duri~ig the hearings, sponsoring witnesses, pro-
ducing rebuttal comments and posthearing comments.
Ms. POSSNER. One final question. Mr. Baer, you mentioned that
in deciding whether to grant an application for funding, part of the
responsibility for making that decision resides in the General
Counsel's office and part of the responsibility resides with the
presiding officer in charge of rulemaking. You also said that the
presiding officer would review the applications to determine wheth
er they represented an interest which would otherwise not be
adequately represented, and he or she does this by comparing them
to comments already filed as part of the rulemaking.
I am not very familiar with how the FTC operates so perhaps I
do not understand. My question is: If filings have already been
made in the rulemaking t~the ~xtent that the presiding officer can
determine whether a point of view has or has not yet been ade-
quately represe)nted, isn~t there a time problem? The proceeding is
underway and interested parties h~ive already filed If the presiding
officer decides to make an award, i~i't this group coming in at the
11th hour?
I don't understand the time factoi~ there or perhaps I've misun-
derstood the sequence. How do you determine if a point of view has
not been adequately represented if a rulemaking is not already
underway?
Mr. BAER. Under the Magnuson-Moss pro~edures,~ there is an
initial notice of rulemaking which sets out the substance of the
rule and poses some questions the Commission tI~inks particularly
merit discussion. There is an extensive period between publication
of that initial notice and the start of the hearings, during which
comments begin to come in,. during which ,applications for public
participation funds also come in
In addition, we have a staff report which sets out the evidence as
the staff sees it, and you basically have a sense for where the staff
is at. That is the first position the, presiding officer can compare an
application to. In addition, he has contact with the interested par-
ties who plan to participate. They have begun to make their initial
submissions, and he is in a position to make an informed judgment,
we believe; on just how valuable and how unique this contribution
is going to be.
There tends to be a bit of a time crunch for the public participa
tion gro~xps. They don't have an easy time of it. In the first place,
in order to make an application, they have to lay out exactly ~what
it is they are going to do in the rulemaking proceeding, and they
complain somewhat fiercely about that because that puts them at a
disadvantage with respect to other participants in the proceeding
PAGENO="0165"
161
who do not have to spell out until the last minute exactly what
they are going to do.
But we think that is a necessary condition of our making in-
formed judgments on whether or not those funds should be pro-
vided. We also think it is really more in the nature of a rulemak-
ing proceeding that groups should not be trying to hide the ball but
rather should have their factual positions identified and their evi-
dence there to be submitted to the record and examined by the
Commission before it makes a decision.
Ms. POSSNER. And by requiring them to spell out their position in
advance of being funded.
Mr. BAER. Right.
Ms. POSSNER. If they are successful with their application, a
great deal of the work has already been done, so that time crunch
is somewhat--
Mr. BAER. That at least helps. They have outlined, at. least,
something they want to achieve. We do not-and this might be of
interest to the subcommittee-compensate for funds or costs in-
curred prior to submission of the application, and we think that is
important. We don't want people going out spending a lot of money
on perhaps the faulty assumption we are going to give them public
participation funds, so they spend their own funds getting the
application together in the detail we think it is necessary to make
a judgment.
Only then will we give them funds, and the funds are only to be
used prospectively and only for approved purposes.
Ms. POSSNER. Thank you.
Mr. WUNDER. When I hear you discuss your program down there,
it sounds all very good. But then when you look at some of the
groups who have received money under your program, it doesn't
look as good. For instance, the Americans for Democratic Action, a
group which, I understand, rates politicians on the basis of their
ideological views, have been funded 34 times, for a ballpark
figure-I have just rounded it out-of about $150,000.
Now, what particular expertise do the Americans for Democratic
Action bring on the area where they appear to be most expert,
which is in the area of health spas?
Mr. BAER. I am glad you asked that question, Mr. Wunder,
because it is one we get wherever we go. The answer to the ques-
tion is, first, we did not fund the National Americans for Demo-
cratic Action. We have had the misfortune of having it appear that
way by the way we have listed our groups.
There is a small consumer affairs committee located in Washing-
ton, D.C., which is affiliated with but substantially distinct from
the local chapter of the Americans for Democratic Action. For the
last 10 or 15 years, they have been very active in the local commu-
nity doing consumer-oriented work. They have done price surveys.
They have been actively involved in trying to get generic drugs
available in local drug stores. They .have done the kind of nuts and
bolts consumer work that gives them some expertise.
Mr. WUNDER. Have they done a lot of work on health spas, too?
Mr. BAER. They have done some work involving possible sales
abuses with health spas. The most unfortunate thing is they are
sufficiently independent that I suspect they could have organized
PAGENO="0166"
162
under a different name. They do not take their direction from the
national chapter. They are in no way affiliated with the sort of
rating partisan activity that the ADA does, and if they were, we
would not fund them.
Mr. WUNDER. So the Americans for Constitutional Action, or the
Republican National Committee, for that matter, could set up this
arm's length affiliate not involved in the activities of the RNC or
the ACA and qualify for funding under your program?
Mr. BAER. It would depend upon the funding arrangement for
the group, the constituents they represented, and their expertise.
Ms. NARADZAY. May I add something, Mr. Wunder?
Mr. WUNDER. Yes.
Ms. NARADZAY. Mr. Wunder, the Consumer Affairs Committee
that is affiliated with the local ADA chapter here gets a total of
$2,000 a year to pay for part-time secretarial services. I don't think
$2,000 ~buys very much these days. I think that when you get an
application, you have to look not only at the finances of a group;
you also have to look at the point of view that it proposes to
represent and whether or not that point of view is already being
adequately represented by any of the other interests in the rule-
making proceeding.
Mr. WUNDER. Another point you make is about the small busi-
nesses which receive funding. When I look at it, I look at the
funeral rulemaking and it appears that the business groups which
received the money there were primarily crematoriums, which
stood to benefit from a rulemaking which was restrictive with
respect to funeral parlors. Do you have any reaction to that?
Mr. BAER. I do. We don't look, necessarily, to whether a group
favors or opposes a rule. We look to whether or not they represent
an interest that otherwise wasn't going to be adequately represent-
ed, whether that interest really is important, whether it will really
make a difference if it is there, and whether they have the funds.
And that grOup satisfied the criteria. Most of the small business
groups we have funded have tended to be opposed, either all or in
part, to FTC rules. In our standards and certification proceeding,
which is ongoing, we have funded some 11 small business groups.
That is a rule that uniquely affects small businessmen because
many small innovators have some difficulty in getting access to
private standard setting organizations.
They have trouble challenging what they believe may or may not
be an unfairly restrictive standard. That rule will affect them, both
for good and for bad. We want their views. And over 11 of those
who have applied have received funds.
Mr. WUNDER. Thank you, Mr. Chairman.
Mr. VAN DEERLIN. Thanks to both of you for your help on this
really difficult and innovative part of our legislation.
Mr. BAER. Thank you, Mr. Chairman.
Mr. VAN DEERLIN. We will take a very short break now to
answer the bells, and we will resume in 8 or 10 minutes.
[Brief recess.]
Mr. VAN DEERLIN. Our next `witness will address another contro-
versial subject-program consent. Mr. Kevin O'Sullivan, president
of Worldvision Enterprises, Inc., accompanied by--
Ms. RENOUF. Katrina Renouf.
PAGENO="0167"
163
STATEMENT OF KEVIN O'SULLIVAN, ON BEHALF OF NATIONAL
ASSOCIATION OF INDEPENDENT TELEVISION PRODUCERS
AND DISTRIBUTORS, ACCOMPANIED BY KATRINA RENOUF,
COUNSEL
Mr. O'SULLIVAN. Ms. Renouf is counsel for the National Associ-
ation of Independent Television Producers and Distributors, and
actually I am appearing on their behalf today.
I think you had, or this subcommittee has had, an enormous
amount of speechifying and comment about the matter of program
retransmission.
Mr. VAN DEERLIN. You noticed?
Mr. O'SULLIVAN. It is not my intention to come here and give a
formal statement in that regard. I think you have a surfeit of that
information. Maybe it has been talked to death to a certain extent.
But I think there are certain technical aspects of this matter which
should be taken into consideration.
I have taken the liberty of bringing down a couple dozen copies
of our license agreements, Worldvision Enterprises license agree-
ments. These license agreements are fairly standard to the indus-
try. These are agreements that we use when we license programs
to stations across the country. Indeed, even the CATV systems.
The license specifies the market area in which the licensee can
broadcast the program. There are thousands, literally thousands,
perhaps tens of thousands of these licenses in effect in the United
States today. And what is happening now with this prolific and, if
you will, promiscuous retransmission of programing across the
country is that these licenses are, in effect, abrogated in terms of
the exclusivity aspect. We don't know what to do about this.
The licensee signs the agreement. We sign the agreement. It
states that you have the exclusive license to the program in your
market, whether it be Birmingham, Chicago, or whatever. But
indeed he does not, because the program can be imported by satel-
lite 1,000 miles away into a cable system maybe in two or three
instances, and we are now faced with this constant mirroring of
the same programs very possibly coming into the same market
through three or four different sources. So these license agree-
ments really mean nothing. We find it very disturbing.
I brought two dozen with me because I thought it might interest
you to read them over, and if I may, I would like to leave them
with you.
Mr. VAN DEERLIN. We would be pleased to accept them.
Mr. O'SULLIVAN. We also came across a document that is really
interesting to look at, and perhaps you may have seen it. This is a
very slick brochure produced by a company called United Video,
Inc., located in Tulsa, Okla. It is a brochure promoting the market-
ing of WGN-TV as a superstation. In fact, the brochure refers to
WGN as the No. 1 satellite independent superstation. This is a
whole marketing technique.
It refers to the programing that is on WGN, the sports programs,
the entertainment programs, in quite some detail, and it even has
an order blank, if you will, by which the cable system can order
WGN-TV from United Video, Inc., and in fact, the gentleman who
is the head of United Video, Inc., has even already signed the order
form indicating that all you have to do to become a licensee of this
PAGENO="0168"
164
company, to get WGN-TV on your cable system, is just fill in this
form and sign it, because he has already approved it, which is a
very unusual way of going about licensing.
But why should he care? He doesn't have to worry about his
licensee's financial standing because if the man can't pay the bill,
it doesn't make any difference because he is delivering this thing to
him for nothing. On the back of the order form are the terms, the
conditions, the costs, et cetera, and there it is and it comes with the
brochure.
If you want WGN-TV on your cable system, wherever you are,
you just have to send this in and Mr. Roy Bliss will deliver it to
you.
Mr VAN DEERLIN And this is an offering with which the hcens
ee, the management, and ownership of WGN has no part?
Mr. O'SULLIVAN. Absolutely. None whatsoever. Nor do the people
who supply the programs. Obviously, this Mr. Bliss of United Video
was offering WGN not for their test pattern but for the programs
they have on the air.
I think that this is an interesting document, and I would like to
leave that also, if I may.
There are also different things if you notice as you go around the
country. I was down in Palm Beach the other day and I took a few
things out of the newspaper. I noted that WTCG Atlanta in the
Palm Beach Post is carried in the actual TV listings along with the
local stations. This is the Palm Beach Post, Friday, June 8.
Here is its TV section [indicating], and it lists in the TV section
all of the Miami stations, all of the West Palm Beach stations, the
stations that are actually on the air. And actually in the TV listing
it lists channel 17 out of Atlanta just as if it were actually in the
market actually broadcasting on the air in the market. I find that
to be quite an interesting thing.
Another thing it does not do is it does not list channel 17 of
Miami, the educational station, because this could possibly confuse
the viewer. So here it lists channel 17 from-oh, gosh, how far
away is Atlanta from West Palm Beach? It must be 500 miles,
maybe 400 or 500 miles. But it does not list the local educational
station which also happens to be channel 17. I think that that is
kind of an interesting thing to note.
~ VAN DEERLIN. Isn't that more a judgment on the newspaper
management than it is on the question of program consent, howev-
er?
Mr. O'SULLIVAN. Well, sir, I don't know if it is accidental, be-
cause it also appears in the Palm Beach Times.
Mr. VAN DEERLIN. My question stands.
Mr. O'SULLIVAN. I think it is a valid question. Yes; it could be
judgmental.
Mr. VAN DEERLIN. The fact that the local public television sta-
tion was omitted seems to me subject to great criticism, but if a
signal is available in a market, it seems to me the readers of the
newspapers would be entitled to know that, whether the NAB
approves it or not.
Mr. O'SULLIVAN. I am not speaking for the NAB.
Mr. VAN DEERLIN. I understand that. I simply pulled that out of
the air.
PAGENO="0169"
165
Mr. O'SULLIVAN. I understand what you are saying, sir, and that
is a valid point. But wouldn't you think it would be listed in the
cable chart, which is another section?
Mr. VAN DEERLIN. Again, it seems to me it reflects on the judg-
ment of the newspaper..
Mr. O'SULLIVAN. Well, may I leave these? Would you like to see
this?
Mr. VAN DEERLIN. Sure.
Mr. O'SULLIVAN. Without rehashing what has been gone through
many times before this subcommittee, we just don't know what to
do about this matter of exclusivity and the fact that we are issuing
licenses that state that the licensee has an exclusive right to the
program in his market., and now that no longer exists.
We really feel that we need legislative relief in this area. There
is no way that we can handle it otherwise. One might say, well, if
you want to protect your licensee in Oklahoma City and protect his
exclusivity, then don't sell any of your programs to WGN-TV in
Chicago because then the fellow in Oklahoma City doesn't have to
worry about your show being imported in by satellite out of WGN-
TV.
But how can we not sell WGN-TV in Chicago? Because Chicago
is a very important market as far as programs are concerned. So it
is a mess.
Mr. VAN DEERLIN. Do you therefore support the program consent
proposal that appears in H.R. 3333?
Mr. O'SULLIVAN. Yes, sir, very definitely. I think it is the only
way to bring order out of what is now chaos and is going to become
even more chaotic.
Mr. VAN DEERLIN. Mr. Collins.
Mr. COLLINS. I want to come to this last question, which is the
basic question people keep asking me. They say on this transmis-
sion consent when they talk about these key superstations, WGN
in Chicago and Turner's station in Atlanta, why is it you sell those
superstations if you know you are getting ready to blanket the
country and you have the right as. an independent producer selling
to whomever you please? Why do you sell to them?
Mr. O'SULLIVAN. That is a very good question. Because we cannot
afford not to.
Mr. COLLINS. In Chicago there are bound to be more than just
one station. WGN is not the only station in Chicago.
Mr. O'SULLIVAN. Probably as time goes on all of those stations in
Chicago will be upped onto satellites at one point or another.
Mr. COLLINS. They will all go broke. You know, there is just so
much that the market--
Mr. O'SULLIVAN. In New York, sir, WPIX is up on satellite and
WOR-TV has just been approved up on satellite, and those ar~ two
independent stations. Channel 5, the other major independent, will
probably go up on satellite. Most syndicated programs are sold to
independent stations.
So if we said, OK, the only way to stop it is not to sell to these
stations, we would be out of business very quickly.
Mr. COLLINS. But on your own free conscience, though, you are
agreeing to sell to them knowing what the ultimate result will be
under the present law. Why, under the present law, are you doing
PAGENO="0170"
166
it? You keep saying because it is the only thing to do, but you have
only named two or three stations in America who in turn with the
benefit of the satellite can blanket the whole country.
Mr. O'SULLIVAN. Well, you have KTTV in Los Angeles, and
KTLA in Los Angeles will probably be put up on satellite eventual-
ly. You have two out of three of the independents in New York up
there, and you start eliminating WGN in Chicago, the leading
independent station in the country. If you begin eliminating those
stations and saying OK, we won't sell to them, you will be quickly
out of business.
The other point is we do not know when we sell a program
whether they are going to become a superstation or not. We may
sell them a program today, and tomorrow they may become a
superstation. There is no way of telling that. If it goes on as it goes
on now, anyone and everyone can become a superstation and it will
become like a house of mirrors, a mirroring of the same programs
back and forth all over the country.
Mr. COLLINS. I understand your problems in duplication and I
understand your marketing problems, too, when you go to Houston
or Oklahoma City and the guy buys a package and someone else is
laying it down on what you have got. But aren't you allowed to put
in a provision that if your station goes to satellite, we can have a
revocation of the contract?
Mr. O'SULLIVAN. We did that when we heard-the first supersta-
tion, of course, was WTCG in Atlanta, and about 1 year or more
before it actually got into the satellite, possibly 2 years, these
rumblings were going around. So I said to our counsel: Put in a
clause there that would say that whether or not, with or without
your permission-I am not phrasing this properly from a legal
standpoint, but we put in a clause saying that should our program
by means of satellite be. taken off your station, with or without
your permission, we would have the right to rescind the contract or
the contract would become null and void.
They signed that agreement. When Mr. Turner announced that
he was putting two of our properties that we had under the license
on the air to go up on the satellite, we exercised that prerogative
and we terminated the agreement with him.
Now we have discussed this with certain stations that are going
up on satellite, and they are saying we won't sign an agreement
like that because we don't have any control over whether it goes
up on the satellite or not, and if you put that in the agreement
now, we will strike it out; we will not sign it and we will not buy
your show.
So it is a mess.
Mr. COLLINS. Do you think it is sound business to take that
calculated risk and sell with the satellite-duplicated coverage going
over the Nation? What are you advising?
Mr. O'SULLIVAN. I think we are going to get to a point where
stations, particularly in smaller markets, are going to look to see
what is on the satellites and what is not on the satellites. We
operate out of four offices in this country, and as our men in the
field call across the country into stations and talk to them about
programs-for example, we are at the moment in what we call the
presell phase of the "Little House on the Prairie," which will be
PAGENO="0171"
167
coming off network in September 1981, and we are talking to
stations about ordering that program for off-network rebroadcast.
Our fellows are running into the question in these small markets
of "Have you sold it yet to WGN or WPIX? We would like to know
that." Well, as of today we have not sold it, but we probably will
sell it to them. People are very concerned about it.
Mr. COLLINS. Let me go into one other side on economics. They
tell us cable is just now beginning to make a situation where they
are showing in the black but they are not really in the profitable
area television is in as an industry, and we are talking about this
thing 3 or 4 years, possibly, too soon; that it ought to be deferred a
while and come up later.
Why do you think it ought to be brought up right now instead of
being brought up 4 or 5 years from now when cable is in a stronger
financial position?
Mr. O'SULLIVAN. Well, because I think you can destroy a lot of
good program property. I don't agree with cable's position that they
are having financial difficulties. They are all doing quite well, it
seems to me. A gentleman testified here a couple of weeks ago who
is very active in our aspect of the industry and is also very active
in the operation of cable systems, and he is very supportive of his
cable operation and less supportive of his program distribution
operation.
I think the handwriting is on the wall. He sees where the action
is going. I think the time to do it is now. It is not going to be very
often that Congess is going to rewrite an important piece of legisla-
tion like this, and it may be too late later on.
[Mr. Collins nods affirmatively.]
Mr. VAN DEERLIN. Ms. Possner.
Ms. POSSNER. Mr. O'Sullivan, I would like to ask you a few
questions about the company that you represent, Worldvision En-
terprises?
Mr. O'SULLIVAN. Yes, ma'am.
Ms. POSSNER. Worldvision Enterprises syndicates programing?
Mr. O'SULLIVAN. Yes. We sell programs, syndication on a
market-by-market basis, but we also sell programs to networks, too,
and we sell them overseas, too.
Ms. POSSNER. In the syndication business, are you a relatively
large firm, a small firm?
Mr. O'SULLIVAN. We are the largest privately held program dis-
tribution company in the world.
Ms. POSSNER. In the world?
Mr. O'SULLIAN. In the world, yes, ma'am. It sounds like an
overstatement but it is a fact. We were originally part of ABC. As
CBS begat Viacom, ABC begat Worldvision, excepting that in the
case of Viacom, when it had to spin out as a result of the FCC
regulations that put the networks out of the program distribution
activity, Viacom went out as a public company. In the case of
Woridvision coming out of ABC, the officers of the company pur-
chased that subsidiary from ABC about 6½ years ago.
Ms. POSSNER. When you referred earlier to distribution and sale
of "Little House on the Prairie," was that a Worldvision enter-
prise?
Mr. O'SULLIVAN. Production?
PAGENO="0172"
168
Ms. POSSNER. Not production. Is that something Woridvision En-
terprises, Inc. is doing? Do you have the off-network rights to that
series?
Mr O'SULLIVAN Yes, ma'am We have the worldwide rights We
have done it overseas and now we are preparing it for the off-
network marketplace.
Ms POSSNER I am interested in pursuing the question that Mr
Collins. raised about selling to a superstation knowing that nation-
wide distribution via cable will result.
When you sell "Little House on the Prairie" to a broadcast
station and the licensee asks if you have sold it to WGN or to
WTCG, and you say no, I have not, you then, I suppose, negotiate a
price based on what market that station is in and how large an
audience it commands in its market. Is that correct?
Mr. O'SULLIVAN. That is correct, yes.
Ms POSSNER Just for purposes of discussion, let's say over the
next year or so you are successful in selling "Little House on the
Prairie" to 100 television stations across the country, and your
101st license is with Mr. Turner's station in Atlanta, channel 17.
When you sell it to Mr. Turner, what kind of audience figures do
you take into consideration? His share of the Atlanta market or an
extended market?
Mr. O'SULLIVAN. I really don't know. You see, the other problem
is, to go back to the first part of your question, when the small
market station manager asks us have you sold it to WGN or WPIX
because he is obviously concerned about whether he is going to
have to compete with it coming in by satellite--
Ms. POSSNER. WPIX is not on the satellite, is it?
Mr. O'SULLIVAN. It is going up. So is WOR. There are a whole
bunch of them going up.
Ms. POSSNER. But so far its signal is distributed by microwave.
Mr. O'SULLIVAN. I think WPIX is up on the satellite now. I think
so but I am not sure. And when that small market station manager
asks that question, we know why he is asking the question. And if
we say to him no, it is not sold to WPIX and WGN at the moment
and he goes ahead and buys the program, he has no assurance it
will not be sold to WGN and/or WPIX by the time he goes on the
air with it.
So these rumblings, these questions coming out of the small
markets indicate the concern of those broadcasters, and it also goes
to the heart of these license . agreements which say-.there is a
section in it here which says Woridvision, the licensor, grants, and
the licensee named and scheduled accepts, a limited license under
the copyright of the pictures to be telecast, programs specified, over
the television facilities of the station indicated in said schedule.
And it indicates it is exclusive.
Ms. POSSNER. Let me ask the question another way. Is Ted
Turner going to pay more for "Little House on. the Prairie" because
his audience is bigger than just channel 17's share of the Atlanta
market? Have you sold ~to Ted Turner? I note that you have can-
celed some agreements with him. Have you in the past sold to Ted
Turner's station?
PAGENO="0173"
169
Mr. O'SULLIVAN. We sold him the "Casper" cartoon package and
a series called "Discovery," and when he put it up on the satellite,
we canceled the contract.
Ms. POSSNER. When you negotiated that contract with him for
either of those two products-without revealing the price, obvious-
ly-did he pay more for those products because he was up on a
satellite, or did he pay a price based upon the share of the Atlanta
market he reaches?
Mr. O'Sullivan. He paid an Atlanta price, and at the time he
bought them, he was not on the satellite.
Mr. VAN DEERLIN. I take it you would be willing to negotiate
with him for the full price that would be represented by his full
coverage.
Mr. O'SULLIVAN. I really don't know, sir. I really don't know how
to answer that question. Really, today when I came down here I
said to myself, I want to stay out of the economic arena, the money
arena. I think that there are other things here which are maybe-
and this may sound Pollyannaish but I don't mean it that way. I
don't see in asking Ted Turner to pay whatever we could figure out
it was worth that he should pay to be able to put it up onto the
satellite, whether that is really the issue here.
What happens to the stations down the line? What happens to
the little stations that are buying it from us also? Do we give it to
them free?
Mr. VAN DEERLIN. We have been talking about marketplace
determinations. If people in the production end sit before us and
say that they would make moral judgments rather than market-
place judgments, it kind of throws our argument out of whack.
Mr. O'SULLIVAN. I really don't know how to deal with that. It is
not a matter of pushing the whole exclusivity thing aside.
Mr. VAN DEERLIN. It is being pushed aside very quickly.
Mr. O'SULLIVAN. Maybe my mind is not moving ahead fast
enough with the developments in the technology.
Mr. VAN DEERLIN. Just for the sake of making a record here that
is going to stand up, you don't seriously mean to tell us that you
would have any other than economic considerations, do you, in
distributing this entertainment?
Mr. O'SULLIVAN. No. Definitely we are in business to make
money. There is no doubt about that.
Mr. VAN DEERLIN. OK. So if Ted Turner will pay a price that
accurately reflects his total audience, which is the whole basis of
program consent, you will do business with him.
Mr. O'SULLIVAN. I would expect so in the final analysis, yes.
Ms. POSSNER. And you expect that the arrangement you make
with him will compensate you for the stations you might lose as a
result of that program already being carried extensively on the
satellite?
Mr. O'SULLIVAN. It would have to.
Ms. P055NER. One final question. Woridvision is the largest inde-
pendent syndication company--
Mr. O'SULLIVAN. At the moment. We are in a process of merging
right now which is not quite final.
Ms. POSSNER [continuing]. In the world?
Mr. O'SULLIVAN. Yes.
PAGENO="0174"
170
Ms. POSSNER. Have you had any contact with the Copyright
Royalty Tribunal?
Mr. O'SULLIVAN. No, not directly. I think Katrina mentioned to
me at the NAPTE Convention in March that we had a lot of money
coming to us, like $34,000, for the usage of our programs. I think
that was the figure, wasn't it?
Ms. RENOUF. Yes.
Ms. POSSNER. Could you tell us whether Worldvision has filed a
claim with the Tribunal?
Ms. REN0UF. No, I cannot tell you that. I served as counsel for
the National Association of Independent Television Producers and
Distributors, of which Kevin's company is a member, and Worldvi-
sion's own counsel presumably makes the Copyright Tribunal fil-
ings if they have made them.
I do know there are a number of our members, Worldvision
being one of the biggest, some of them being one-man companies,
who have never even made the filings because they didn't know
how or what they were supposed to do. There are not many of
them exactly major corporations. They are just small, ignorant
operations and they didn't even know about it.
Mr. O'SULLIVAN. I don't think we have. I am not sure.
Ms. POSSNER. Mr. O'Sullivan, would you consult with your coun-
sel and let the subcommittee know whether your company has
filed?
Mr. O'SULLIVAN. Do you want us to call that down to you?
Ms. POSSNER. A letter will do.
Mr. O'SULLIVAN. Sure.
Ms. POSSNER. Would you also consult with your counsel and ask
whether your corporation, the largest of its kind in the world, has
taken part in any of the negotiations or discussions the Tribunal
has held with respect to distribution of the royalty fees that have
been collected. We would be interested in that information as well.
Mr. O'SULLIVAN. Yes.
Ms. POSSNER. Thank you very much.
Mr. O'SULLIVAN. Thank you.
Mr. VAN DEERLIN. Mr. Wunder.
Mr. WUNDER. The question I have is: You expressed a concern
for the smaller market people who, in effect, will be competing
with a signal brought in from the superstation. Let's go back a
minute.: In that market that broadcaster pays a price for that
product based upon the fact that he is going to have exclusive
rights to that product in that market.
Now, why couldn't, as the chairman suggested and Mr. Collins
also alluded to, as a matter of contract, you charge the supersta-
tion more on the basis of this expanded audience and then charge
the broadcaster in the smaller market who no longer can get
exclusivity a smaller amount? Wouldn't you have effectively a
wash?
Mr. O'SULLIVAN. I suppose you could do that, excepting you
might sell the smaller market the program first and you may not
have sold it to the--
Mr. WUNDER. You could adjust for that, couldn't you? You could
put a provision in the contract that in the event this same product
comes into that market, you would renegotiate at some predeter-
PAGENO="0175"
171
mined rate? And alternatively with a bigger station, if you sell on
the basis of a given size audience and the audience increases in
certain increments, that the price would be---
Mr. O'SULLIVAN. Theoretically that could be done, Mr. Wunder,
but I really don't think the so-called superstations-maybe Mr.
Turner would be willing to pay more money for the product, but I
don't know if WGN in Chicago and WPIX and the others that are
going up on satellites would be willing to pay a lot more money for
the programs because they are going up on satellites.
The attitude they are taking is we are reluctant about this; we
don't like being u~ there, but gosh, what can we do about it? You
know, I really don t know what the answer is there.
Mr. WUNDER. What you are saying is it would work for Turner
because he wants to be there?
Mr. O'SULLIVAN. Well, he has an ax to grind. He is determined
he wants to do this thing. And I think he has indicated to some
sources of program supply that he would be willing to pay addition-
al moneys for programs. But I don't think they all would.
Mr. VAN DEERLIN. He has testified that the program consent
provision of this bill would put him out of business.
Mr. O'SULLIVAN. Put the satellite out of business, or his station?
Mr. VAN DEERLIN. His superstation.
Mr~ O'SULLIVAN. I don't think that that is so.
Mr. VAN DEERLIN. Well, neither do I, but that is what he testi-
fied.
Mr. O'SULLIVAN. I think that is very untrue. He would probably
do better if he gave up his obsession with this superstation thing
and operated WTCG as a responsible television station within At-
lanta.
Mr. VAN DEERLIN. Well, now, just a minute. Every American boy
has a right to dream and to spend his money in pursuit of that
dream. I don't think you have any more right to require him to
remain a fourth-rated station in the Atlanta market than he has to
dream impossible dreams.
Mr. O'SULLIVAN. I accept your chastisement, sir.
Mr. VAN DEERLIN. It was not intended as that.
Thank you very much.
Mr. O'SULLIVAN. Thank you, sir.
May I leave this material here?
Mr. VAN DEERLIN. I hope you will, sir.
[The following letter was received for the record:]
PAGENO="0176"
172
WORLDVISION
ENTERPRISES INC. 660 Madison Avenue, New York. NY. 10021 (212) 832-3838 Cable Address WORLVISION
Neil M. Delmart
Executive Vice President August 6, 1979
Ms. Karen Possner-Wiggins
Subcommittee Ofl Communications
House of Representatives
B-333 Rayburn House Office Bldg.
Washington, D.C. 20515
Dear Ms. Possner-Wiggins:
I am writing to you on behalf of Worldvision's President,
Kevin O'Sullivan, who is out of town for several days. We
wanted to get a response to you without further delay.
Following up Mr. O'Sullivan's testimony to the Communications
Subcommittee on June 13, and his promise to bring you up
to date on Worldvis ion s contacts with the Copyright Royalty
Tribunal, this is to advise you that on July 30, 1979 World-
vision files its claim for cable royalty fees from secondary
transmissions by CATV systems during the second half of 1978.
On the same date WorldvisiOn filed a claim for fees from such
transmissions during the first half of 1978, requesting a
waiver of the Tribunal's rules if necessary for its acceptance.
Until recently, Worldvision was not part of any preliminary
negotiations or discussions with the Tribunal concerning the
distribution of royalty fees. However, we have been in touch
with representatives of the Motion Picture Association of
America and plan to pursue our claims as part of the group
of which the NPAA is a part.
If we can be of any further assistance, please let me know.
Mr. O'Sullivan `certainly appreciated the attentiveness of the
Subcommittee and its staff and hope we can continue our dialogue
as Congress moves toward badly needed legislation in this field.
Yours sincerely,
~
NMD/ib / Neil M. Delman
cc: ~r. Kevin O'Sullivan
E. William Henry, Esq.
Katrina Renotif, Esq.
PAGENO="0177"
173
Mr. VAN DEERLIN. Our next witness, in still another subject area
of the legislation, will be Mr. J. Edward Day, special counsel to the
consumer electronics group of the Electronic Industries Associ-
ation, a highly distinguished former Postmaster General of these
United States.
STATEMENT OF J. EDWARD DAY, SPECIAL COUNSEL, CON-
SUMER ELECTRONICS GROUP, ELECTRONIC INDUSTRIES
ASSOCIATION
Mr. DAY. Thank you, Mr. Chairman. My name is J. Edward Day.
I am a lawyer in general practice that has for a number of years
represented the consumer electronics group of the Electronic Indus-
tries Association.
We are different than nearly all the other witnesses here in that
we represent the equipment manufacturers, and particularly the
television equipment manufacturers. Our association includes not
only substantially all the television manufacturers for the U.S.
market; we include the principal Japanese-controlled manufactur-
ers as well in our trade association.
So we pretty much represent the market. We also represent the
other types of consumer electronics products that are mainly in the
entertainment area. Our concern principally is with the provision
in section 413, subsection 12, which is on page 86, which would give
to the new regulatory commission the power to regulate the per-
formance characteristics of television receivers.
This is a very big change from what the existing law is. We
think it is unnecessary. We think it is not justified by any failures
on our part or by any need to have the Government bring about
things that are not already being done pursuant to the strong
economic pressures our members are under to improve the product
constantly in order to meet the competition.
Because we are television, people sometimes are inclined to get
us mixed up with the broadcasters and think that we are in the
same ball park as far as profit margins are concerned. But al-
though our industry is an enormous success from the standpoint of
volume of sales and from the standpoint of public acceptance, it is
actually a distressed industry financially.
Very few of the companies in this manufacturing business are
making any money at all. The trade press reports that overall last
year, which was a tremendous year volumewise, the industry as a
whole ran in the red. When television got started in the earlier
days, there were over 100 companies in the business of manufactur-
ing television receivers in the United States. Today that figure is
down to about 15.
A couple of those are having a hard time surviving, and we are
going to have the same situation if we are not careful that hap-
pened with the automobile manufacturing industry where they
started out with large numbers of manufacturers and ended up
with only a handful.
As you have observed, just in recent years leading companies
have dropped out of the business: Packard Bell. out in your part of
the country, Admiral just a few months ago, Philco Ford, Warwick,
Motorola, and there are going to be more.
51-254 0 - 80 - 12
PAGENO="0178"
174
Now, the significance of this profit squeeze and financial squeeze
is we try to balance every change that we make in our technologi
cal improvements with cost benefit, and we don't want to have
forced upon us costs which we feel don't really achieve anything
significant for the buyer of the product but which increase the
squeeze and increase the problem of the companies surviving
Another thing that is really unique in our business is that we
are the only leading product where the price has stayed stable for
20 years While it is a well known figure that the cost of living,
CPI, has gone up over 100 percent since 1967, our prices have
stayed level In fact, in 1978 they even went down a little bit, and
that has been a terrific boon for the consumer because he is getting
a better product all the time at a price which, in relation to other
products and the Consumer Price Index, is constantly lower
So the combination of these two factors make us very conscious
of the necessity to pinch pennies in the way we go about our
production
Now, the present law gives the Federal Communications Com
mission some regulation over our performance, as you know, and
that has to do with the comparability between UHF and VHF But
this provision which I am concentrating on here would give a
general authority over all performance characteristics And it is
important to realize that it is not a health and safety type problem
It is not like giving more power to EPA or OSHA or one or another
to improve the atmosphere or to improve people's health
This is purely a matter of giving a Government agency a right to
substitute their particular preferences as to how a product should
be designed and engineered for those that result from long years of
highly competitive activity.
Mr VAN DEERLIN Would you see it, Mr Day, as adoption of a
consumer standard which has no bearing on the interference po
tential of a product Obviously, I am out of my depth already, but I
am referring to the performance characteristics of a TV set which
would determine whether it emits interference which would impair
the reception of a neighbor's set?
Mr DAY Interference is a subject that is being and has been for
a long period of time pursued intensely by the industry, and tre
mendous strides have been made There are certain types of inter
ference which caiinot, by any expenditure of money or any means
that could possibly be devised, be cured by something that you do
to the receiver
Certain types of interference are caused by transmissions that
are improperly controlled, maybe excessive power, maybe illegal,
one thing or another If that comes in on the same channel you are
trying to tune in on as harmonic interference, if you build some
thing into the set to get rid of that, you get rid of the program you
are trying to see
So there are certain rather major parts of the interference prob
lems which can only be solved at the transmitter, and the Federal
Communications Commission does, through action of your commit
tee and the Congress, have increased enforcement powers to pre
vent certain illegal transmissions which have been the source of
much of the interference
PAGENO="0179"
175
We feel the interference problem is gradually tapering off and is
not as serious as it was. The companies all report that the public
communications on this subject are going down, but a lot is being
done on it. On the new color sets, there is additional componentry
being put in there which greatly reduces the susceptibility to inter-
ference to the extent that it can be done in the receiver.
If you have an unusual case of some next door neighbor-say you
had Senator Goldwater living next to you in an apartment with his
ham radio equipment and it was causing some interference. Usual-
ly the ham radio operator is an expert and he will be able to take
care of it by you pointing it out to him, but if not, the company will
furnish a special type of filter that may help the situation some-
what.
Mr. VAN DEERLIN. Then there would be no tool left except to
impose a spectrum fee on the Senator, right?
Mr. DAY. I suppose so.
But that interference is an example of the type of performance
characteristic regulation that we hope will not be included in the
bill. There is a separate subsection of 413 that does relate to
interference. We cannot tell from reading it whether it relates to
preventing the emission of interference, which we certainly favor,
or whether it relates to-it may relate to susceptibility of interfer-
ence.
There is also a provision under your new agency relating to the
spectrum which would allow them to study the interference prob-
lem. We think it would be highly undesirable for anything to be
said by Congress that would indicate to the public that there is
some shortcut easy solution to the interference problem, all types
of interference, that can be achieved by passing a law or adopting a
regulation.
Thank you, sir.
Mr. VAN DEERLIN. And do you know anything, Mr. Day, about
performance characteristics in other countries, say Japan?
Mr. DAY. On interference?
Mr. VAN DEERLIN. On performance characteristics in general. I
am just seeking information.
Mr. DAY. Well, I don't have anything significant. As you know,
in most of those other countries the transmission facilities for
broadcasting are run or controlled by the government, and you
may have fewer stations that are operating in an area. I think
Japan goes pretty much on the basis of nationwide programing.
Mr. VAN DEERLIN. I was wondering if there was any supervision
of standards for receiving sets.
Mr. DAY. I don't know the answer to that. Do you know, Eb?
This is Mr. Tingley, the staff engineer of the consumer electron-
ics group.1 Sit down here.
Mr. VAN DEERLIN. Do you know anything about that, Mr. Ting-
ley?
Mr. TINGLEY. Yes, sir. Mostly they are under the national admin-
istration, just like the FCC in our country. There are certain rec-
ommendations that are made internationally by what they call the
CISPR that deals with interference that products may cause to
communication services. We don't get involved too much in that.
1Mr. Tingley was in the audience and was called upon for questioning.
PAGENO="0180"
176
I am aware, though, in the case of FM, I believe the mternation
al recommendation was not as strict as that placed on FM receiv
ers, so they are having some problems now with interference be
tween FM receivers and certain air-ground services. But I don't
think there are any performance requirements that get into the
type Mr. Day was discussing dealing with interference susceptibil-
ity of the television receiver I still think that is largely determined
by the marketplace.
Mr. VAN DEERLIN. Thank you, Mr. Tingley.
Ms Possner
Ms POSSNER Mr Day, when you talk about regulating perform
ance characteristics of television receivers, does this refer to pic
ture clarity and the quality of the sound?
Mr DAY All of those things, yes The Federal Communications
Commission at the present time has outstanding three notices of
inquiry which are bringing forth volumes of papers in attempting
to comment on them, and those include 33 different subjects of new
regulation for us, which gets into every kind of detail of that kind
almost that you can think of.
We feel that the FCC has no special magic by which they can
improve on the intensely competitive efforts of the companies to
improve the quality of the picture and the quality of the sound and
other performance features of the set, because this is a survival
industry If one set turns out to be deficient, it is soon going to drop
by the wayside because people shop these things
We were rather interested to see that Consumers Union, which
is hardly a fan of most industries of this kind, said in a recent issue
that the consumer today when he buys a television set of any make
can count on getting good performance
Ms. POSSNER. I raise this because-and this is in the nature of a
followup to the question the chairman raised-I was wondering if
other nations regulate performance characteristics of receivers
with respect to picture quality and sound I am not suggesting that
it is another area the FCC need necessarily get into, but I was just
wondering if that occurs-if perhaps in Japan or in other countries
the government requires manufacturers to adhere to standards of
performance
Mr DAY Well, I think rather than surmising, it would be better
if I submitted for the record such information as we can glean as to
what is done by other countries on video sound, for example That
has for some time been a very active subject of concern and devel
opment by the industry on a private basis in this country, to work
toward having the quality of sound in the audio portion of your
television receiver that you have in a sophisticated audio product, a
hi fi or something of that kind
How that will be achieved, we can't say yet, but we certainly
don't need any Government agency to tell us that is something we
are working toward And you can bet that the first company that
comes up with it is going to have a terrific competitive advantage
and the others are going to have it very fast
Ms POSSNER Thank you
Mr VAN DEERLIN Mr Wunder
[Mr Wunder nods affirmatively]
Mr. VAN DEERLIN. Thank you very much, Mr. Day, for your
testimony
[Testimony resumes on p 189]
[The following letter was received for the record]
PAGENO="0181"
June 22, 1979
Honorable Lionel Van Deerlin
Chairman
House Subcommittee on Communications
B333 Rayburn House Office Building
Washington, D.C. 20515
Dear Van:
When I testified last week on H.R. 3333 in opposition
to regulation of performance characteristics of television re-
ceivers, you asked whether other countries had such regulations.
I have checked with people who are in a position to
know, and they tell me no such regulations are imposed by gov-
ernment authorities in Japan or in Western Europe.
I am attaching a bulletin entitled "Television Re-
ceiver Requirements" and dated November 7, 1978, from the Depart-
ment of Communications in Canada. These Canadian requirements
are roughly parallel to those of the Federal Communications
Commission in the United States. for UHF broadcast receivers.
There are additional technical requirements in Canada for re-
ceivers or converters intended for operation with CATV systems;
however, they apply to the narrow area necessary for compatibil-
ity so there is not unfavorable interaction between the cable
system and the television receiver.
Best wishes,
incerely,
J. Edward Day:hm
177
SQUIRE, SANDERS & DEMPSEY
21 DUPONT CIRCLn, N. W.
WASHINGTON, D.C. 20036
TELEPHONE (202) 862-7000
CAXLE "COXFIRM' TELEX `CLXB 440003'
(202) 862-7026
Enclosure
PAGENO="0182"
178
!I `~-~ Government of Canaoa Gouvernement du Canada
Department of Communications Ministére des Communications
6203-0 D P
6203-14 BC-
300 Slater Street
Ottawa, Ontario
K1A 0C8 November 7, 1978
RE: Television Receiver Requirements.
Dear Sir:
Enclosed is a copy of the amendment to the General Radio
Regulations Part I and General Regulations Part II pertaining to
television receiver regulations which was published in Part II of
the Canada Gazette on October 25, 1978.
The above regulations, as now promulgated, were finalized
following comments received by the Department in response to Notice
No. DGTR-Ol2-77 published October 8. 1977 in the Canada Gazette Part
I. We wish to thank all those who have assisted the Department in
this matter.
Yours truly,
W.E. Wright
Head
Broadcast Standards
Broadcasting Regulation Branch
Telecommunication Regulatory
Service
End.
#31040 11/15/78
R- 4 , a
PAGENO="0183"
179
25/0/78 Canada Ga:ette Part 1/. Vol. 112. I/o. 20 (iu:ct it dv Canada Panic II, Vol. 1/2. V' 20 SOR/DOI~S/78-768
Registration
SOR/78-76S 6 October, 1978
RADIO ACT
General Radio Regulations, Part II, amendment
The Minister of Communications, pursuant to paragraph
7(l)(h) of the Radio Act, is pleased to amend the General
Radio Regulations. Part Ii, made by order of 6th August,
1963', as ansended', in accordance wills the schedule hereto.
Dated at Ottawa, this 5th day of October, 1978
JEANNE SAUVE
Minister of~'onirnunications
SCHEDULE
I. The heading preceding section 33 and sections 133 and
134 of the Gnis.'ral Radio Ru'gslations, Part /1 are revoked.
and the following substituted therefor: ~
"DIVISlON VIII
RADIO APPARATUS CAPABLE OF RECEIVING 5R000CASI'tNG
/,ttx'rprc'tau:ost
Enregistrornent
DORS/715-768 6~octobre 197S
LOISURLARADIO
Rčglement géndral sur Ia radio, ?artie ~
Modification
En vertu de I'aliniia 7(l)/I) de Ia Loi sur Ia radio, ii plait Su
nsinistre des Communicationc d'apporter par les prdsentes leo
nouvelles modifications ei'uprdu. as Rdglemest gindral sur Ia
radio, Partie II, itubli par l'ordonnance ds 6 uo8t 1963', dane
su fornte modifile'.
Ottawa, Ic 5 octobre 1978
Lu' ntinistre den Communications
JEANNE SAUVt
ANN EXE
I. La rubriqsequi pric/Ide l'articlk 33, et lea articles 133 cI
134 du Rčgletnettt .général sun Ia radio, Partie /1, soot ainst
remplaeis:
.SECTION VIII
APPAREILS Dli RADIOCOSIMLNICATIONS POUVANT RI1CIIVOIR
DES EMISSIONS Dli RAt)tODtFI'USiON TOLISVISIJHLLH
lstterprétalion
133. Dana Ia pritsente section, l'expressiun
.facteur de bruit. dEsigne Ic rapport. expriml en dicibels,
entre Ic niveau total du bruit pr~duit sun borneo de sortte
dc I'appareil Iorsque Ia semptruturc de bruit :~ sen homes
d'cntrbe cst do 290'K, ella partie de en bruit produite par
Ia résistance sun barnes d'cntrée; (5,01st' figure)
.gain dn conversion. disigne In gain obtenu torsqu'nn signal
radioilectrique 8 une frlqucnce cat converti en signal
radiodlectrique S one auire frlquencc: 1 cat csprin'tE en
decibels, sous forme de rapport cntre In niveas do signal
de sortie ci Ic nivcau du signal d'.'ntrCe: (conversion gain)
.nis'eau du signal. disigne Ia tcnsion sflicacc an cit/Irs dun
cycle radixCleetrique. pendant Ia transmission dune
impulsion de synchronisation dun signal de tdldviston,
exprimiic
a) en micrOvoltt par rapport usc impedance do 75
ohms, on
b) en dl3ntV, 0 dIttnV correnpondant S us millivolt sax
bomnos dune impedance do 75 ohms;
(signal level)
133. In this Division,
"conversion gain" means the gain obtainable when an RE
signal of one frequency is converted to an RE signal of
another frequency, and is expressed in decibels as the
ratio of the output signal level to the input signal level;
(guilt dv co,ts'ersisa(
"manual selection" means the adjustment of a radio
apparatus to obtain reception of a channel by use of an
easily accessible and continuously bariable control or a
device that can be adjusted witheut the aid of a tool;
(sii!eciion nia,tselle)
"noise figure" means the ratio, expressed in decibels, of
(a) the total noise pownr'delivnmed to the output termi~
nation of a radio apparatus nvltcn the noise temperature
of its tCrmination is 290 degrees Kelvin, to
(h) the portion thereof engendered by the input
termination;
(facteun dv bruit)
"preset selection." meson the adjustment of a radio
apparatus to obtain, auloinatically, reception of a channel
by use df discrete positions, digital systems or other
mechanical or electronic devices; (s!Ic'ction pr/In/guy)
"signul level" means the RMS voltage over an RE cycle
during the traitnmission of the syncttroniziotg pulse of a
television signal expressed
SOR/h5.2'$7, (`o',ad,i Gs:rii,' Pox ii. v,,i. 07. No. II. Augu.I 2v, 963 `DORS/t,s.297, G,i.','ix' So Ca,,athu I'soit It, Vat. 97,,,' Ix, 26 ,,oSi "95
t SOR/7o.73't. C'aoada Ga.'.,,, Pox ii. Vai. 112, No. l's, Oa'iobor ii, 1979 DORS/79730. Gao's, to Csoada Pau,u Ii. V,it, ISv' 9. it oniab,, 1979
.silectton nununlle. diisigne I'ajustement dun apparetl do
radiocoittinuiiieatioon qui pertnet d'abtenir Ia reception
30319
[I]
PAGENO="0184"
180
25/10/70 Canada t7aeeiis' Part / 1, Vol. /12, Vo. 20 Ga:eitc Is Canada Partial! Vol. 112, V 20 SOR/-DORS/78--768
(a) in microvitlts, with rcspect to an impedance of 75
ohnts, or
(hI in dllmV, with 0 dtlmV corresponding to one
milhvolt across 75 ohms.
(aivm'nmt dii signall
C/tannin! Rv'qoiPeomrnt.t
134. (I) Subject lit suhucctiovs (2) and (3), cvery radio
apparatus of the class of radio apparatus that is capable of
receiving tclevis;on broadcasting shalt be capable of receiv-
ing television broadcasting
(a) only on all very high frequency channels and all ultra
high frequency channels front both a broadcasting trans-
mitting undertaking and a broadcasting rc-cciving
undcntaking:
(hI only on all very high frequency channels and all ultra
high frequency channels Irom both a brnadcasting trans-
mitting undertaking and a brnadcmsming receiving under-
taking, and on all be ntid.hand channels and all the
super-band channels from a broadcasting receiving under-
taking; or
(ci after July 1, 1979, in accordance mvilh paragraph (a)
or (h) or only no all very higlt frequency channels, alt the
mid-band channels and on not less lion nine super-band
cltarnels from a broadcasting receiving undertaking far
the purpose of aot;iitentiog the clianitel capacity of a radio
apparatus that confornns to paragraph (a).
(2) A radio apparatus of the class described in subsection
(I) shall, until Ju'y 1, 1900. be deemed to conform to the
requirements nf pttragraph (tool if, in addition to conforns-
itg to the requirentents of that paragraph, it is capable of
receiving television broadcasting ott less than all the ntid-
band channels or super-band channels from a broadcasting
receiving underlaking.
(3) A radio apparatus nf the class described in subsection
Ill shall, until July I, 1990, be deemed to conform to the
requmrcntents of ~ar,igr.tph 111(/.1 ii it is capable of receiving
television broadcasting only on all very high frequency
channels and all ultra high frequency channels from both a
broadcasting iranartitting undertaking and a broadcasting
receiving undertaking and on less than alt the mid-band
channels or super-hand channels from a broadcasting receiv-
ing undertaking.
(41 In this sectino,
"mid-band channels" means the nine channels, commonly
identified by the alphabetical designators A, B, C, D, B,
F, C, H and I. hit ire used in the frequency band from
120 Ntllzto 174 vtlti~
"super-band channels" means the fourteen channels, cam-
mvnly identified by the alphabetical designators J, K, L,
d'un canal, en utilisant one commande cnnmindment varia-
ble d'accds facile ou us divpositif qui peat Care rdglh sans
l'aide d'un numil: (ntonitmo! selection)
~sdlection prdrdglde~ ddsigne l'ajustement d'un appareil dc
radiocomntunicalmons qui permet d'obtenir autotttamique-
went Ia reception d'un canal grilce ń des positions distmnc-
leo, des syssdntes numdriques ou autres dispositifs mileani-
ques ou dlcctrottiques. Unrc'aet selection)
Exigence.n rt-latives aux caiioux
134. (1) Sous reserve des paragraphes (2) Cl (3), es
appareils de radioconnmunicatmons de Ia clause d'appareils
pouvmtnt rccevoir des Omissions de radiediffusion tdlOvisuetle
ye peuvent receoomr cc genre d'dmitsmons
a) qoe our tnus (en canauo C ondes mOtriques (VHF) et
sur bus lea cavaux a nodes ddcimiltriques (UHF) en
provenance d'une entreprise d'imission de radiodiffusion
et d'une entreprise de reception de radiodiffusion:
b) que sur bus les eanaux a andes nidtriques (VHF) et
sur bus les cansux ii nodes dOcimOtriques (UHF) en
provenance dune eatreprise d'Omission de radiodiffusion
Cl d'une entreprise de reception de radiodiffusion, et que
sur tousles canaun de Ia bande moyenne et de Ia bande
supdrieure en provenance d'unc enbrcpriue de reception de
radiodiffusion; vu,
a) aprCs Ic I" juillet 1979, conformOment 8 l'alinia a) nu
b), on que sur bus leo canaun C andes mdtriques (VHF),
sur taos les canaux de Ia bande mayenne eb sur as mains 9
canaan de Ia honda suplricure en provenance dune entre-
prise de reception de radiodiffusion afin d'augmenter Ia
capacilb ea canau.s d'un appareil de radiocommunications
qui eat confnrme C l'alioda a).
(2) Un appareil de radiocommunications dlcrit aa para-
graphe (I) est, jusqu'au I" juillet 1990, repaId conforme
aux exigences de l'atinCa (11mm) si) peat recevnir 1ev Omis-
sions de radiodilfusion tmitOnisuelle en provenance dune
entreprise de reception dc radiodiffusian, sur an nombre de
canaux de Ia bande moyenne nu de Ia bandc supirieure
infOrieur ax nombre manitnal de canaan de ces bandes.
(3) Un appareit de radiocommunicali000 visé au paragra-
phe (1) est, jusqu'au I" juillet 1980, rOpimtii conforme aux
eoigences de l'mtlinda (I )h) s'iI ne peat tcccvoir des Omissions
de radiodiffusion tOlivisuelle en provenance d'une entreprise
d'simission de radiodiffuoion et d'une entreprise de reception
de radiodiffusion que sur IonS les canaan C andes miitriques
(VHF) Cl nor bus les canaan C andes ddcimdtriques (UHF)
et, en provenance d'unc entreprise de reception de radiodif-
fusion, que sur on nombre de canaux de Ia bande moyenne
Ct de Ia bande supdricure infdrieur au nombre maximal de
canaux de ccv bandes.
(4) Duos Ic present arbicle,
~canaun de Ia bande moyeone designent neuf canaux coa-
ramment identifies par len lestres A, B, C, D, E, F, C, 1
eb I. respectmvemens. qui ant 410 dtablis days Ia bande de
friiquenees camprmscs enbre 120 at 174 MHz:
.canaua de Ia bandc supdrieure dOsignens quatorze canaan
courantment identmfids par les lettres 4, K, L, NI, N, 0, P
3839
PAGENO="0185"
181
25/10/78 (`unuda Gu:ette Part 11, l'oI. / /2, ~ 20 (locate do Canada Partie II, Vol. /12, tV' 20 SOR/l)ORS/78-768
M, N, 0, P. Q. R, S. T, U. V and W, that are used in the
lrcqucney band from 216 MI/i. 10300 MI-Ic;
`ultra high frequency ch:tnncls or UK F" means the sevc'nty
channels commonly idcnttlied by the numerical designa'
tars from 14 to 83, that are used in he frequency band
front 470 `al I-In to 890 N/li;
`very high frequcncy channcls or VHF" means the twelve
channels, commonly identified by the numerical designa-
tors from 2 to 13, thaI are used in the frequency hands
from 54 MHz to 72 MHz, 76 MHz to 08 MHz and 174
MHz to 216 MHz,
Additional Technical Ru'sjtsiri'vu'ttts Applying to Standard
Television Apparatus
135. (I) Every radio apparatus that conforms 10 the
requirements of paragraph l34(l)(a) shall, in addition to
those requirements, eonfornt to the following technical
requirements:
(a) the noise figure fur the radio apparatus shall,
(i) for chunnet numbers 2 to 13, not exceed tO dB, and
(ii) for chanttel numbers 4 to 83,
(A) if manufactured in or imported into Canada on
or before October I, l98t, aol exceed IS dO,
-_ (B) if manufactured in or imported intn Canada
after October I. 1981, and before Octnber `2, 1984,
not exceed 14 dO, or
(C) if ntanufactured in or imported into Ctsn;sda
afler October I, 984, not exceed 12 dO;
(b) if Ihe siewable area of the television screen exceeds
170 cntt, tlte radio appuratan shall be equipped with
preset selection;
(c) the radio apparatus shalt be equipped with a channet
selection system that has a UHF channel selector or
tuning mechanism comparable to its VHF channel selec-
tor or tuning mechanism svith respect to ease of operation
and, in particular, with respect to location, accessibility
and readability for channel identification purposes;
(d) without limiting the generality of paragraph (c),
where preset selection is provided, a chunnet selection
system described in that paragraph st-tay be
(i) a dual knob channel selection system
(A) syhose VIlE chtsnnol selector or tuning mech-
anisna is equipped with a numerical readout for each
of the t 2 channel numbers,
(13) svhnse UHF channel selector or tuning mech.
anisni is equipped with-a nunnorical readout for each
nf the 70 channel nunabcrs or, alternatively, for at
lettst every other one of the 70 channel numbers with
a mark to ittdicate each channel that is not displayed
nunterically. and
(C) svitlt wltich ii is possible to change from the
reception of VHF channels to she reception of UI-IF
channels and vice versa by using either a clearly
labelled position on the VHF channel indicator or a
clearly labelled switch,
Q, R, S, T, U, V it \V, respectivcment, qui ont ltd ltablis
dans a bande Ic frdquenees centprtses entre 216 ct 300
MHr:
~canaux di andes dmictmm2trtques (Ul-lF)~ ddsigncnt soicanse-
dix caitaux, couramment identifids par lea cttiffrcs 145 83
inclusivement, qui oat ltd ltablis dans Ia bande do frI.
quenecs comprise entre 470 et 990 MI-Ia: et
canauo S ondes mdtriqucs (VHF). dlsignent douze cannon
cuuramment dilsignds par lox chiffres 2 5 13 inclusive-
went, qui oat Ill itablix dunn los bandes de frlqaences
comprises caIro 54 cI 72 MHz, 76 il 08 MHz 01174 et
216 MI-la.
Antri'.n e.vigo'nci'.n trchnsjtir.c app/icablrs ati.v téléviseurs
ordi,:aires
35. (I) Los appareits do raciiocomnotunieations qui sonl
cotformes aux exigencea de l'alinda 134(1)a) dnivent dgalc-
mont mitre conformos aux enigencoa techniques suivantes;
a) lo facteur do bruit de t'spparcit no peat eucdder,
(i) pour les canaux 25 13, 10dB; 01
* (ii) pour los csnattx 14 5 83,
(A) 10 dB, s'ils ont ltd importds au fabriquds au
Canttda lcott avant Ic l"octobre 1981,
(B) 14 dIl, x'ils l'nnt ltd entro lo I" octobre 1981 ot Ic
2 netobre 1984, ou
(C) 12 dO, s'ils l'ont ltd aprls lo I" octobre 1984;
b) les tdldviseurs ordinaircs dotis dun micran posuddato
one surface de vision do plus de 170 cm2 doivent lire
mnitnis dun disposimif de smitection prdrlglde des canauc;
c) los tdldviseurs ordinatres dotnens lire ntunis d'un sys-
tIme do sdlectiun des eattaut coittportant un sdlecteur do
canaux ou on dispouitif do rlglagc UI-IF dont Ia lucilitd do
fonctionnoment, ot plus parliculilrcment Ia position, `ac.
cessibilitd Cl Ia lisibilitd aux fins d'identif'tcation des
eanaux sont contparables S celtes dc leur sdlocteur do
canaut ou dispositif do rdglage VHF;
dl sans litnitcr Ia gdndralitl de l'alinda c), lorsquo Ia
sdlcction prdrdglde cxl fournic, an systlme do adloction dos
can.tux visd audit alinda peat mitre
(i) un syntlme do selection des canaun S deux boutnnu
(A) dont to smilecteur do canauu ou dispoultif d'aceord
\`}-IF esl dotl dun indicuteur afficlnant Ic nummiro do
chacun des 12 canaus,
(B) dont Ic smilecteur de canauu uu dispusitifd'accord
UHF eat dotmi d'un indicateur affichant lo numdro do
chacun des 70 canaux ou afl"tchant alternativemeno
on nutndro et une nmitrque indiquant chaquc canal qui
nest pus affiehd numiiriquctnent, et
IC) ta moyen dtiquel II ext possible do p;svser do Ia
rdcepiion des cattaux VHF Itt rdception de eanaux
UI-IF, et vice versa, soil en placant Ic slteeteur do
canaun VHF ft one position cltsirement indiqulz, soil
en actionnuni an conmntutatour clairemeni identiflI,
(ii) un sysidnie do sdlection des canaan boumon
unIque, doll d'un indicateur atfichant Ic nutndro do
chacuu des 32 canauu, nu aft'mchant altornativoment an
3840
(3)
PAGENO="0186"
182
25/tO/7S Cruwda Ga:cit' Parr II, Vol. 112. No. 20 Ga:eiie lu Canada Partie II, Vol. 112. V 20 SOR/DORS/78-768
() 1kb ~ mthth mot cmaqedq thq calq st
num~ric~tI readout br each of he M2 channcl numbers pas affiché nurnįrtqucmcnt, ou
or. alternativey. lot at least every other one of the 82 (iii) an sysshme 8 boutons-paussuirs ou autre genre de
channel numbers with a mark to indicate each channel syst8nrc de siilcction des canaux
1 t d pl d II ( \) y t a do pa o s hi ~0 tnt
) p h h to the typ ch n etton ~ p nI p ci o m II p r c o
system that has n'inrportc quel canal VHF ou UHF, ou
ci r h of wh ch e n b (8) t do p is q t p gI ~0 r Ia
p I t to elect d Vllr ct n suites
UllI I I p to q p t t p gl p I
(13) twelve positions tltat are preset for the selection manuclle pour recevoir ninsporte quel canal UHF, et
I c y h ph I q I d at I t (C) p m 5 s d d t Ic 1 cnn t t m nile
additional positions that can he preset using manual canal dc reception choisi;
selection to receive try ultra high frequency channel e) Ics syutbmes de sdlectina des canaux visds 8 l'atinCa c)
tnd qul sons tnunis dun dispositif de selection prdrdglde dot-
(Cf a means wlscreby tire channel selected for recep- vent pouvoir Climiner la ndccssitd dcffcctucr Ic rilglage
t o ac cI ly d c I d t 1 d p c h b t I e y t e I I c d glage qu e s
(e) every channel selection systens described in ptragraph aeu intporte Ic canal choisi os lordrc de sCtcction des
(c) that has preset selection stall be capable of clinsinat- canauo,
I- 1 e c d 10 o t I t b ha g a I ( ) e dec d I p1 cc d nd nch m t du ctrcu t d
accuracy that. regardless of the channel selected or the commando autontatique de Ia frdquencc, us
o C of ha I I ( ) I squ n c c t de ow a de , tumat q de Ia
sh th p II an~e of th autom t c I I q en e t p fo r o qu 1 t sufi a t pour
q a t ol 5 o a e cap c t d code h n cot sur bus lcs
( ) I to t I q a trol c rcu try not ca t lIe
p o d d o If t 1 s p It c pab I ty (A) q e Ia m y e de to t I s d at u s par
o y cb I h th pp s Ia f q c c s s I ca o 14 a 83
(Al 1 a g of II dc 5 s low the en reel I m I d pa p 075 MHz ci
1 q c h I umb Id to 81 does 05 (13) qu c n d t a d ca tI p sc I r de
exceed 0.75 Mllc, and cetse pamrne ne dCpasse 2 MI-Ic:
(Ill the d t fo cx lea ncy u an of J)1 q pp I pc t g I mc t rec o d s ems
ch:tnncl numbers 14 to P3 does nol exceed 2 MHz: sians de radiodilfusinn tClCvisuellc our les canaux des
~J) oh c ad appsr'tt p blc f cc p 1 b d m y I p e Ic so s aI a I36a)( )
sion broadcasting on mid-band channels or super-band sappliquc: et
ch'tnncl ubp't g ph1361 l( I pplcbl and g)l pp I lb q o mpose a Caadaapesle
(g) c c y d is pp 5 that ms I ct d o I Il 5 1979 es q o 5 m s d ne anten e VHF
pi ted so C C It 3 ly I 1979 nd i q pped d
th a VH r a 5 h II (I I t e ess I e I appa esl ci raccordce a e
f lb a 5 yr II d to she app Sun a d bor d Sc c VHF etr mans d une antennc VHF
en cs d to 51 VHF t a term als b eq pp d q e I
sh UIIF 51 th 5 (A) Ii cc I apparesl pa raccordement aux bo es
(A) affixed so she apparatus by connection so the d'tsnsenne UHF,
UIII I t I otl r (13) ceo d a ho net d se c UHF ci
113 a I d t th UHI 5 5 n Is i d (C) co ē po r c pie so s tess gnu a UHF
(C) d e If 1 ps o fall UIIFch I ( ) I a senne VHF nest pan fix e S I appt cit ste
I fsl vHr 1 n nut If d to she `spp asus mun sd on a se e IJHFq
be eq pp d th UHF' t t 55 (A) pent etre acco dee a x ho nes dante n UHF
(\) c p hI of b g cs d In th UHF `tote n es
sc m I d (B) ss do qu po eapse so s les ca a UHF o
(B) designed for the reception of all UHF channels. (iii) si Irs antenncs vissics ann alindas (i) ou (ii) sons
comb e e c ante c VHF UI-IF q e c tIe
I she t -t pee f d bp g -xph ( ) o ( ) d do t I e cun~ p0 capte bus let a
a u-nb d cnmm VI1IUHP 5 `t lb I VHFe5UHF
anlen I II b d s g d fo tite rcccps on of alt VHF
adUFIF h I
(2) I lb Ct d I k oh m ans Iwo c tr e a (21 D le p e s 5 cI I p es a de u ho Ions
p se k ohs a I wh I en t I th VHF cha I de g u de ho t a t q d t ct d ns I
[4) 3841
PAGENO="0187"
selector or tuning inech.utism and the other the UHF chart-
tel selector or tuning mechanism.
,lthlitional Technical Reqsirrvtevts Applying to Gable
Compatible Television Apparatus
136. Every radio apparatus hat conforms to the require-
ments of paragraph I I )(b) shall, in addition to hose
requirements, conform to thc following technical require.
ments:
(a) when the apparatus is adjusted to receive signals from
a broadcasting receiving undertaking, it shall be equipped
and have characteristics as follows:
hI the channel selection system shall have
(A) at least eighteen positions, each of vohich can be
preset soiltiout the use of tools to receive any VHF,
mid-band, or super-band channel, and
(B) manual selection for any such chaotic) list has
not been preselected,
(ii) the fine tuning control or automatic frequency
control shttll provide sufficient adjustment of the
apparatus user a range of frequencies to ensure
(A) for the very high frequency channels, reception
of input signals svhosc visual carrier frequencies are
offset by up to *0.55 MHz from thcir nominal viaual
carrier frequencies, and
(B) for the mid-band channels and super-band clian-
ncls, reception of input signals whose visual carrier
frequencies are offset by up to -1.31 MHz from
tltcir nominal visual carrier frequencies,
(iii) the noise fsgure for soy channel shall not exceed 10
dl) except that, svhorc the circuitry or configuration of
the apparatus involves a double conversion of input
signals, the noise figure may euceed tO dB but shall not
exceed 13dB,
(iv) the apparatus shall ho so shielded that there is no
noticeable evidence of interference when
(A) she apparatus is in the field of a co-channel
synchronous television signal having a measured field
strength of 100 millivolts per ntetre, and
(B) the signal level of She desired input signal is
adjusted so I millivolt (0 dBmV) at the input termi-
nals of she apparatus,
(v) the signal input shall be through a 75 ohm imped-
ance coaxial conucesor,
(vi) there shall be no overloading of lie apparaluu at
any signal level below 5 nsillivolts (14 dltmV),
(vii) the image rejection shall be at least 60 dB for any
intage frequency below 300 MHz,
(viii) the level of tiny local oscillator signal and of any
signal of an undesired or spurious nature, generated
within the apparatus and arriving as the cable input
terminals of the appurasus,
IA) in the frequett~y range above 5 MHz and below
54 MHz, shall not exceed -50 dBmV,
lBl in lie frequency range from 54 MHz to 300
MHz, shall not
currniande Ic sdlectour de caneuu so dispos:t:f do riglagc
VHF, ct l'autre, In sdlecteur de cianaux as dispositif de
riglage U H F.
.`luires exigences tec/iniqtsu'.v upplicahles aux tlliviseurs
Cd blocoi;ipaiibl i-s
(36. Lcs appareils do radiocornmunications qui sont con-
formos aux exigences de l'alioiia 134(1)6) doisont sigalement
itre conformes aux esigences techniques suioanscs:
a) lea appareils qut sort riglds pour capter los signaux
dune entrepriso do rilcoption de radiodil'fusion doivent
itre iquiptis conime suit Cl possdder lea caraetiristiques
suivau tea:
(i) Ic systime do sv5ection des canaux dott comporter
(A) an ntoins 16 positions, chacune d'cntcc cItes
pouvaitt itro prdriglic sans outil pour recevoir Olin-
porte quel canttl VhF on canttl de Ia bavde nioycnno
us de Ia bande supsiriesre, ci
(B) Ia selection manuelto ic tout canal qu'il nest pay
possible de recevoir as moyes de Ia sdlection
prirdglio,
(ii) Is comitrando do riglago précis ou Ia commando
aulomatique do frdquencc dolt pormettre yr rdglage
suflisant do l'appareil sur Soc gamme dx friquences
qut,
(A) pour los c,snauo VHF, hornet Ia rtiception dos
signaux d'entriie dont Ia porheuse vision cot dicalie
de *0,55 Mllz par rapport Cs lx porteuuo vision
nonvinale, et
(B) pour los canaux sic Ia liando titoycnne ci do Ia
bande sisperteure, permot la rilception de signaux
d'cntrie dent Ia porteuse vision cvi dicalic de - 1,31
MHz au plus par rapport a leur porteuse vision
nominale respective,
(iii) Ic facteur do bruit, pour tout canal, ne dolt pay
excdder 10 dB: vi los circuits os Ia configuration de
l'apparoil niicessitent ha conversion double des signasu
d'entric, In factetar do bruit pout so situcr zntre 1Oct13
dB as maximum,
(iv) t'apparcil doit itre blindi de soric qu'il n'y ait
aucun brouillage perceptible lorsquu
(A) l'tsppareil so trouve days Ic champ dun signal de
tilivision synchrone dune station utihisant Ic mime
canal et dart l'intensitii do chantp mncssrdc `st do tOO
millivolts par mitre, et
(`B) Ic nix'oau du signal d'ontnrie disiri est rdgld is
millivolt (0 dBmV) aux bornes d'entrio de l'apparcil,
(v) l'entrdc do signal dolt se faire par cubIc coaxial de
75 ohms d'impidancc,
(vi) I'apparctl ne doit p.ss urn sarchargil Iorsqu'un
niocau de signal quelconquc cat infiricur is 5 millivolts
(14 dBmV),
lvii) Ia rejection de Ia frdquence image doit itrc d'au
moms 60 dO pour tastes los frdquoncos images infiriou-
res Cs 300 MHz,
(viii) Ic tttvcau sic tout signal do l'oseiilatour local on dc
tout signal non diusrd on non casontiel, produit dana
183
25/111/70 (`ansi/a (Ja:ette Part II, his!, / /2, No. 21) i `i:s'tte i/s Citvaaa lactic 11, hal. 112, N" Il SOtOJl)OllS/78-7o4
3842
(5]
PAGENO="0188"
184
23/10/78 (avails, Ca:i'tte Pun II. Vol. 1/2, No. 20 Ga:ettcdu Canada Part/n 11, Vol. 1/2, V' 20 SORJI)ORS/78-768
(1) on or aflcr July I, 979 exceed -20 dI3mV, l'appareiI ci achemind aux barnes d'entrde du cable dc
(It) on or after July I. 1981 exceed -26 dBn~V. l'appareil,
(Ill) on or alter July I, 993 exceed -31 dBmV, (A) dans lx gamme des frdquences compriscx enlre 5
* and MHz ci 54 MHz, limites coclues, dout dIre d'au plus
* (C) in the frequency range above 300 MHz and -50 dBmV,
bclow 000 `viii, shill nol csceed -10 dl3mV nd (B) d s I pam c dc I q ces camp ses e Ices
(h) win he ppt t dj ted I ccc e s a al f om 54 et 300 MHz do I at
a b a dcast a I n it g I t k g I h II eo fo m (1) 1 compte d I j Il 1 1979 d a p1 s -20
to th c re t et I t 135 e c pith t he dl3mV
no a fg ref I n I b 2 to 13 hall not d (Ill cx pier d I jutlIci 1981 d au pIus -26
tO dO u Ic s the c cu try or .onfl,urat on of the dl3mV
apparatus involves a double conversion of input sigoals in (Ill) ii compler do 1" joillci 983, d'au plus -31
wh ch c the o f~, m e d 10 dO in I shall dBmV et
not exceed 13 dO. (C) dons Ia gamma des frdquences comprises entre
300 MHz ci 1 000 MHz, limites cxclues, doit dire
d ph -lOdBnV I
b) I s app is gI s de faqon Capt I s s g d ne
cntreprisc d'dmission dc radiodiffusion doivent dire con-
formes aux exigences de l'articlc 135. saul quc Ic facteur
de bruit pour las canauo 2 1 3 xc doit pas ddpasser 10
dB, S mains quc cs circuits au Is configuration de l'appa-
I n c Ic II co c o do bI des s gna d ciii
I f ci de hr I pa 01 alo s se s I cc colic 10 dB ci
13dB ma mm
Add n a a! T ci / 1/eq I pps5 plo C bI A t as ex ge ces techniques opplicables cab/oco a ttsse
Con c Ii tg ia/c on lpp at n
37 (I) F y d pp 1 th I a for to the 137 (I) Les appa ets dc adocommuncato q sont
q c it of p p pt 114(1)1 ) h It dd to to to m a e ide I al ca 134(t) ) d I g I
those requirements, conform to the following technical mcxi dire conformcs aux exigenecs techniques nuivanles:
requirements: a) Ics canvertisseurs qsi convcrtissent las signaus de
CO Icr hat a t the e d I Ic s a d ad If a I I sadIe ccus a a ca al d a I pa t
broadet t p i, Is to p Ic i r ip I cha I the c I r de I ha dc de f q c m t ques (VHF) am
very high frequency band for delivcry of nignals to a radio d'acheminer les signaux S an appareil de tdldvision ordi-
app's alas tin I ca fo ms to 11 q cm I I p c ph at e o lo m S I al a a 134(l) ) do I I q p
134(1)( I shalt b eq pped II (I d s t m dci lcd a d sea as pa m Ilani Ia
( ) a eha ci I ci an s~ tern p a d p p at I el n 5 I et a p rcgl a d a ma no 18 ca dl Ia (cci on
for at I asic ghtec ha I nd ma iii I elan to m n II dc to tea alq I nest pas puss blcdceapter
any channel that has not been preselected, and par sheehan prJrdglde, ci
a I a i n a I ol n tomal 1 q e e eo ( ) n Comm de de r gI'sg p s xc commande
trol or `i I r Ily dj I ble et I ol fo aeh cin a a tom I qsc de freq a c a a a comm ndc te
tel cc edo eo b ala of chco al ht pa nt Ir rgl a you ehsqu canal cc a
II p 0 d /f t adj 1 01 f lb o cr1 a cc comb on d s comma des d 01 5
r ~, ft q e to e r lage Ifs xl d ox cr1 cc r our na gamma de
~) for tin I ph f eq e c~ eh I lb c p 1 q c at' d si
tonal p 1 1 whn a Ic r f eq (A) p0 les c VHF Ia rcecpt a dci a g aux
a a off el b p o ±0 5s \lHr I am tin r nam al d enl a dont (a pa a s o t d I a de ± 0 55
aal cx cr f qu C C d MHz par rappo I S Ia porte a nom n Ic at
* (SI for the ntid-band channels and super-band chan. (B) pour leo canauo de Ia bande moyenne et da Ia
nels, the reception of laput signals whose visual carri- bande nuphrieure, (a reception des signaua d'cntrde
er frequencies arc offset by up In -1.31 MHz from dont Ia porteuse vision cst ddcaldc de - 1,31 MHz
the r om I I c f q ne es p appo i `t (a po Ic a s o am ol aspect
(h) a y en I tin 1 a t he cc d tel o dcces g s
broadcasting signals as a block of inpul channels to an b) (as canvertisscsrs qui convertissent Ics signaux de
eqs `tIe 1 x ber f a p t cin el fo d I e y of rad od 11 s on I Ic elI g s n s mbt d
iihn'tIs to i id o pp 1 that lorm to tin eq c c ni d cntr a e o omb e eq Ic t de ca i de
ment of p acr ph 134(1)1 1 shall in qu pp d w 6 a sort at' d lea I melt a a I Ic se a S
met win eb
[61 3843
PAGENO="0189"
185
)s/lO/78 canada Ga:exlv Port 11, Vol. /12, No. 20 G.s:etse dn canada Part/i' II, Vol. 1/2, N" 20 SOR/DOKS/78-768
(i) the output channels can be shifted sufficiently so
avoid inierfcrcncc front local tclcvioion stations, and
(ii) the received signals on channel numbers 5 and 6 in
she very high frequcncy band can be bypassed around
she convcrnion circuits for direct delivery to the
apparatut; and
(c) every converter to which paragraph (a) or (b) is
applicable shall have the following characteristics:
(i) the frequency stability obtained with any line volt.
age in the range from 104 so 127 volts and measured,
after. twelve hours of warrn.ap operation, over a period
of three hours shall be such thus the visual carrier
frequency of signals received via any input channel,
converted and delivcrcd to a radio apparatus that con-
forms so she requirements of paragraph 134(l)(a) via
an output channel will,
(Al if the converter is equipped with a One tuning
control, be maintained within 450 kHz of the nomi-
sal carrier frequency for sIte output channel, or
(B) if the converter is not equipped with a fine tatting
control, be maintained within 250 kHz of the nomi-
nal carrier frequency for the output channel,
(ii) the gain characteristics shall be such that,
(A) for a converter having axtomalic gain control
circuitry, thc output signal levels are not less than I
millivolt (0 IBmV) and not morethan 5 millivolts
( 14 dBm V) or
(B) for a converter not having tnttomauic gain control
circuitry, she conversion gain is sot less than 0 dB
nor more than 7 dB,
(iii) she noise figure for any channel shall not exceed 13
dB,
(iv) when the converter is exposed to a radiation field
having a measured field strength of I V/tn at any
frequency in she range front 1.6 MHz*to 300 MHz, she
shielding shall be sufficient to ensure that no voltage
attributable to she field exceeds 10 microvoltu (-40
dBmV) at measured at the output terminals of the
converter,
(v) the signal input shall be through a 75 ohm imped-
arice coaxial donneetor,
(vi) with~ input signal present, the level of any local
oscillator sigosl and of any signal of an undesired or
spurious nature generated within, she converter and
arriving at the cable input serutinals of the converter,
(A) in the frequency range above 5 MHz and below
30 MHz, shall not eocced -$0 dBnvV,
(B) in she frequency range from 30 MHz to below 54
MHz, shall not exceed -35 dBinV,
(C) in she frequency range front 54 MHz to 300
MHz, shall not exceed -31 dBnnV, and
(D) in she frequency range above 300 MIle and
below 1000 MI'lz, shall not exceed - 10 dIintV, -
vi) with inpus signals present, any spurious signal
generated within the converter and appearing at the
input terminals shall be at least 25 dB below input
signal levels,
conforme I l'aiinla l34(l)a) doivenl dtre dquipxia do
nxdeanismes permetsant do
(i) dlplaecr es canaan de sortie suffisamniens pour
lviter Ic broailtage par los suassons de teidvision locales;
ci
(ii) diner los signaux reēus sur los canaan einq Cl six de
Ia bande 1 ondes mltriqaes (VHI) au nxoyen do cir-
cuits de conversion, afin dc trassmettre les signaus
dircosement 4 un tdllviseur ordinaire; es
c)les eouvertisseors sixes par les alinias.a) ox di) doivent
possddor len caractdristiqucs suivansca:
0) la stabilitd de frdquence obsonue ft l'une oa l'ausre
des tensions do Ia ligne comprises ensre 104 es 127 volts
cx mesurde sur site plriode do trois heures, aprls douze
heureu do rdchauffement, dolt Otre 5db que Ia frh-
quenee de Ia porsoase vision des signaun rcquu par
l'internildiaire dun canal d'ensrde qucleonque, pals
eonvertis 05 trtsnsniis 1 xx tdliiviscur ordixairo cunforme
ft l'alinda 134(1 Ia) dolt,
(A) us Ic ennversisscur ext mxxi dun diupositif do
rsiglage précis, dire mainienue en dccl de 450 kHz do
Ia porteuse nominale pour cc qul ext du canal de
sortie, vu
(B) xi Ic conversissour n'cs; pits mxci dun dispositif.
do rdgla~e précis, lire nxaivtesxue en dccl de 250 kHz
de lit psrtcuue nominalo pour cc qui cut du canal de
sortie,
(ii) les earisctlristiques dx gain doiveat dIre telles quo
(A) duos to cas dun conversiuseur do~d do circuits de
coinnxaode ausonxatique dc gssin, los nixeaux dx
signal do sortie soions d'aa amiss I millivxls (0
dBnxV) cs duo plas $ millivolts (14 dBmV), ox
(B) duos IC cas dxix eUnvertisseur qui no possdde pas
do circuits do conxmandc autotsxasique do gain, Ic
gain de conversion suit d'au nsoius 0dB os d'au plus 7
dB,
(iii) Ic faetcxr de bruit pour Ic eunvertiaaeur dolt dxre
d'au plus 13 dO,
(iv) lorsqae Ic eqnverlisseur ext exposé ft sn champ de
rsyonnesient dont l'insensiid mesurie cut de I V/ni
poor saute frlquence comprise ensre 1,6 Ct 300 MHz, Ic
bhiodege dolt lIre auffiaant pour assurer qu'aucxne
tension attnibuablc' ax ehanip est suplricure 1 10 micro-
volts (-40 dBmV), tolle q'u'elbe cut mesurde aax homes
do sortie dx eanvertissear,
(v) `entrée du signal dolt so faire par cIble coaxial do
7$ ohms d'impidance,
(vi) en l'aboinco dun signal d'ontrde, Ic niveax do tout
signal de l'oscillaxeur local et do tout signal non disird
ox non ossoxtiel, produis dans he eonverxisscar ci ache-
mind aux borncs d'cntrde dx cftble dx convortixxour,
(A) dans Ia gaiximo des frdquonees caniprises etitro S
MHz ci 30 MHo, limisea oaclucs, dxii itro d'aa plus
-50 dtlmV,
(13) dans a ganime Jea frlqucneos comprises entre
30 MIlz, inelxsivement, et 54 MHz, zxelusivemens,
dolt Isre d'ax plus -3$ dBmV,
3844
[7]
PAGENO="0190"
186
25/10/78 canada Ga:etse Part 11. `al. /12. Plo. 20 Ga:etre lu canada Panic II, Vol. /12, N' 20 SOR/DORS/78-768
(viii) the field strength of any emission emanating from
the converter shall not excced
(A) 20 uV/nv at a distance of tO metres in the
frequency range above 5 MHz and bclow 54 MHz,
(0) 20 uV/tn at a distance of 3 metres in the
frequency range from 54 Mllz to below 100 MHz,
(C) 0 uV/m at a distance of 3 metres in the
frequency range from 08 MHz. to be/ova 174 MHz.
(D) 20 uV/m at a distance of 3 metres in the
frequency range from 174 MHz to below 216 MHz,
(E) 20 uV/m at a distance of 10 metres in the
frequency range from 216 MHz to below 300 MHz,
and
(F) 70 aV/m at a distance of tO metres in the
frequency range from 300 MHz to 1000 MHz, and
(ix) the tend of any spurious signal produced by the
connerter and falling suithin the pats-band of any
output channel shall not, in the svotst case, he less than
60 dB below the signal level of the output visual carrier,
as measured separately for each input channel where
- signals at the same level in the range from t millivolt (0
dBmV) to 5 millivolts (14 dBmV), are supplied to alt
inputs except the one under test.
(2) Tn this section, "converter" means a cable converting
television apparatus."
(C) dans Ia gammc des frOquences comprises entre
54 MHz et 300 MHz, limites inclusca, doit Otre d'au
plus -31 d0mV, et
(DI dans Ia gamme des frdquences comprises entre
300 MHz et I 000 MHz, limitca eaclucs, doit dtre
dos plao - 10 dt3mV,
(vii) en presence de signaus d'entrdc, tout signal non
ennentiet, prnduit par Ic csnvertisneur, qui apparait sun
borneo d'cntrde doit Otre d'ssu moms 25 dB infsirieur auh
niveaux du signal d'entr/e,
(viii) l'intcnsitO dn champ de toute Omission en prove-
nance do conventisaeur doit Otre d'au plus
(A) 20 uV/m, a une distance de tO mOtres, dana Ia
gamme des frdquences comprises entre 5 MHz dl 54
MHz, limites exclues~
(B) 20 uV/m, S ace distance de trois metres, dans Ia
gamme des frCquences comprises entre 54 MHz
inclustvement et 108 M Hz exu'lusivement,
(C) 10 aV/ni, a one distance de trnis mOtres, dons Ia
gamme des frOquences Comprises cube 108 MHz
inclusivement et 174 MHe exclunivement,
.(D) 20 uV/m, one distance de mis mOtres, dons Ia
gamme des frdquences comprises entre 174 MHz
inclusivement et 216 MHz exclusivcmenl,
(El 20 uV/m, S une distance de dix metres, dons Ta
gamme des frOquences comprises entre 216 MHz
inclusivemcnt et 300 MHz exclustvement, et
(F) 70 ttV/m, a sue distance de die mOsres, dana Ta
gamme des frOqoences comprises entre 300 MHz et
I 000 MHz, limites incluses, et
(ix) Ic niveau de toot signal non essentiel pmoduit par Ic
convertisscor et qui tombe en deēh de,la bande passante
de qoclquc canal de sortie que cc soil, dais, mOnte dons
lea cas es plus graves, Otre infOrieur au niveau du signal
de Ia porseuse vision de sortie dan mains 60 dB,
lorsqu'il cst mesurO sOparOment pour chuque canal den'
tree, lorsque des signauo d'entrOe du mIme niveau, de 0
6 14 dBmV (de I 5 5 millivolts), soul fournis 6 tosses
1ev borneo d'ensrde, exception faite de celle qul eat 6
I'essai.'
(2) Dans Ic present article, ,consertisseur. dOsigne xc
cSbloconvcrtisscur.
QUEEN'S PRINTER FOR C,~NAOA, OTTAWA. 1978
IMPRIMEUR DC LA REIIAE POUR LE CANADA, OTtAWA, 1978
(8]
3845
PAGENO="0191"
l(tgislralitiu
SOR/7x-77) 13 O.tober, 197S.
RADIO ACT
(;enerai Radio Regulations, Part I, amendment
P.C. 197S-3 43 12 Octobcr, l97S
Its Lxellency he (ji.wernor General in Council. on the
recoinniendalion if the Minister of Contn,unieaitons, pursuant
to subparagraph h( I )(Ii)(ii) vii lie Radio Act is pleased
hereby to intend the General Radio Regulations Part I node
by Order in Council P.C. 1965-1321 of 12th July 968', as
atnendeiP, in accordance with lie schedule hereto.
SCI lEI)0L11
Tue heading preceding section 22 and section 22 of bc
(iencrnl Radiii Rrgii(aiion.c. Putt / are revoked and he follow-
ing subslilutcd thcrcfor~
"sAul 00 ileOAi)CASTiiSci RiiCLlVl~'iG si'i'MvsTUS
l'reiltiltuion
22. (1) No person shall oiler for sale for usc in Canada
radii apparatus of he clins of radio apparaton that `is
capable ol receiving television broadcasiiiig unless it eon*
fornis to lie technical rctioireincnts established itt relation
10 liii class sf radio apparatus by the Gtnrrul Audio
Rrgxlatias.c. Part 11.
(21 Subsection II) does not appl> to radio apparatus that
(al is intended for and capable of recordiitg television
britadeanting: or
(bl is intended and used for.a purpose other than honte
cnteriaininent,
(31 Any perstin svho violates subsection (I) is liable on
summary conviction lit a line not exceeding one huittired
dollars for eaett day during which such violation eontittttcs.
187
* 22/ I 0/75 (wtotla (,a:t'llm Pitt II, Vol. / 12. tvmj. ~`l/ i `u:cmf' dot (mtmtct/iI'vrttc' II, Veil, / U, V"~mt S0t(/tsQR~/i$.779
I:tiicyirlrettteuil - /
1)ORS/7S-779 13 octųbrc ~7S
1.01 SLIc LA RADII)
R~glememit gén~r;tt sur a radits, Partie 1-
Modification
C.t~. 1978-3143 I2uetobre 1975
.Stii' coin eont'oritte do nitnistre ties ciimimntuiltcatcons ci en
s'eniu du soos-clinda hI I l/thii I de a l.ti sur a radio, 1 plait
Sait lixeellence Ic Gtittserneur g~ndr~i ea eunneil de modil'ier,
cinifuriticittient a l'amtitexe ct-aprds, Ic Rt~gletttent gcindr;tI nut Ia
radio. I'ttrtie I habIt par Ic dieret Cl'. I 91:9.1 321 du 12 jutllet
I 949~, dons so iornte ittoēlt(idd.
AtsNEXI:
l.article 22 dii Iictglcmmicttt ,5-/mdra/ stir lit radio. Panic I
ci Is rubriquc Ic prdcddoni soiti ainst reittplac~s:
~Vt04Tti D'Ati'ARLti.S is kt('it't ti)~- cit iAIateiIsimtOstoro
/:mierdit'titimt
22. (II II ext irtierdit cl'otl'rir cii venie, pour uttlisalton au
Cattadi, un tt:pareil de r:idiocoiiiitteiiicttton ftiuvitnt reee-
otmir des eimti~,i,iiis dc riittiiiliffitv.iot tdtesivuehle, sauf Al
ripivid iiis extgencev tecttmtcciucs dt,ihlien mitt r `~e etasue dotis
Ic /dciy:/e'utemit g/ntrnl cur In radio. Peinlte' 11.
12) I.e )saragra;slme (I) xc sine to un appareml dc
radioeoinitteniett ton
a) consiruit pour enregistrer tIes ciflissiOtts de radiodiffu-
I) destinmi ct utilismi ft des fins atetrcs que Ic divcrusuetttcnt
au ftiycr.
(31 Quicmsnqiie entreint Ic parayrsiphe III ol possible, sur
ditclaritiimii soinnia:rc de eulpaoiitd. dune ainende maul-
ittale de StOO pour ehaquc jour d'inl'r;cttos.
Is'nglc'tHt'mtt
2). (It Avaimt ditifrir en c evie. sir uiilisatiomt 116
Catiacla, itt myparell the radiocomtttitxcntcatiiiim visé au pars-
graphic 221 h) Ic iabricammt nu t'iti:portateur doml i'aniuret
clue cci appareil i)u tin dcltanitthlcn repriLmeutictif alt did
souttmis des esnais itmprtiuviis par he Mmnistre, tour ddternti-
tier nil rdpcind aux coigences iceimvidiucs quc ui scnt appllca-
bles scIon Ic /ltg/t'~iemmt gdneral inn la radio. Purtie' II.
0 (moult: Petit: ii. Vi. xi. 0 tO, i iuitt'i i'mSn
t i)0llS/77.iObJ. r;u:,mmv it Cunccmle `mu it. 5*~ ti, u' 23, i4 daccmbrc
1'077
Re'gtc/at/omm
23. (I) llcIorc offering fvir sale fmtr usc itt Canada any
rauhiet apytraitis of ilte elms described in subse~t:on 221(1.
ihte niattufictitrer or iimtpvtrtcr shall emmsurc thai lie
aptsaratus or a productioit sa:ttplc mr other reltrcscnlatls'c
unit ii (mat type of apparatus it iest~d in accordance coitlt a
procedure approved by the tslinisier to dctermmttne svhcilmer or
ii conloritmn to thu applicable technical requtrcittcmmis
cstablisltcd by he Gc'nerul Radio Regulations, Part II.
`SOR/sM.Jiu. (`much Ga:vn, Pun it. Vni. 02, No. tO, Suty 20. 964
SOR/77.t~63. (mmudu Qao'mme Part it, VoL tim. 10,. 23, Dnecmbnr 4, i')~
JtiO(:
PAGENO="0192"
(2) Every manufacturer or importer rcfcrrcd to in subsce'
ion (I) shall
(a) forward to the Director. t9rnadcassing Regulations
Bra~ch Te!ccotnrnunic:ttioo Regt:latorv Service of the
Department of Communications, the type nuntbcr and
manufacturers spccifications for each type of apparatus
iestcd as rcquirctt hy nubsection (1) and offered for sale
for use in Canada; and
(b) keep and make available to the Minister on demand
for a period of five years a copy of all tent data obtained
as a result of site fcsts carried out to required by subsec-
tion (I).
(3) Every manufacturer or importer referred to in subsec-
ion It) shall ensure that each ttnit of a type offered for sale
by hint pursuant to thett subsection, vvhethcr or nut the unit
is equipped with ittputs ord outputs for connecting auxiliary
equipntent or apparatus, bettrs, is a location convenient for
inspection, ;t permanent label or markittg containing, in both
official languages, the following statement:
(a) wltere paragraph 134(1)10) of the General Radio
Regu/atis,stc. Part /1 is applicable to the unit, the state-
ment "Standard Tclevision~\pparasus Canada GRR Part
(ls)ssltere parttgraph 134(l)(h) of the General Radio
Regulatiost.n, Part /1 is applicable to the unit, the state'
mont "Cable Cotntsatible Television Apparatus Canada*
GRR Part II"; or
(c) where paragraph t34(l)(c) of the General Radio
Rrgtilatir#t.r. Port //is applicable to the unit, the state-
went "Cable Converting Television Apparatus Canada
C;RR Part It".
(41 Poe the purpose of tltis section. `type" means a ttnit
that, to one f rn,ttty sintilar onus, ha~ been manufactured in
accordance with a particular electronic design attd pltysical
pattern, subjoet to sitch improvements or minor chartgen as,
svhile not degrading performance, may- be necessary to
satisfy nsarkeling requirentevts.
(5) This section shall come into force on July 1, 1979."
12) Ceo (abriēants et importateurs doincnt
a) envoyer au Directeur, Direction dc Ia riglemcntation
tic Ia radiodifftision, Service de Ia rlglenientation des
t~lécotnntvntc;tIionn du mirtistirc ties Cottsntuttie,ition~,' Ic
nuindro du ssudile et cc spicifications techniques du
fabricant, pour chaque nsodile d'appareit sounsis sun
essais scIon Ic paragraphe (I) ci
b) conserver pendant cinq ass tous len rtisulsato des essuis
ainpi cffectutis et leo mcttre I Ia disposition du Ministro,
aur demande.
(3) Ces fabricants et importatcurs doivent, sur ehaque
appareil visé no poragraphe (II, qu'il soil 00 505 muni_
d'cntrtieu ou do sorties permettant d'y raccorder du ntattiriel
us us dquipemcnt auoiliaire, opposer do fagon permanente,
on endroit facile d'acetis 01 danu lou dcu.s langucs officici.
los, l'inscription suivanto:
a) nil s'agia d'un apparcil oisi par l'alinla 134(l)a) du
keg/evict: p/viral stir Ia rat/ia, Portie II: `TIliviscur
ordinairc, RGR, Partin it, Canada.;
b) s'il o'agit d'ur apporcil visé par l'alinla 134(1 )h) du
Rep/event gCnCral sue to radio, Panic (I: .Tildviucur
cablocompatible, RGR, Partie It, Canada.; ou
c) sit s'agil d'un appareil visé par l'alinda 154(1 )c) do
RCglevtevt p/i/rat nor to radio, Poetic /1: .CIbloconvcr.
tisseur, RGR, Partic It, Canada.. -
QUI1I1NO PRtNTCR FOR CANADA, OTT.sWA, 978
tMt'ttMitUR 00 LA REiNS 001)0 itt CANADA, OTTAwA, 978
188
25/10/78 Catvvla G;:s'ur Jon II, l~l. 112, jVo. 20 Got-tsr v/u C'atsae/s, Poetic II, Vol. /12, A" 20 SOR/UOIIS/78.779
(4) a~ux fins tie cet article, I'espression .modkle. divignc
on appareil scIon leqvel vI'ttotrcs appareils peus'eot itre
reproduits et qui a titi fabriqusi scIon one conception silectro-
niquc particulisire ci vs diztgrantme donnti, eoception faite
tnutefois d'anviliorationn et do modifications minimeti qui,
sans dtsssttucr son revdcntent, peuvent s'avIrcr nticossaircu
pour rIpondre tao coigences do vs misc en nsarchI.
(5) Cot article cairo en vigueur Ic I" juillet 979..
(2)
3867
PAGENO="0193"
189
Mr~ VAN DEERLIN. We have as the balance of our hearing today
a panel of four who will begin, after a brief recess, at 11:80.
[Brief recess.]
Mr. VAN DEERLIN. We will resume with a panel made up of NAB
observers of the communications and social scene.
We are pleased to have the distinguished board chairman of the
NAB, Mr. Donald Thurston, who in real life is himself a prominent
radio broadcaster in Massachusetts; Mr. Thomas Bolger, the chair-
man of the association's television board of directors; Mr. Walter
May, chairman of. the radio board of directors; and Mr. Vincent
Wasilewski, president of NAB.
Welcome to the subcommittee.
STATEMENTS OP DONALD A. THURSTON, CHAIRMAN, NATIONAL
ASSOCIATION OF BROADCASTERS; THOMAS BOLGER, CHAIR-
MAN, TELEVISION BOARD; AND WALTER E. MAY, CHAIRMAN,
RADIO BOARD, ACCOMPANIED BY VINCENT WASILEWSKI,
PRESIDENT, AND ERWIN KRASNOW, GENERAL COUNSEL,
SENIOR VICE PRESIDENT
Mr. WAsIi~wsKI. Thank you, Mr. Chairman.
Mr. Chairman, each of these gentlemen have brief comments to
make with respect to your bill. If it is agreeable with you, Mr.
Thurston will deal with some of the broader issues, Mr. May more
specifically with radio matters, and Mr. Bolger with television
matters.
I would like to present first, if it is agreeable, Mr. Donald Thur-
ston, the chairman of the board of the National Association of
Broadcasters.
Mr. VAN DEERLIN. Mr. Thurston.
Mr. THURSTON. Thank you very much, Mr. Chairman. It is nice
to be here again. Thank you very much for the opportunity.
I am happy to be able to testify again, this time regarding H.R.
3333. Certainly this new version of the rewrite of the Communica-
tions Act demonstrates again the great amount of hard work that
has characterized this project since you began. I want to take this
opportunity to thank you and your colleagues for the many hours
you have spent in improving and redrafting this bill.
Now that the hearing process is coming to an end, I will be brief
and succinct with some of my comments and will be as helpful as
possible.
First let me say to you that the National Association of Broad-
casters does want legislation in the broadcasting area. We know
that it might be very tempting to break out the common carrier
sections of the bill and leave broadcasting to perhaps another day,
but I sincerely hope that you will not follow that course.
While as an industry we still have our differences among our-
selves on the various provisions of the bill, I still believe these
matters can be treated in the context of a comprehensive version of
the act and that it continues to be most worthwhile to continue to
work out those differences.
In my perception, this is a golden opportunity to redress some of
the problems of broadcast regulation, and we do not want to miss
it, recogrnzing that it means making some very hard choices and
treating radio and television problems in different manners.
51-254 0 - 80 - 13
PAGENO="0194"
190
So please resist the temptation to cut us adrift. As a radio
broadcaster I again salute you for the deregulation contained in
the bill. It is most welcome and I believe it will mean more time
and energy devoted by licensees to serving the community. Televi-
sion could also look forward to greater deregulation, particularly
after a 10-year period and two 5-year license terms.
While this is an improvement, we would continue to urge that
television also be freed from the fairness doctrine and equal time
requirements and other programing restrictions which exist today,
and we would like to see TV freed of them upon enactment of the
bill.
As you know, Mr. Chairman, I have also been very involved in
working to expand opportunities for more broadcast service. At our
winter board of directors meeting in January, the association
unanimously-well almost, save one abstention-resolved to sup-
port efforts to provide maximum full-time local broadcast services
to the communities of this Nation.
I believe our efforts in this regard coincide with provisions of
H.R. 3333 with respect to the allocation and assignment of radio
frequencies, and, I might add, to Congressman's Findley's very
special efforts regarding daytime broadcasting.
I would urge you to use your influence to get the FCC to act on
the NAB request for a joint Government-industry committee that
could begin to study the consequences and rewards of new ways to
provide full-time local broadcast facilities.
To this point today, the Commission has taken no action on that
request, and it would seem to me this is one area where they could
move ahead and put us leagues ahead not only of present practice,
but also, in the event that your bill goes through as it is presently
drafted, the study is going to be necessary and it might just as well
get underway now.
Mr. VAN DEERLIN. How long has that request been on file?
Mr. THURSTON. Shortly after we got back in January. I think
February it was filed. I can't give you the exact date. And we have
a letter that says yes, it is a good idea, but nothing has happened.
And the studies simply have to be made. We are not treating this
issue of allocation with current data. There is a lot of emotionalism
involved and we need some studies.
I might also add, hearing a discussion on standards this morning,
that one of my personal disappointments with H.R. 3333 is that it
does not have anything to say about a project that you and I have
talked about before, and that is AM and FM all-channel radios.
One of the possible solutions of the maximum full-time local
service in this country is a new kind of license that would involve
the joint issuance of a joint AM-FM facility, especially with short-
space FM or FM directional antennaes in order to solve the local
service problem.
That, of course, would be made much more interesting were the
receivers sold in this country required to carry both an AM and
FM band. It is simple sometimes to look to 9 kilohertz as a world-
wide solution, but nowhere else in the world do we experience the
transmitter density that you do in the United States.
Last week in Chicago, some of us were with the consumer elec-
tronics show in the EIA talking with some representatives of the
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CES concerning radio performance standards, believe it or not, and
one of the things an RCA design engineer brought to our attention
was the possibility ąf 9 kilohertz further reducing the standards of
automobile radios because of the interference problems we are
already experiencing because of transmitter density. So there are
real concerns.
I also, while I am adlibbing, a departure from the prepared
testimony, might want to agree that performance standards would
be very difficult if they were legislated on a governmental basis.
There is a joint committee on intersociety cooperation that works
as a representative of all the technical industries, and that is how
we hope to solve the radio standards problem.
It has worked very well with color television to date, and per-
haps with a little more urging it can work to solve that problem.
With respect to the problems of common concern to the entire
industry that are still in the bill, let me raise a few very briefly.
The creation of a new spectrum tax continues to be an issue that
seems to unite all broadcasters in opposition. The tax is billed as a
fee on the use of the spectrum which will help to regulate the use
of the spectrum and reduce the scarcity that now exists.
We do not believe that taking large sums of moneys from broad-
casters is in any way going to encourage a more efficient use of the
spectrum, unless, of course, the tax is so great that some broadcast-
ers cannot continue to operate, thereby freeing up the frequencies.
We continue to contend that we pay our fair share of taxes at all
levels of Government and that any additional payment beyond the
cost of regulation is unjustified.
We would also have to object to the provisions in the rewrite
that would allow public broadcasters to begin commercial advertis-
ing. It is our belief that the public system was created to provide
the kind of alternative educational and cultural programing that
many times does not attract large audiences and therefore is not
attractive to the commercial broadcaster. We do not object to the
competition as long as it is fair and everyone plays by the same
rules. That would not be the case here.
Perhaps our most serious concerns about this legislation are the
many words, phrases and concepts that are not yet well-defined in
the legislation or in the staff explanation. We are not saying this
in a critical way, since we understand the legislation at this stage
many times suffers from this kind of infirmity. But it is essential
that all broadcasters have a clear understanding of how any new
communications act might affect them in the future. While we are
very interested in achieving the deregulation that the bill prom-
ises, we are not ready to give up stability or certainty for it.
So we hope our questions can be resolved during the markup
process, and that very tight few days that remain and that will
follow at the end of these hearings. We believe that the intent of
the sponsors of this legislation is good and that the emphasis on
full and fair competition in the marketplace is appropriate, and we
are quite willing to compete with all other media where competi-
tion is equitable.
For this reason, we offer our full support of the program consent
provision included in your bill. My colleague Mr. Bolger will dis-
cuss it in more detail in a moment. I would like to just remind the
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committee of an editorial that we don't see very often in the New
York Times supporting broadcast issues.
I understand it has been submitted complete for your record, but
I would like to just quote the first paragraph of that editorial:
Just as they are finally winning rescision of rules that unfairly shielded broadcast
television against their competition, cable television companies are grasping to hold
on to some unfair protection for themselves They are to be free at last to carry
programs from every part of the country but they do not want to pay the market
price for such shows They want to attract customers with high quality entertain
ment but without paying a fair royalty. That is not our idea of fair competition.
We agree with the sponsors of this bill that some action must be
taken to make sure it is fair, and we support the program's current
concept.
Again, thank you very much for the opportunity to appear before
you. Of course, I would be happy to answer any questions.
Mr. COLLINS [presiding]. Thank you very much.
Mr. Bolger, are you the next member of the panel?
Mr. BOLGER. I can be, Congressman.
Mr. COLLINS. Go ahead.
STATEMENT OF THOMAS BOLGER
Mr. ~OLGER. My name is Tom Bolger. I am chairman of the
television board of direėtors of the National Association of Broad-
casters. I am also president of a UHF station in Madison, Wisc.,
WMTV.
I am here today to comment on the portions of H.R. 3333 that
pertain to the television industry.
In general, Congressman, I think most television broadcasters
find the provisions of H.R. 3333 to be much improved over the
earlier version. We appreciate the sponsors' attempt to further
deregulate our industry and allow us to spend more of our efforts
on improving services to our communities. However, since I have a
limited time to speak this day, I want to concentrate on several
areas that I believe are some of the most critical to my industry.
As in H.R. 13015, the new bill totally deregulates cable televi-
sion. Last year I expressed great concern over the treatment of
cable since I felt that cable with no Federal regulation and the
advantage of a compulsory license fee would have a tremendous
competitive advantage in the marketplace as compared to televi-
sion broadcasters who must pay full marketplace prices for their
programing.
I believe the inclusion of program consent in H.R. 3333 would go
a long way toward resolving the fears of last year and I support the
sponsors' decision to include it in this bill.
Broadcasters are not afraid of cable competition if we are placed
on the same footing and left to provide service to our communities
in our own ways. But the competition must be fair. Let the viewer
choose among the sources of programing for the best value for his
dollar. But competition wouldn't be fair if cable were totally dere-
gulated and then allowed to compete by retransmitting broadcast
programs for a small fraction of their actual worth.
Cable can provide many valuable services to the people of this
Nation and should be free to do so. Your bill would give them the
freedom that they desire but would also treat them like the rest of
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193
us who must go into the marketplace and pay a full and negotiated
price for the product that we want and that includes the pay cable
industry. We support your approach.
On another subject, we do have some concern over the provisions
of section 331(e) of the bill that would allow carriers to also pro-
duce and own programing. We do not believe that conventional
television programing as we know it should be owned and trans-
mitted by what we now knąw as common carriers.
We are very concerned that local broadcasters might eventually
lose access to the home receiver and thereby destroy the value of
providing local broadcast service. We applaud the attitude of
A.T. & T. on this matter and hope that the committee will extend
a prohibition on program ownership to all common carriers.
I would also like to express my objections to the section of H.R.
3333 that requires broadcasters to provide news, public affairs, and
locally produced programing~-inc1uding news and public affairs-
throughout the broadcast day.
Your bill would continue to regulate television for at least 10
years and perhaps well after that. I suggest that during that 10-
year period the Congress will have ample time to assess the effect
of deregulation in radio and in certain television areas. You could
judge our "good faith" over this period and then decide whether
any programing restrictions such as those contained in section 462
are justified.
I understand, Mr. Chairman, that this provision is designed to
prevent broadcasters from presenting their news and pubic affairs
programs at hours when there is little audience to view the pro-
graming. I think these fears are greatly exaggerated and do not
call for such drastic treatment.
Many broadcasters today have news and public' affairs programs
in prominent time slots and, as the public demands more, we will
see an increase in this type of informational programing.
This bill contemplates a lot of new competition for the television
broadcaster in the form of cable, and all manner of new video
services created by the continuing wonders of advancing technol-
ogy. The major area where television may be able to remain com-
petitive is in the provision of news, public affairs and local pro-
graming.
The sponsors of this legislation seem to be confident that the
marketplace can work and have pegged the bill on a marketplace
philosophy with Government intervention only where needed. I
firmly believe that television's future may well depend on the
individual broadcaster doing an even better job of producing news,
public affairs and locally oriented programing and I assume that
you also see that role for us and would be willing to let the
marketplace take care of the need for this special service.
Finally, I would like to make several comments about the spec-
trum tax provisions of this bill.
I find it difficult to believe that I have to buy my way out from
under oppressive Federal regulation. If it is right to deregulate,
then I think it should happen without all, the talk about tradeoffs
and prices to pay. I am not trying to be disrespectful. I understand
the position that you find yourself in. And while I am no politician,
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I know that there is a belief in Congress that for the broadcaster to
get some relief from regulation, there must be some quid pro quo.
I guess I could be accused of being naive, but I just don't see why
that is right. It seems to me that we have been overregulated and
that the mood of the country, including the administration and the
Congress and the people of this Nation, is to get rid of government
intrusion where we can I hear no great calls from the public
demanding something in return for giving broadcasters freedom to
operate as most businessmen do. And I am not arguing poverty. It
is the principle that offends me and that I object to.
Let me end, Mr. Chairman, on a positive note by indicating that
as the television board chairman, I believe this bill, H.R. 3333, is
much improved over the earlier version. As I said before, I also
want to indicate, though, television support for comprehensive
radio deregulation even if it is not possible to have corresponding
television deregulation. I am hoping we can continue to work with
you to resolve the problems that do remain, and I believe that we
can finally end with a bill that will assure continued valuable
service to the public with less Government interference in our
business.
I thank you for your great efforts to bring welcome change in
broadcasting regulation.
Mr. COLLINS. Thank you, Mr. Bolger.
Now Mr. May.
STATEMENT OF WALTER E. MAY
Mr. MAY. Thank you, Mr. Chairman.
I am Walter E. May, chairman of the radio board of the National
Association of Broadcasters. My home is in Pikeville, Ky. I own an
interest in five small radio stations in Kentucky and Tennessee.
As a radio broadcaster and small businessman I am most im-
pressed with the effort of the sponsors of H.R. 3333 to relieve radio
operators of many of the burdensome provisions which have been
created `over the years by the Federal Communications Commis-
sion.
Of course, I am pleased that the Commission has seen the need
for deregulation and has at last begun a proceeding to rescind some
of the most burdensome provisions; but that proceeding is only
crawling along at the Commission, and although our hopes are
high, I am afraid my past experience with the Commission's slow
motion activity gives birth to some pessimism about the final out-
come. So I am here to support your deregulatory efforts and urge
you to continue them.
When I testified before you last year I listed many of the good
things I found in your bill. Virtually all of them remain, but in the
interest of time I see no reason to go down the list again.
There also remain some provisions that I am concerned about
mainly because I don't really know how they will work or what
they mean. I hope you understand that I am not being negative in
bringing these matters up. It is just that I guess it is natural to
mention the items that create problems ~n the hope that some
solution can be found. I agree with Don Thurston that we would
like to cooperate to work these matters out where it is possible,
although I admit that I don't have concrete answers.
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195
As a nonlawyer I am still a little perplexed about the new
standard of the bill that replaces the public interest standard. As I
understand the intent of the sponsors, you hope to free radio from
most of the program-type regulation that has given us nonenter-
tainment percentages, commercial time limitations, ascertainment,
format considerations and others.
I concur with this and think it is a wonderful idea. It was
through the use of the public interest standard that this program
regulation was instituted and now we have a new standard which
seems to rely on the marketplace and only would cause regulation
where marketplace forces are deficient.
In the event that these marketplace forces are deficient, the
Commission is charged with regulating to protect the public inter-
est. I guess what I am concerned about at this point is the possibil-
ity that the Commission might find these forces deficient somewhat
as a matter of course and we would again find ourselves fighting
new regulations that might become just as numerous as the old
ones.
I have no concrete language to suggest in lieu of your language
here, but I hope you see what I am driving at. I think your
intention is good, but I am just not sure that a bunch of bureau-
crats won't be able to create whole volumes of new rules and
regulations out of your standard just as they have done with the
old one. Perhaps this can be made abundantly clear, Mr. Chair-
man.
I also have some similar concerns about the revocation provi-
sions. Let me say right now that the Commission should continue
to have the power of revocation and the public should have some
way of bringing a broadcaster's conduct to the attention of the
Commission. I have no quarrel with that in conjunction with an
indefinite license. I do have two other concerns, though.
First, the petition to revoke proceedings continues to be openend-
ed. Now, I know the burden is on the petitioner and even assuming
that the grounds are quite limited, it still looks to me like some
poor devil is going to think it is open season on his license under
these provisions.
And you. cannot afford to take any of these types of petitions
lightly. You have to defend them. And with the provisions for
prehearing discovery, you could be spending a lot of time answer-
ing questions for a persistent petitioner. This certainly isn't going
to happen in every community, but in many communities where
there is a good concentration of the seif-annointed public interest
groups, I can foresee periods of continual proceedings. Maybe some
will be successful, but the tool provided will be abused, Mr. Chair-
man, probably in ways that we cannot even anticipate at this
point.
Perhaps there could be some provision drafted that would re-
quire a bond when the petition is filed or at least some payment of
costs to the broadcaster when the challenge is deemed frivolous. If
this is to correspond with the petition to deny, maybe the petitions
could only be filed by the public every 3 years with the Commission
having the right at any time. In any case, I see this as a real
problem under this bill and hope that we can find some way to
work it out.
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196
The second problem with revocation concerns the grounds for
revocation. I think the grounds are clear and appropriate with the
exception of section 418(a)(2), which would allow revocation because
of the existence of conditions that would have meant a refusal to
grant a license on the original application.
Mr. Chairman, that takes in one heck of a lot of territory, in my
opinion, including a catchall phrase like the character of the
owner. Is there really anything that doesn't bear on character,
which the Commission must consider in an original application?
And ownership. Even though the bill sets no limits on radio
ownership,\ suppose I decide to get into the newspaper business in
one of the small towns in which I operate a radio station. Wouldn't
that violate the diversity standard of the bill and be a considera-
tion on an original application? And if so, would I then be subject
to a petition to revoke on a diversity basis? If you could assure me
that these things can't happen, I would be much relieved, but it
appears to me that they can as the bill is now drafted.
Mr. Chairman, I keep hearing that revocation will be only for
technical matters. If that is the fact, why don't you just say that in
section 418 instead of keeping this language that would seem to
allow many other grounds to be considered?
Briefly on the allocation secton of the bill, I think the provisions
are much improved. My only thought is that the committee should
make sure that any new system of assignment, such as going to 9
kilohertz spacing, be thoroughly studied before the implementa-
tion. I am not concerned over more competition in the marketplace
and heartily support the effort to provide more full-time facilities
in those communities that now have daytime-only stations.
Finally, I am still opposed to a spectrum fee. While I understand
that the fee would not be great under your bill for radio broadcast-
ers, I think I represent the feelings of most of our radio member-
ship by opposing it. We see it as an effort to make us buy what we
think we are entitled to, the right to operate in the marketplace
without Government agents hanging around our necks 24 hours a
day. We still believe the public is getting tremendous value out of
our use of the radio spectrum and we see no need for further
tribute.
I hope this statement has not sounded too negative, Mr. Chair-
man. Again, the entire radio industry is indebted to you and the
other sponsors of this legislation for taking on the burden of dereg-
ulation in the face of a lot of stern critics from the self-appointed
defenders of the public who usually represent themselves and no
one else.
Thank you very much.
Mr. VAN DEERLIN. I assure you that I don't look upon this as
negative testimony. You would be foolish to come in and use up all
your time talking about the things you like in the bill. The thing to
do is to come in and try to see about things that you don't like.
I suppose that with the battery of legal talent you command
down at the NAB, we might get some suggested legislative lan-
guage on some of these proposals. Now, you know what the purpose
of the term "throughout the broadcast day" is, and I will agree
with you that it is ambiguous as stated. Could you give us some
help on that?
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197
The idea, is that if you have a responsibility to provide public
service and public service announcements and so forth, it doesn't
really `provide such great service to have them all ghettoed in at
hours of the day when viewing is so light.
Mr. MAY. Mr. Chairman, I think we understand what you are
looking for, and although we are not prepared to make those
suggestions today, we would be glad to give you some suggestions
in that area.
Mr. VAN DEERLIN. Clearly "throughout the broadcast day" could
be taken by a commission, if it wanted to, and be made something
quite different from the intended purpose.
Mr. BOLGER. We feel the same way. There is an inherent danger
with the present wording, and we would be happy to provide you
with something.
Mr. THURSTON. We also think it would be more a television
problem than a radio problem. The broadcast day is pretty Well
distributed with most radio stations with which I am familiar, and
what it really zeroes in on is prime time networks. That is a
television problem, by and large.
Mr. MAY. What about this matter of revocation that I men-
tioned? I do keep hearing that it is only for technical reasons you
can lose your license, but it seems to go along with a lot of other
areas.
Mr. VAN DEERLIN. It is my guess from last week's hearings, and
not so much from what I heard from witnesses but what I heard
from some of my subcommittee colleagues, that there will be an
effort to put some other standards in there, even for radio, and one
of them that keeps coming up is EEO standards.
How much of a bother is this to broadcasters? I know we have
the extreme example of a mom and pop operation that had a total
of three employees and they were reprimanded for not introducing
an affirmative action program, but let's say for a broadcaster of 10,
15, or 20 employees, assuming that this does represent a great
national aspiration, how onerous is it to you to comply with EEO
standards?
Mr. MAY. I guess, speaking of radio broadcasters, we feel the
same standards should apply to us as apply to other businesses.
The penalty shouldn't be any greater than it would be for any
other kind of business which might come under these regulations,
such as revocation, being out of business or losing your license.
Mr. VAN DEERLIN. There are, of course, two observations that are
made on that argument. One is that you are not like other busi-
nesses. You are very much a part of the lives of virtually all
Americans. And the second one is, of course, that most businesses
do not operate on licenses and yours does, although, as you can tell
from what is in the proposed bill, it was my hope that this very
justified aspiration could be adequately represented by the agency
provided within Government to police the full range of American
business and industry.
It seems to me that I probably could not command a majority of
the subcommittee or of the Congress to lift that restriction entirely,
and I was wondering, this being so, how it might be made the least
unpalatable to the industry.
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Mr. THURSTON. Congressman, if I might comment on that, I have
not heard a broadcaster complain about the E1~O regulations. The
complaint I have heard regarding this is the dual enforcement or
the fear that the enforcement from the FCC might differ somewhat
from that of EEOC.
Mr. VAN DEERLIN. Of course, the statutory definition of what
brings you under EEO regulation does vary in the beginning. I
think you're subject to EEO regulation by the FCC if you have 5 or
more full-time employees and you're subject to EEO regulation by
the EEOC if you have 15 or more full-time employees.
Mr. THIJRSTON. Yes. Well, I haven't heard any discussions about
that, for instance, and I operate a pretty small facility, one of
which has seven full-time employees. So it has not bothered us any.
I also think the broadcast industry has a most exemplary record in
the employment of minorities and women in the United States.
The question is whether, beyond those quantitative numbers, is
there a threat to a second level of enforcement? Maybe it is just
fear, but those are the comments I have heard that would be
negative. I haven't heard anyone who wishes to be treated differ-
ently than all the rest of the country regarding equal opportunity.
Mr. BOLGER. I guess we feel, sir, that the mechanism is already
in place and we don't need duplication.
Mr. THURSTON. If indeed it is duplication.
Mr. VAN DEERLIN. Yes. The position of the Black Caucus in
Congress, for example, and of many others who have testified is
that while the broadcast media may have an exemplary record,
that record has been fashioned in part because of the fire to which
the industry has been held through Commission enforcement
rather than through enforcement by the EEOC, which has a back-
log of something more than 100,000 cases.
Mr. THURSTON. There is no question about that in my mind. I
think Commissioner Brown talked about that last weekend when
we were together. There is no question but that the narrowing of
the focus has improved the level of understanding, and I guess
probably the level of performance.
Mr. VAN DEERLIN. But in response to Mr. May, I think that it
would be desirable to have some certain parameter of conduct
which would be the basis for keeping or losing a license. Not that
anyone under the present law is entitled to a license beyond the 3
years for which it is issued but the very nature of the way in which
broadcasting has expanded in the United States has made it some-
thing more than a certainty that a licensee will be in business
longer than just a 3-year stint to which he is entitled.
Perhaps you and those lawyers to whom I have referred with
great deference and respect could help again in providing legisla-
tive language with which we might seek to work in July.
Mr. WA5ILEw5KI. We will surely try.
Mr. VAN DEERLIN. Thank you.
Mr. Collins.
Mr. COLLINS. I sure have a lot of questions after having read
these prepared statements. Let me start with one which concerns
me very much. On this TV, what is it about the licensing as it now
stands that is burdensome, superfluous paperwork, unnecessary?
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What should you be required to file in television if we kept a
system parallel to what we have?
Mr. BOLGER. Do you mean as far as the actual physical applica-
tion form and the information we would provide on an annual and
3-year basis, sir?
Mr. COLLINS. Let me put it this way. Suppose when we went into
mark-up, some Members said they weren't quite ready to delegate
television in 5 or 10 years, but at the same time, in working on this
bill, if you were going to still be regulated, that you ought to be
regulated better. How could they regulate you better even under
the present system?
Mr. B0LGER. Of course, one of the points about regulation that
we feel we could be regulated better is that if they allowed us to do
more things-for example, we find that section 315 and the fair-
ness doctrine are elements that have been applied to our business
that are counterproductive; that in many cases, not, perhaps, for
large broadcasters but for smaller broadcasters, they find the diffi-
culty in political 315 section during the primary election having all
the candidates on because there are just so many times a mass of
candidates.
Another thing would be ascertainment, doing away with ascer-
tainment.
Mr. COLLINS. If we didn't do away with ascertainment-and I am
one who would sure do away with it-but if we didn't do away with
ascertainment, how could we prepare it where it would be a logical
system instead of this jungle of paperwork and all that we have
now.
Mr. BOLGER. I would respectfully submit that the broadcasters
would do a form of ascertainment themselves without being re-
quired to do it. Recently a Congressman was speaking to a public
affairs conference that we had here in Washington. He said in his
home district there was a small radio station and the woman who
was the news director of the station also did the ascertainment.
She confided in the Congressman that half the time she knew
what was going on in the community and that is when she was
doing her news job, and the other half, she didn't know what was
going on. I think with the basic broadcaster, it is just good com-
monsense to go out and know the people you are serving. And I
don't think you need any dictate from the Federal Communications
Commission to tell you that.
I think the broadcasters would do a responsible job and allow
themselves more time to respond to what those needs are.
Mr. COLLINS. You just get back again to the premise you don't
think we need the ascertainment.
Mr. BOLGER. A formal ascertainment standard as prescribed the
Federal Communications Commission.
Mr. COLLINS. I want to add just one thing. I have recently just
been checking all of the radio and TV stations in my district. We
have about 35 radio and about 7 television stations, so we have a
good cross section. And they have been giving me a report out of
the blue-they didn't know I was going to ask them-about what is
their record on public service. It is outstanding, and all of them
have a different one. They didn't just sit there and write a bible
and they all followed the same format. I was really proud of it.
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I am inclined to believe, like you, that they would do it without
the book.
Mr. BOLGER. And also, Congressman Van Deerlin mentioned
about "throughout the broadcast day." I would subscribe that right
now that is being done throughout the broadcast day. There are a
lot of prime time pubic affairs programs and public service an-
nouncements, and recently when the Federal Communications
Commission checked into the performance standards of radio sta
tions, they found that they far exceeded the levels they had placed
on them, far exceeded them.
I am encouraged by these findings because I feel this is presently
going on.
Mr. COLLINS. Let me ask Mr. Wasilewski. You have the broad
picture. Do you have any ideas about how, if we did not completely
deregulate television, what we could do to materially improve the
present system for licensing, the renewal of licenses9
Mr WASILEWSKI If you did not totally deregulate9
Mr. COLLINS. But suppose when we started our deliberations
there were some who said they were not ready to completely dere-
gulate television.
Mr. WASILEWSKI. I would agree you could do away with the
formal requirements involving ascertainment because I have at-
tended a lot of meeting where we have some of our staff people
who go out and talk about how you have to go through one step,
two steps, three steps by the rules, ascertainment. You could do
away with that. You would know it is going to be done anyhow
because it is a competitive requirement of stations to get involved
in the respective communities.
I have often thought that the public would be better served if we
did away with the fairness doctrine Now, fairness sounds great on
the surface but I think the fairness doctrine oftentimes is used as a
shield or can be used easily as a shield by stations to avoid getting
into what I would call the open robust debate, because you can live
by the rules of the fairness doctrine fairly easily and avoid the
nitty gritty of controversial public issues.
I think if we did away with the fairness doctrine, for example,
you would see much more in the way of discussions at the local
level of the hot items that are in debate. I think you would find
more stations voluntarily engaging in editorial positions and going
out on a limb if they knew they didn't have to be involved with all
of the technical requirements that you have in the fairness doc-
trine itself.
And you will ask a lot of broadcasters: Does the fairness doctrine
really inhibit you? Oftentimes they will say no, it really doesn't
inhibit me. It doesn't inhibit them because they don't get involved
in the~ deep issues involving controversy. That is another one I
think would be beneficial to remove although it would be a hard
one to remove.
Mr. VAN DEERLIN. If the gentleman will yield, I recently heard
on a prominent Washington radio station, for example, a hard-
hitting editorial expressing the viewpoint that it was improper to
use parking spaces that are reserved for the handicapped if you are
not handicapped. The editorial ended with a statement that listen-
PAGENO="0205"
201
ers with opposing points of view were invited to come and use air
time.
This is a clear example of the utter rubbish to which many
stations subject us under the idea that they are editorializing and
operating under the fairness doctrine.
Mr. THURSTON. I have been editorializing for many years and I
am one of the few in the country who endorses political candidates.
And let me tell you, that is a controversial subject. I have never
failed to broadcast that kind of material without getting lots of
response.
Mr. VAN DEERLIN. I would like to see that going on 3,000 miles
from San Diego.
Mr. COLLINS. Let me get on another subject in television. What
about the comparative hearing process? Is that handled, from the
regulatory viewpoint, most efficiently and expeditiously? Is the
present system the best way to handle a comparative hearing?
Mr. WASILEWSKI. Although I am a lawyer, Mr. Collins, as you
know, I think I would defer to our general counsel on that, if I
may. We have made some various proposals to the FCC for changes
in the administrative processes, and we are hopeful we can get
something done. But if it is all right with you, maybe Mr. Krasnow
will respond.
Mr. VAN DEERLIN. Would you identify him for the record so we
will know which Krasnow this is?
Mr. KRASNOW. My name is Erwin Krasnow, general counsel,
senior vice president of NAB.
Just a very brief answer to the question of comparative hearings.
There are two types of comparative hearings at the FCC. One is for
a new station. The other is at renewal time. In both situations it is
sort of an abysmal mess, and I think the FCC regards it as such.
On comparative renewal standards, despite the WESH case, the
FCC still doesn't have really any standards on comparative renew-
al. It is a terrible plight for both the station and the FCC and the
competing applicant. They are not sure what the ground rules are.
With respect to competing applications for a new station, the
FCC came out a couple of years ago with new, streamlined proce-
dures. Then this year they came out with newer, more streamlined
procedures because the old streamlined procedures didn't work.
And the FCC concedes on comparative renewals they would much
rather have a lottery system. They recommended that to Congress
a while back.
So, in short, comparative renewals, I think, are good for the
lawyers but not good for the public or the Government.
Mr. COLLINS. Let me go back onto this, just the average situation,
the renewal of license situation. What standards are necessary
which would be to the advantage of everyone concerned? What
should be the standards that a television station should have to
qualify for renewal of license? I have talked to them. They don't
know exactly themselves what they are shooting for.
Mr. BOLGER. I think it is something basic that would be in the
public interest standard, that general area.
Mr. COLLINS. Do you mean that is all we need to put in the law?
Mr. BOLGER. It has been highly defined, I think, if it were kept
basically the way it is, by the courts.
PAGENO="0206"
202
Mr. COLLINS. If YOU stayed just with the way the courts have
presently interpreted it, do you think the television industry and
anyone who challenges know where they stand today?
Mr. BOLGER. I couldn't guarantee you 100 percent, but I think
they have got a good indication of where they stand and what they
should do to operate within this concept.
Mr. COLLINS. Basically--
Mr. BOLGER. I think if it is the purpose of the act, this is new
ground that would have to be plowed and we might be years before
we realized what the rules of the game were.
Mr. COLLINS. You would rather keep it just like it is? You are
talking about plowing new ground, and I wanted to know if you
wanted to just keep it like it is.
Mr. BOLGER. The form, basically, I would not object to at this
point.
Mr. WASILEWSKI. Basically, Mr. Collins, I think there is one thing
in particular that should be clarified, and that is this, what I call
the birth defect kind of thing at renewal time. For example, if you
get a license and you are a newspaper-owned station, and you get a
license and you operate as you promised you would operate, so to
speak, at renewal time we don't think the fact that you are a
newspaper-owned station should be a factor going against you at a
future comparative renewal.
In other words, if you qualify as a licensee with this situation of
ownership, we don't think that that same situation should preclude
you or be a factor against you as opposed to another applicant for
your facility at renewal time.
Mr. COLLINS. In other words, you think ownership should not
only be grandfathered but you think it should be a future deal, too;
that we don't care what they do as long as they do a good job?
They could be a newspaper owner or own another radio station?
Mr. WASILEWSKI. Yes, sir, that is my point.
Mr COLLINS And that is in no way the law today It is a flexible
subject?
Mr. WASILEWSKI. It is a flexible subject as of today, yes, sir.
Mr. COLLINS. Let me go into one thing on radio. When I went
home I talked to a lot of little stations, kind of like the kind you
know something about, Mr. Thurston, and they have more prob-
lems than anyone, because in that case the manager does it all and
they are really involved. They understand what it is all about and
they are very proud of their ownership. They are proud of the
radio station.
We had about 70 of them sitting around, and they got on this
stuff about selecting a new station based upon random selection.
They think it is rather insulting, just a strictly screwball, bureau-
cratic way. Now, the bureaucrats didn't suggest it. It came out of
the NAB. But that random selection just impresses me as a--
[Mr. Wasilewski nods negatively.]
Mr. COLLINS. Didn't the NAB come out with that?
Mr. WASILEWSKI. I have been with NAB for 30 years, and we
never suggested that, sir.
Mr. COLLINS. Where did it come from?
Mr. WASILEWSKI. It came out of the FCC. I think it came out of
the FCC from some of the commissioners at one time.
PAGENO="0207"
203
Mr. COLLINS. But the NAB position is one that does not believe
that that is the---
Mr. WASILEWSKI. We have just never seen that coming as a
potential actual possibility in the near future. We have never
found it necessary to take a position on it. But basically I don't
think it is a good idea.
Mr. COLLINS. It is a very real suggestion we are kicking around.
Mr. WASILEWSKI. I know it is. We kind of sit in the weeds on that
one, I guess.
Mr. COLLINS. Mr. Thurston, what do you think about it? You
really understand it. You are in the middle of it.
Mr. THURSTON. I sure do. It has in some cases absolutely stopped
me from looking to create new services for a given market because
of the diversity standards that are being used as benchmarks at
the moment. And it bothers me a great deal.
Mr. COLLINS. On the diversity, you would like to have anybody
anywhere have a right to go in? You are just like he mentioned
here, that newspaper ownership or more radio ownership shouldn't
be a handicap? Well, I am 100 percent with you on that one. But I
don't understand this random selection business where, when we
have a new radio license coming up-and it applies more to radio,
certainly to~television-that they want to let everyone everywhere
come and put their name in a hat and we will draw, and if you are
a minority group member you get your name in the hat twice.
Mr. THURSTON. I think the origin of that is that now we have a
mature industry, a lot of frequencies are used up. If there are to be
some more, there should be an advantage to minority ownership.
Mr. COLLINS. I would agree with that.
Mr. THURSTON. So would I, but I am not sure how to provide that
advantage. I and others at NAB are working very hard to recognize
the benefits that this broadcast industry can develop by assisting in
minority ownership.
Mr. COLLINS. Someone said something that could come up in the
long run is they could extend the ban both ways and get a large
number of new frequencies at both ends.
Mr. THURSTON. That is one way, but then you have to have radio
sets that are [indicating].
Mr. COLLINS. We didn't have FM either, 20 years ago, and I am
amazed at how it has come along. But if they did extend it, it
would be a great thing for industry because they would be making
more radio sets for a long time.
Mr. THURSTON. If they would get around to approving AM stereo,
we would perhaps help the electronics industry too.
Mr. COLLINS. Is there anyone in the industry that is a believer
that random selection should be the basis? Do you know of anyone,
Vince?
Mr. WASILEWSKI. I don't know of anyone in the industry who has
ever suggested that when they were in the industry. I know some-
one who suggested that when they were an FCC Commissioner and
now represents industry.
But I don't know of anyone now suggesting that. I think what
has happened, Mr. Collins, is this. They say you go through all of
the ramifications of financial qualifications, technical qualifica-
tions, and character qualifications, and you come down to the final
PAGENO="0208"
204
analysis and they make some arbitrary determination that A is the
winner and B is the loser.
I think that sometimes Commissioners have become frustrated in
going through that whole system and say, well, once we agree they
are all qualified financially, technically and characterwise, you
might as well throw it all in the hat and pull a name out. I don't
think you ever do reach the point where everyone is equally quali-
fied, and I think that is an easy way to administratively make
tough determinations.
Mr. COLLINS. I think that sums it up pretty well. I have one final
question, and I really appreciate this opportunity to visit with you
all because you are enlightening me.
You might have a few inhibitions in answering this question, but
what should we do in regulations to change the FCC? Are any of
you just quickly available to say what is wrong with them and how
they should be better or how the system should be better?
Mr. THURSTON. One of the things that worries me about the bill
is the separation of jurisdiction from spectrum allocation, creating,
in effect, two organizations rather than one. That bothers me.
Mr. COLLINS. What is that? What two organizations?
Mr. THURSTON. Well, one responsible for the allocation of spec-
trum, an executive-level department, similar, I guess, to the form
currently practiced in Canada, and then having a smaller group of
regulatory people appointed for longer periods of time
I am not sure whether that corrects the situation or not. We are
really talking about practice and how bureaus tend to grow and
grow and grow. I, rather than create something entirely new,
would rather concentrate on making what exists work a bit better
and relieving it from some of the rules and benchmarks that have
been established over the years in which the FCC has no right to
be, like commercial standards.
The Congress at one time said stay out of commercial standards,
so they did. There was no rule. There just happen to be procedural
benchmarks they follow with great attention, and we just can't find
a way of getting at that. I don't know, how you do that in a bill,
whether it is with five men for 5 years, and you don't have the
accountability or opportunity to change. And I worry about the
jurisdictional change of policy being established by the allocation of
frequencies, on the one hand, and then having someone charged for
regulation, on the other.
I see conflict in that.
Mr. VAN DEERLIN. If the gentleman would yield, there is also the
possibility of conflict in the present system.
Mr. THURSTON. I understand that, but especially because of some
of our recent discussions with our counterparts in Canada, we can
see how the direction this is headed in could provide the same kind
of basic policy differences in the allocation of spectrum.
Mr. COLLINS. Mr. Wasilewski.
Mr. WASILEWSKI. As I say, there is always potential for conflict,
but I guess you would rather deal with the devil you know than
the one you don't at certain times in that regard.
Mr. COLLINS. Are there any other major conflicts you have
within the FCC system?
PAGENO="0209"
205
~Mr. THURSTON. Well, inability to perform, I guess. Their backlogs
are incredible. It is like a simple request we made for a joint
industry-Government study committee to really wrestle with pro-
viding modern data on a problem that everyone recognizes exists,
and w~ are almost frozen with inaction. We have the AM stereo
proposal before the current FCC, which offers great promise not
only for the receiver industry in this country but also in improving
the quality of AM broadcasting all over the United States. We
seem to be caught in that process.
We have another on automatic transmission systems that could
just provide reassignment of people within the radio industry, espe-
cially, and we are caught on that. I am not sure how you jar that
loose. There are times when I think the Government seeks to solve
these problems by creating a whole new agency rather than con-
centrating enough on making tI~e one they have work.
Mr. COLLINS. I sure agree with that. We either do that or throw
money at it, but we never loQk for the right solution.
Mr. THURSTON. That reminds n~e of our minority program. The
first advice I ever had was, for he~ven's sake, Don, don't just throw
money at the problem; really get fat it and see what is needed and
how it is needed; it is not something th~it is just a giveaway; there
is more to it than that. So that i~ why ~č are doing what we are
doing.
Mr. MAY. Another point on the px~esent Commission would be the
failure to deregulate radio broadcasting. They give a lot of lip
service to that idea that we really don't need the amount of regula-
tions we have, but when it gets down to it, their actions do not
match their public statements.
Mr. VAN DEERLIN. Ms. Dowell.
Ms. DOWELL. Thank you, Mr. Chairman.
I have one question that Was raised as a result of Mr. May's
statement. On page 4 you raise concern that has been repeatedly
brought to the attention of the subcommittee by industry wit-
nesses, and that is that the provision in section 418(a)(2) of H.R.
3333 would allow revocation because of the existence of conditions
that would have meant a refusal to grant a license on an original
application.
Each time this concern is raised, it is treated as though it was a
novel idea, a brand new provision proposed only recently in this
bill. In fact, that same provision now exists in the current law in
section 312(a)(2). I am wondering what abuses you think will be
prompted by this provision in view of the fact that I know of no
cases brought by citizens groups on this basis. I am wondering if
you have experienced an abuse, and if not, why do you think
continuing this provision is going to suddenly prompt a barrage of
complaints, I assume, from citizens groups.
Mr. MAY. It just seems, ma'am, this language is not in keeping
with the thought of this bill of the deregulation of radio broadcast-
ing. It leaves more conditions for .the revocation of a license. We
are told or led to believe that this bill is going to be giving radio
*broadcasters ab indefinite license.
Ms. DOWELL. Well, there are some basic requirements that all
potential licensees~-radio and television-have to meet, whether or
not the industry is deregulated. They must be citizens of the
51-254 0 - 80 - 14
PAGENO="0210"
206
United States, they must meet certain character qualifications, and
they must operate substantially in conformance with whatever
promises they make in their license applications. I do not under-
stand why continuing this provision would be inconsistent with
deregulating the industry. Everyone must meet certain qualifica-
tions in order to be a licensee, radio as well as television.
Mr. VAN DEERLIN. Moreover, isn't it true that if we were to
remove this provision, it would seem to signal to many of last
week's witnesses that if you come and lie to the Commission, and
on the basis of that lie you are awarded a license, you could keep
that license even if the lie is found out. In fact, we would be
grandfathering lying.
Mr. MAY. I don't think anyone would want to see that happen. It
is just the language of the character-I would like to think that my
character is pretty good at this point. What if my character
changes in your opinion? When do I lose the license, under what
level?
Mr. VAN DEERLIN. It really does seem to me that that concern is
akin to looking for bugs under rugs.
Mr. MAY. It does, but that is the way I guess we approach the
legislation.
Ms. DOWELL. I have one further question. This is for Mr. Bolger.
You state on page 5 of your testimony that you hear no great
quarrel from the public demanding something in return for giving
broadcasters the freedom to operate as most businessmen do. For
the past couple of weeks we have heard nothing but demands from
other-than-industry witnesses that broadcasters be made to operate
in the public interest.
This something more that the public interest groups want usual-
ly takes the form of more nonentertainment programing require-
ments. On page 3 of your statement, though, you say that broad-
casters today do provide news and public affairs programs in
prominent time slots. You state further that as the public demands
more, we will see an increase in this type of informational pro-
graming.
A number of complaints that other-than-industry witnesses pre-
sent is that currently their demands go unheard and unanswered,
and that if the television industry is deregulated, they will have no
forum in which to bring their demands to the broadcaster and have
him address them.
I am interested to know how you currently see public interest
demands being manifested to television broadcasters and whether
or not you can suggest more efficient ways of having them present
their demands to the industry.
* Mr. BOLGER. Well, as far as the demands, I think that many of
the demands are being met today. And if you look at some of the
current programs--
Ms. DOWELL. May I interrupt you? Ultimately that is the ques-
tion, but I am interested in knowing how you see these demands
being addressed to the industry and, consequently, how the indus-
try is responding. Do you get demands from letters? Do you ascer-
tain them by the ascertainment process? How is it that you inter-
pret the needs and interests of your community and what sources
of programing do you use to respond to these needs and interests?
PAGENO="0211"
207
Mr. BOLGER. We do it in many different ways. We do it through
an ascertainment procedure. We do it through the response of
calls. We do it with the purchasing of rating services. We go out to
our community a great deal, and we have our management people,
who are going out all the time, talking to the public. They are
going to schools, PTA meetings, church groups, retirement homes
to meet with the people, and at that particular point you go ahead
and start to have a feel of what the community is interested in, the
community interest groups, and then you have to match the need
with particular programing.
I think it is being done by the responsible broadcaster, and I
think many of those demands are being met now. And as far as
some particular programing, Capital Cities. Broadcasting, for exam-
ple, is doing a series of specials on significant items, and these are
placed in prime time by-I think the last count was 175 or 180
stations.
So I think the demands are recognized by the broadcaster and
they do it by their involvement. And once those demands are
known, the broadcaster responds because it just makes good sense.
The strength of our community is going to be our inherent
strength.
Mr. THURSTON. There is also one example and I think it came
before this committee, although I am not sure. There is one exam-
ple I am familiar with where local public interest groups have
organized kind of an ombudsman service, a cooperative service that
the city of Boston has, which really works. It is far better to set it
up on a cooperative basis than it is to try to demand a statistical
report or specific percentages at specific times.
Public interest organizations within the city of Boston, maybe
because that is where it all began, are very well organized and
have a very good relationship, at least to the best of my knowledge,
with the television industry within the city of Boston on a volun-
teer cooperative basis. I think there is someone scheduled to come
and talk to you about that.
Ms. DOWELL. Thank you very much.
Mr. VAN DEERLIN. Mr. Moir, full committee counsel.
Mr. Mom. Thank you, Mr. Chairman.
I would like to address just one short question to the panel, and
anyone may respond who feels so inclined. Several weeks ago the
subcommittee had a dialog between Wade Hargrove and Congress-
man Broyhill of the subcommittee, and at the tail end of that
conversation, the question was asked if Mr. Hargrove and the
broadcast industry had a choice between a spectrum fee-not a
license fee, but a spectrum fee-or deregulation legislation, which~
he would prefer. He was under the impression that he would prefer
to have no legislation whatsoever.
Do you have any comment on the views of Mr. Hargrove?
Mr. THURSTON. That is a tough either/or for me. It reminds me
of a television broadcaster I once heard testify, saying, well, maybe
$800,000 a year would be a fair fee for me to pay. That is more
than I gross with three radio stations. I have trouble with that
kind of thing.
Mr. M0IR. His problem was with the concept of a spectrum fee.
PAGENO="0212"
208
Mr. THURSTON. I have a problem with that concept too. We are
making use of a public resource, but I think we are enhancing its
value rather than depleting it. It is not an analogous situation to
the oil rights or the grazing rights or all of those other public uses
that I have heard the spectrum fee compared with.
I also recognize that broadcasters generally feel that if there is
legislation, regulation concerning the broadcast industry, that we
should not provide any special burden to the public, that we ought
to pay our fair share of the cost of that special regulation. I don't
think there is any argument with that.
There are broadcasters who seek property rights in their license,
and if there were a license for an 8- to 10-year period of time, there
might be a way, with IRS and others, that the goodwill factor
involved in the transfer of broadcast stations might reflect itself in
that kind of application.
So it all depends upon your view from the bridge. I have forgot-
ten whose testimony it was, Tom's, I think, that talked about if
deregulation is the right idea, it shouldn't have a dollar sign at-
tached to it. If, indeed, over the years too much has grown up that
is burdensome to the industry that is detracting from the service it
provides-and, I might add, detracting in that same manner from
the normal taxes we pay-then we shouldn't have to buy our way
out of that.
Mr. VAN DEERLIN. You said something about the transfer of
goodwill in a sale of a broadcast property. Did I hear that correct-
ly?
Mr. THURSTON. Yes.
Mr. VAN DEERLIN. Would you elucidate?
Mr. THURSTON. Almost any radio or television station which is
sold today has a part of its price that is not represented in physical
assets, depreciable assets.
Mr. VAN DEERLIN. That is goodwill?
Mr. THURSTON. Well, that is what the bookkeepers and account-
ants call goodwill. It is a price over and beyond what--
Mr. VAN DEERLIN. The real estate and the electronic equipment?
Mr. THURSTON. That is correct.
Mr. VAN DEERLIN. And the difference between the value of that
property and the selling price--
Mr. THURSTON. If it is an asset price, yes.
Mr. VAN DEERLIN. Represents goodwill?
Mr. THURSTON. Well, that is the term used by the accounting
professions of America.
Mr. VAN DEERLIN. But you are a broadcaster, not an accountant.
Do you think it represents goodwill? What else does it represent,
Mr. Thurston?
Mr. THURSTON. It represents the value a willing buyer and a
willing seller agree on on that particular basis.
Mr. VAN DEERLIN. For what?
Mr. THURSTON. What do you mean, for what?
Mr. VAN DEERLIN. What is he getting? Is he really buying good-
will?
Mr. THURSTON. Well, he is buying, in the case of many facilities,
yes, he is buying some goodwill. He is buying pioneering effort.
Mr. VAN DEERLIN. What else is he buying?
PAGENO="0213"
209
Mr. THURSTON. He is certainly not buying the license.
Mr. VAN DEERLIN. He is not buying the license?
Mr. THURSTON. No; he is buying the right to compete for that
license. He is buying the right to be judged by the FCC as to
whether he is a fit licensee or not.
Mr. VAN DEERLIN: Can the FCC judge it?'
Mr. THURSTON.. You can't depreciate it over a--
Mr. VAN DEERLIN. Can the FCC under the present law judge him
against any other applicant?
Mr. THURSTON. No; but they could judge him for his qualifica-
tions as they would an original applicant.
Mr. VAN DEERLIN. So--
Mr. THURSTON. Someone else had to risk it in the beginning to
prove the market was viable from the very beginning, and there is
value in that. And I am only talking ~sset sales. You have some
stock transfers, which are different tha~i that. I recognize what you
are driving at.
Mr. VAN DEERLIN. Thank you.
Mr. THURSTON. And I know there is value, Congressman. I am
just not sure that the value of what we do has to be represented in
that additional charge. The broadcast industry supplies a very
valuable service, and we have found through technological develop-
ment over the years how to get into more radio stations and
television stations than anyplace else in the world. And to tie a
spectrum fee to the deregulation, I think, is incorrect.
Mr. VAN DEERLIN. But it is possible, is it not, that a broadcaster
with an abundance of ill will might be able to draw a very good
price for his property?
Mr. THURSTON. There are brokers that try to sell radio and
television stations for 10-time losses; yes.
Mr. Morn. An interesting dialog, but back to the question. Let me
ask it maybe a little differently. The subcommittee has a bill which
the Chairman, Mr. Collins and Mr. Broyhill have sponsored, and
they have a markup schedule proposed for next month, with the
comments of Mr. Hargrove on the record.
A number of members who weren't even in attendance have
become aware of those comments and are very interested by the
impact of that statement, that broadcasters, if there were a spec-
trum fee, would prefer to have no legislation whatsoever. Can you
shed any light on that? Obivously you said that is a hard decision,
but Mr. Hargrove did make a hard decision on the record.
Mr. THURSTON. If it were a spectrum fee based upon percentages
of income, and if the regulatory fee were to be in addition to that,
and if it was specifically for the grazing rights analogy, the broad-
cast industry would oppose it with great vigor. Now, if that opposi-
tion resulted in the status quo, I guess that is where it would be.
And from that standpoint I would say yes, that would be an accu-
rate reflection of the broadcast industry's position.
It has just felt that it is a basically unfair extra assessment made
on the broadcast industry, and there is nothing in all of American
business history comparable to it.
Mr. Morn. I have no further questions.
Thank you, Mr. Chairman.'
Mr. VAN DEERLIN. You have just made me a pioneer.
PAGENO="0214"
210
Mr. THURSTON. I understood that.
Mr. VAN DEERLIN. I suppose in a panel that comes from the
same direction, it would be superfluous to ask if there was any-
thing you wanted to say to one another or ask of one another for
the record, so I guess that does it for today and for this week.
[The following letter was received for the record:]
PAGENO="0215"
211
COMPTROLLER GENERAL OF THE UNITED STATES
* . * WASHINGTON, D.C. 20548
~VN
1-103018 July 12, 1979
The Honorable Lionel Van Deerlin
Chairman, Subcommittee on Communications
Committee on Interstate and Foreign
Commerce
House of Representatives
Dear Mr. Chairman:
Members of my Logistics and Communications Division staff
met recently with Ms. Karen B. Possner of your staff to discuss
the "Communications Act of 1979 (H.R. 3333), particularly Title
VII - National rrelecommunications Agency.
Ms. Possner suggested that we submit our comments on Title
VII before the record on the bill is closed. We advised her
that we were planning to begin a review in August on the dises-
tablishment of the Office of Telecommunications Policy (OTP)
and the dispersal of its functions to various other offices.
However, we would like to provide for the record copies of
two documents which state our position and concern with the lack
of a focal point for effective coordination of telecommunications
policy and the fragmented organizational arrangement for managing
the Government's own communications.
Enclosed is a copy of our report, Review of Status of
Development Toward Establishment of a Unified National Communi-
cations System' (B-l6~6655, July 14, l969)'~' This report was in-
strumental, at least in part, in the establishment of OT?. Also
enclosed is a copy of my letter to the Director, Office of Man-
agement and Budget (0MB), dated August 18, 1978, concerning
Federal telecommunications procurement and management policy.
As you know, Executive Order No. 12046 transferred the responsi-
bility for developing and establishing such policies from OTP
to 0MB.
We hope these two documents will be helpful in your
deliberations on Pitle VII. We will, of course, upon completion
of our review of the disestablishment of OTP, provide you with
copies of any resulting report. If we can be of further assis-
tance in this matter, please advise.
Sincerely yours,
Comptroller Gneral *
of thea c!~1Ses _
~he report referred to may be found in the subcommittee files.
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212
COMPTROU~~ GENERAL OF THE UNITED STATES
WASHINGTON. DC 20545
B~131935
AUG. 18., 19?8
The Honorable James J. McIntyre, Jr.
Director,~Office of Management and
Budget
Attention: Mr. Walter Hasse, Director for
Information Systems Policy
Dear Mr. McIntyre:
This is in response to your memorandum of July 11, 1978, concerning
Federal telecommunications procurement and management policy.
We have long been concerned with the lack of a focal point for
te]ecomxnunicatiOflS policy and the fragmented organizational arrangement
for management of the Government's own communications. In our report,
"Review of Status of Development Toward Establishment of a Unified
National Communications System' (8-166655, July 1L1, 1969), we pointed
out the lack of a basic plan or "blueprint" and authoritative overview
to achieve the goal of a unified National Communications System. We
recommended that the President consider a realignment which would
establish an organization and give it stat6re, authority, and resources
sufficient to provide a strong central telecommunications authority as
the Government's central focal point in telecommunications matters.
As a result of that report and other studies, Reorganization Plan
No. 1 of 1970 and Executive Order No. 11556 established the Office of
Telecommunications Policy (OTP). We believe these actions were success-
ful in establishing 07? as a focal point for telecommunications matters.
Unfortunately, 07? was not given the authority and resources-we consid-
ered necessary to be effective.
Since that time, we have issued a number of reports pointing out the
lack of centralized direction and control over the Government's telecom-
munications and the resulting unnecessary duplication of facilities
and waste of resources. Copies of these reports were furnished to the
President's Administrative Services Reorganization Project, Telecommuni-
cations Task Force.
We would like to refer specifically to a reply by the Acting
Director, OTP, dated November 26, 1975, in response to cur draft report
PAGENO="0217"
213
on the need to control Federal warning systems. 1/ In that letter,
the Director, while agreeing with the report, stated that it implied
a role "in excess of 07? authority." Further, that there was no
mechanism for any single entity to control Federal warning efforts.
In a more recent letter from your office, dated August 24,1977,
in response to our draft report on navigation planning, 2/ the
Director advised us that the authority to select navigation systems
resides only in the President. Therefore, your office would recom-
mend that the President's reorganization project consider the need
for a single agency or office to assume responsibility for navigation
systems.
Although we have not made a detailed analysis of Executive Order
No. 12046, it appears that it is a step backward in that what limited
functions and authorities were concentrated in OT? are now dispersed
to six separate organizations, including yours. Thus, there is no
longer a focal point. Further, the specific authority and responsi-
bility of the six organizations and the boundaries between them is
not, in our view, completely clear.
As you know, hearings are now being held on H.R. 13015 (Communi-
cations Act of 1978). This bill would make substantial changes in
the Government's organizational arrangement for management of its own
communications and the regulation (or deregulation) of telecommunications
facilities and services.
At a later date, we intend to. review the broad issues discussed
above, particularly th~ impact of Executive Order No. 12046. At that
time, we will also consider the impact of H.R. 13015. In the meantime,
we believe you should give consideration to the need for a national
organization to manage interdepartmental telecommunications matters,
its organizational structure, and methods for implementations of plans.
In addition, we believe you should address three specific issues
described as follows:
Nontactical Secure Voice
In our classified report, "Secure Voice Telephone Systems--How
Department of Defense Can Save Millions" (LcD-77-105, December 30,
1977), we recommended that you take steps to see that there is a
1/ Need to Control Federal Warning System Proliferation (LCD-76-l05,
April 9, 1976)
2/ Navigation Planning--A Need For A New Direction (L~D-77-l09, March 21,
1978)
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214
common narrowband secure voice technique for all Government
nontactical use worldwide. Specific steps to be taken, with he
assistance of the Federal agencies involved,:were also recommended.
We pointed out the econctnic, survivability, and restoration
advantages of a common-narrowband system as opposed totwo dis-
parate systems proposed for civil and defense users. Although
directed by the Congress to develop a single riarrowband secure
voice common-user system, the Defense Department is not convinced,
and continues to advocate a wideband overlay for defense users in
the United States, if not a separate wideband worldwide system.
Our evidence to date continues to support a worldwide common-user
narrowband system in the near-term as well as the long-term..
Consolidation of Government Switchboards in
Metropolitan or Other Limited Geographic Areas
In this review in progress (our assignment code 941155), we have
found that there is little coordination between, and even within,~
civil and defense agencies in the consolidation of switchboards.
We believe that substantial savings and improved service can be
achieved through coordination of all agencies in a given metro-
politan or other limited geographic area-. Officials of the
agencies involved advance various reasons why Government-wide
consolidation cannot be achieved. Some of these appear to be
parochial. We plan to issue our report on this review toward the
end of the year. We will, of' course, include your views on our
conclusions. -
Navigation P1annin~
In our report, "Navigation Planning--A Need for a New Direction"
(LCD-77-1O9, March 21, 1978), our recommendation was that the
President appoint a single, authoritative management focus for
navigation matters in-order to overcome agency parochialism and
opposition to a consolidation of systems. We are aware of your
current efforts in this matter, but we are also concerned about
the intense opposition from some sources that oppose ~ny naviga-
tion consolidation. Recent indications convince us that efforts
are in process to reinforce agency opposition from industry and
user advocates, particularly aviation groups, such as Aircraft
Owners and Pilots Association, Air Transport Association, etc.
One issue in particular which will be exploited by the opposition
involves the dilution or denial of access to NAVSTAR signals.
We hope the above ccmments will be helpful and that you will give
consideration to the issues discussed above.
- Sincerely yours,
~GNED -EL~E~ B. 1~TAATS
Comptroller General
of the United States
[Whereupon, at 12:45 p.m., the hearing was adjourned.]
0