Extreme Makeover - Radio Edition

AM/FM allotment policies overhauled as Commission looks to discourage relocation of service from rural to urban areas 

If you’re looking to move an AM or FM radio station from a small community to a different, bigger, community, your job probably just got a boatload harder. The Commission has released a wide-ranging decision – technically, a “Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rulemaking” (ouch – let’s just call it the Second R&O for short) – in its two-year old “rural radio” proceeding. Unlike the Commission’s first order in that proceeding, the Second R&O tightens up radio channel allotment standards considerably.

Since radio broadcasting began, entrepreneurs have been inexorably drawn to the bright lights (and larger audiences) of big cities. Eschewing the bucolic delights of rural America, entrepreneurial folks have strived to locate stations in or near metropolitan areas. In response, the FCC has strived to keep the metro-bound tide in check. In recent years, though, the regulatory levees have been relatively easy to overcome, leading to a steady influx of channels to metro areas. With the release of the Second R&O, however, the flood barriers have been raised higher . . . much higher.  And, as a bonus, the Commission has made it harder for FM translators to pop in or out of the reserved portion of the FM band.    

First, some background.

For almost 30 years, radio allotments have been subject to a set of four priorities. In the Commission’s view, the highest priority (dubbed Priority 1) calls for channels to provide first fulltime audio reception service. If a radio proposal would deliver service to areas and populations that don’t already receive any radio service at all, that proposal moves to the front of the line. Next up (Priority 2) are proposals which would provide a second fulltime audio service to areas/populations that receive only one other such service.

As a practical matter, though, there are very, very few areas/populations in the U.S. that do not already receive at least two aural services. So Priorities 1 and 2 are largely vestigial; they seldom if ever come into play anymore.

That leaves Priorities 3 and 4. Priority 3 awards preference to any proposal which would result in a community receiving its first local station. The idea is that, to the extent possible, every community should have its own radio station which would, the FCC imagines, focus its programming on the needs and interests of its community of license. Priority 4 is a catch-all, rewarding “other public interest matters”. (Normally, Priority 4 tends to involve comparisons of populations proposed to be served by competing proponents; the nod generally goes to the proposal promising to serve the greatest population.)

Note that Priority 3 requires only that the proposed station be the first in the community. It says nothing about where that community might be, or how many other radio services it may already receive. Accordingly, for many years the typical way to get the okay to put a station in an urban area has been to specify a community of license in or near the urban area, with no local station. 

Presumably suspecting that the “first local station” test might lead to less-than-sincere proposals, the Commission eventually imposed additional mandatory showings if a proposed allotment brushed up against an urbanized area. In particular, the so-called “Tuck showing” (named after the 1988 decision in which the showing made its regulatory debut) requires allotment proponents to provide an extensive laundry list of information designed to establish that the proposed community of license really does have an independent need for its own local station.

But over the years, move-in proponents and their lawyers have become adept at making the required Tuck showings – possibly, in the view of some at the FCC, too adept.

The New Presumption. Concerned that the continuing trend of stations toward metro areas may be leaving the radio needs of rural areas underserved, the FCC has now come up with a new approach designed to slow (if not stop altogether) that trend. The Second R&O creates a “rebuttable presumption” applicable to proposals to allot AM or FM channels either: (a) to a community in an urbanized area or (b) in such a way that the facilities proposed would (or, with a minor modification application, could) cover 50% or more of the urbanized area with a city-grade signal (for AM’s, that would be the daytime city-grade). If either of those conditions is met, then the proposal will be presumed to be proposing service to the entire urbanized area rather than the named community of license.   In other words, no Priority 3 preference would be awarded, even if the proposed community of license technically did not have any other local stations. For ease of reference, we’ll call this concept “the Presumption”.    

Additionally, the FCC has tweaked Priority 4 to put much greater emphasis on coverage of relatively underserved areas rather than raw differences in the number of people covered.

The Second R&O explains how these changes are to be applied to various common radio allotment situations. Those include: (a) proposed community of license changes (for both FM and AM stations); (b) applications for new AM stations and major modifications to existing AM stations; and (c) new FM allotment proposals.

Community of License Changes. To change an AM or FM station’s community of license, the applicant must demonstrate that the proposed facilities in the proposed community will serve the FCC’s allotment priorities better than do the station’s present facilities in its present community.

The FCC will apply the Presumption to all such proposals – even those that were pending before the Second R&O was released. That will limit severely the ability of proponents to avail themselves of Priority 3.

Recall that the Presumption applies not only when a proposal would put a city-grade signal over at least 50% of the urban area, but also if the proposed facilities could do so after a minor mod. Because of that, the applicant will also need, in effect, to demonstrate a negative – i.e., that it will not be able to use its proposed facilities as a launching pad for a change that would produce 50% or greater urban area coverage. 

It’s always hard to prove a negative, of course. In this context, the Second R&O addresses that problem by requiring proponents to certify that “there are no existing towers in the area to which, at the time of filing, the applicant’s antenna could be relocated through a minor modification application to serve 50% or more of an urbanized area and still cover its proposed community of license.” In making that certification, the applicant will be required to consider every existing tower with an Antenna Structure Registration and every unregistered tower currently used by licensed radio station. The applicant also must consider possible use of a directional antenna, contour protection and other techniques widely employed to fashion a rule-compliant modification application.

The Commission will also impose an absolute bar to any facility modification that would create a “white” area (i.e., an area with no over-the-air service available) or a “gray” area (an area with only one over-the-air service available).

And under the newly-tweaked Priority 4, the Commission will “strongly disfavor”: (a) any change that would result in the net loss of third, fourth, or fifth reception service to more than 15% of the population in the station’s current protected contour; and (b) any proposed removal of a second local transmission service from a community with a population of 7,500 or greater.

There’s more. Applicants will have to set forth the size of the populations that would gain and lose service, together with the numbers of services those populations will receive if the application is granted. Historically, in this context the Commission’s concern has topped out if at least five other services were shown to be available to a given area; that is, once a proponent could show that at least five services were available, it could stop counting. No longer. Here’s how the FCC describes the showing it would expect in a proposal to provide a 21st new reception service to 500,000 people while removing the sixth reception service from 50,000:

A detailed summary should suffice, for example, to point out that 50,000 people would receive 20 or more services, 10,000 would receive between 15 and 20 services, 7,000 would receive between 10 and 15 services, etc. The showing should, however, state what service the modified facility would represent to the majority of the population gaining new service, e.g., the 16th service to 58 percent of the population, and the corresponding service that the majority of the population losing service would lose, e.g., 60 percent of the current coverage population would lose the ninth reception service. New service or service losses to underserved listeners should be detailed.

The Presumption is, by its very terms, rebuttable presumption. Like all rebuttable presumptions, it can be, um, rebutted. But to do so, a proponent must make a “compelling” show. You can start with a Tuck showing, but that may not be enough. The Commission has said it will scrutinize Tuck showings more rigorously “than has sometimes been the case in the past”. For example, an applicant “should submit actual evidence of the number of local residents who work in the community, not merely extrapolations from commute times or observations that there are businesses where local residents could work if they so chose.”    

Proposals for New/Major Mod AM Facilities. Like proposals to change community of license, applications filed during an auction window for a new AM station or major changes of an existing station will be subject to the Presumption. In such cases, applicants have historically been able to prevail without going to auction if they can demonstrate up front that their proposal is preferable on Section 307(b) grounds. Factoring in the Presumption will likely make such auction-free results more difficult to achieve. 

As with community of license changes, the Commission will consider not only whether the proposal itself would serve the urban area, but also whether the applicant might be able to realize such service through a minor mod of the proposed facilities. In assessing the hypothetical potential for such service, the Commission will consider only whether the applicant could file a minor mod specifying the same site and a frequency available at the time the filing window closed without changing the proposed antenna configuration.

With respect to Priority 4, large service population differentials between competing applicants, without more, will not be sufficient to secure a dispositive Section 307 (b) preference. But an AM applicant that will provide third, fourth and/or fifth reception service to at least 25% of the population within its proposed primary service area and has specified a community of license with no more than two local stations may receive a dispositive Section 307(b) preference. 

An AM applicant also may, but is not required to, submit something called a Service Value Index (SVI) showing. This complicated (indeed, geeky) formula takes into consideration the population served and the number of reception services received by segments of that population. In order for an AM applicant to prevail with an SVI showing, it must demonstrate a 30% differential between its proposal and the next-highest-rated proposal.

The Presumption and the other policies and procedures adopted in the Second R&O will not be applied to the applications still pending from the AM Auction 84 window, which closed in 2004. But they will be applied the next time an AM window is opened.

The Commission also formally codified a previously informal standard used to determine when the nighttime proposals included applications for new AM stations or major changes of existing stations are mutually exclusive. Detailed explanation of this is best left to the engineers. According to the Commission, two applications will be deemed mutually exclusive if either application’s nighttime proposal would enter into the 25% exclusion RSS nighttime limit of the other. That will be the case even if each applicant could still provide the requisite nighttime coverage of its community of license.       

FM Allotment Proposals. The Presumption and the policy under Priority 4 of putting heavier emphasis on reaching underserved populations (as opposed to simply reaching a greater total population) will be applied immediately to all pending petitions to amend the FM Table of Allotments, all other open FM allotment proceedings and all non-final FM allotment orders – except any non-final FM allotment proceeding in which the Commission has already modified a radio station license or granted a construction permit.

FM Translator “Band-Hopping” Applications. The FCC has decided it does not like it when the owner of an unbuilt or relatively new FM translator seeks to “hop” in or out the NCE reserved portion of the FM band (88.1 MHz to 91.9 MHz). The Commission is concerned that that practice might reflect an effort by some applicants to game the system. For example, an applicant might apply during a filing window for translators in the non-reserved portion of the band. With a non-reserved permit in hand, it could then modify to the permit to hop over to the reserved portion and thereby take advantage of certain less strict regulations applicable to the reserved portion. 

The Commission is not enthusiastic about such initiative. According to the Second R&O, the practice wastes staff resources and otherwise is, well, not a good thing.  So an application to change an FM translator’s frequency from the non-reserved potion of the band to the reserved portion or vice versa may now be filed only by an FM translator station that has been (a) licensed (or for which a licensee application has been pending) and (b) operating for at least two years. (Note, however, that the rule language adopted by the Commission makes no mention of any two-year holding period. If the FCC really does want to impose such a limit, we may be seeing an erratum in the near future spelling that out officially.)

Tribal Priority. The Second R&O also adopted certain changes, and proposes other changes, regarding the Tribal Priority which the focus of last year’s preliminary action in this proceeding. Since the Tribal Priority is available only to a very limited universe of applicants (i.e., an applicant  that is itself an Indian Tribe or of which the majority owner is an Indian Tribe), we will leave to another time the discussion of this topic, although we stand ready to field any questions that come our way.

The Second R&O is a sweeping action which reflects the Commission’s determination to stem the flow of radio service toward urban, and away from rural, areas. Whether – and if so, for how long – these changes will serve that purpose remains to be seen. 

According to the Second R&O, all the changes made in the order will become effective as soon as it’s published in the Federal Register – except for one aspect of the Tribal Priority rule, which will require prior OMB approval. It’s not clear, though, that other changes – including, e.g., some of the new certification requirements – may not also require OMB approval, as they could be construed to be new “information collection” requirements. The Second R&O doesn’t address that possibility. Check back here for updates on these and other developments on this front.

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Comments (1) Read through and enter the discussion with the form at the end
Tom Taggart - March 9, 2011 6:28 PM

This proposal appears to doom a lot of AM stations if they lose their transmitter site. Often, with the growth of population, there is no new site that can cover the center city--but a city of license change to a smaller suburb may keep the station alive.

May also have an impact on "diversity." Avenue for many minority owners into larger markets is to buy a suburban facility and re-license it to another suburban community that's closer in. In most markets of size, there's nothing for sale unless you have the $$$$ to buy someone's 6 station cluster.

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