Commission to consider audience and revenue data, but not interference, in assessing impact of LPFMs on full-service stations

Last January, when we reported on the enactment of the Local Community Radio Act of 2010 (“LCRA”), we focused on the practical aspects of that new law – and particularly how it might affect the long-running siege between FM translator licensees and applicants, on the one hand, and low-power FM licensees and applicants, on the other. We didn’t bother to mention the homework assignment Congress laid on the Commission in the final section of the Act. In case you missed it, Section 8 of the LCRA instructs that the

Federal Communications Commission shall conduct an economic study on the impact that low-power FM stations will have on full-service commercial FM stations.

Congress didn’t bother to give the Commission any further direction about just what the study should look at or how it should be prepared. The only other detail contained in the Act was that the Commission would have to submit a report about the study to Congress . . . within one year of the LCRA enactment. That means that the FCC’s got until January 4, 2012, to wrap up the study and get its report filed.

The clock is running and time’s a-wastin’, so the FCC has done the only sane thing: it’s asking all of us to help it out.

In a May 10, 2011 public notice, the Commission has solicited input on a range of questions concerning, well, the economic impact of LPFM stations on full-service FM stations.

First off, the FCC is looking for tips on “the appropriate subject matter and scope of the study and report”. Presumably the Commission is as mystified by the terse and cryptic statutory directive as anybody. Congress wants a report on how LPFM stations WILL affect full-power folks, but (unless it’s managed to locate a really, really reliable crystal ball, or maybe a Ouija board) the Commission can’t just peer into the future and tell us what’s going to happen; rather, it’s stuck looking at historical, or at least currently available, data. What’s an agency to do?

The Commission also wants to know what “metrics” it should be considering. Its current thinking is that the study should focus on audience measurements and advertising revenues, since those are the two “most relevant available indicators” for assessing a commercial station’s economic performance. Of course, the Commission is wide open for suggestions of other factors to consider.

With respect to audience ratings, the Commission is looking for data demonstrating the effect LPFM operations have had, or are likely to have, on full-service stations’ audience shares. The Commission helpfully observes that more than half of all currently operating LPFM stations are located outside Arbitron “Metro” markets, which is likely to complicate this particular aspect of the Commission’s study.

The FCC’s inquiry about revenues is similarly vague: to what extent have LPFM stations had – or are likely to have – any “direct or indirect impact on the advertising revenues” of full-service commercial FM stations. Sure, LPFM stations are, by regulatory definition, non-commercial, but they can still air “underwriting” announcements that sound a lot like – and generate revenues like – advertising. Is there any way that the available data (whatever those may be) can be parsed to produce useful insight into the competitive interplay of LPFM and full-service FM stations with respect to revenues?

Geographically speaking, the Commission plans a two-prong approach. First, it will study the particular economic effects on commercial FM stations whose signals “significantly overlap or encompass” one or more LPFM stations. Second, it will at the overall impact that LPFMs have in Arbitron markets, regardless of whether or not the LPFMs are overlapped by full-service stations in those markets. Again, though, the Commission is looking for suggestions – particularly since (as noted above) the FCC knows that there aren’t that many LPFM stations in Arbitron markets, so the second geography-based aspect of the inquiry may be a bit trick to pull off.

Interestingly, the one thing the Commission says it does not plan to look at is the potential interference effect of LPFM stations on their full-service siblings. As the Commission sees it, the interference remediation provisions of the LCRA “adequately protect[ ]” full-service licensees from second- or third-adjacent interference and, anyway, Section 8 of the LCRA (you remember, that terse statutory instruction quoted above) “does not expressly require such an assessment”. True enough – but Congress’s instruction doesn’t really “expressly require” consideration of any particular factor; nor does it expressly exclude any particular factor. Why, then, should audience and revenues be deemed to be within the scope of the statutorily-mandated study, but not interference?

The Commission’s thinking on this point appears to be that, with the new LCRA remediation provisions in place and with a 2003 study in hand predicting that elimination of third-adjacent interference protections would not create any interference risk, there’s no reason to worry about interference. And with this convenient bit of wishful thinking, the Commission proposes to ignore what could be a highly contentious issue.

One might reasonably question the practical utility (let alone the reliability) of the study and follow-up report that the Commission is undertaking. After all, the FCC is starting with virtually no solid data, no established parameters, unclear “metrics”, and a potentially important factor (i.e., interference) simply written out of the game plan . . . and with a deadline which, by the time the public notice comment period wraps up, will be barely more than five months away.

But as was true of the Light Brigade, the Commission’s role here is not to reason why. Congress told it to do something, so the Commission’s got to do it. And once the study is completed and the report filed with Congress, it’s likely that we won’t be hearing any more about this for some time to come. Having enacted the LCRA and, in so doing, ordered up the study and report, Congress will probably figure that it’s done all it needs to do with respect to LPFM matters, and it will move on to other legislative pastures.

 Anyone possessing actual, reliable data about the interplay of LPFM and full-service stations would be doing everyone a public service by submitting it in response to the public notice, if only to build a factual record for future reference. While Congress may think that it’s put LPFM issues to bed for good, others may not be so sure of that.

The deadline for comments is June 24, 2011; the deadline for reply comments is July 25, 2011.