Policies To Promote Rural Radio Service and To Streamline Allotment and Assignment Procedures

AGENCY:

Federal Communications Commission.

ACTION:

Proposed rule.

SUMMARY:

In this document, the Commission adopted a Second Further Notice of Proposed Rulemaking (SFNPRM), in which it announced that it wished to develop a more comprehensive record regarding measures to assist Federally recognized Native American Tribes and Alaska Native Villages (Tribes) in obtaining commercial FM radio station authorizations. Specifically, the Commission sought comment on the use of threshold qualifications for Tribes applying for commercial FM radio channel allotments that were added to the Table of Allotments using the Tribal Priority adopted by the Commission in the First Report and Order (First R&O) in this proceeding. The Commission also sought further comment on whether a Tribal Bidding Credit would accomplish the goal of increasing Tribal ownership of commercial stations broadcasting to Tribal Lands, and sought comment on the financial and other barriers facing Tribes wishing to enter the commercial broadcast arena.

DATES:

Comments may be filed on or before April 15, 2011 and reply comments may be filed on or before May 16, 2011. Written comments on the Paperwork Reduction Act proposed information collection requirements must be submitted by the public, Office of Management and Budget (OMB), and other interested parties on or before May 16, 2011.

ADDRESSES:

You may submit comments, identified by MB Docket No. 09-52, by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments.
• Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/ . Follow the instructions for submitting comments.
• E-mail: ecfs@fcc.gov. Include the docket number in the subject line of the message. See the SUPPLEMENTARY INFORMATION section of this document for detailed information on how to submit comments by e-mail.
• Mail: 445 12th Street, SW., Washington, DC 20554.
• People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: 202-418-0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:

Peter Doyle, Chief, Media Bureau, Audio Division, (202) 418-2700; Thomas Nessinger, Attorney-Advisor, Media Bureau, Audio Division, (202) 418-2700.

For additional information concerning the Paperwork Reduction Act information collection requirements contained in this document, contact Cathy Williams at 202-418-2918, or via the Internet at Cathy.Williams@fcc.gov.

SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Second Further Notice of Proposed Rulemaking, FCC 11-28, adopted March 3, 2011, and released March 3, 2011.

Initial Paperwork Reduction Act of 1995 Analysis

The SFNPRM contains potential information collection requirements subject to the PRA, Public Law 104-13. OMB, the general public, and other Federal agencies are invited to comment on the potential new and modified information collection requirements contained in this SFNPRM. If the information collection requirements are adopted, the Commission will submit the appropriate documents to OMB for review under section 3507(d) of the PRA and OMB, the general public, and other Federal agencies will again be invited to comment on the new and modified information collection requirements adopted by the Commission.

Public and agency comments on the potential proposed information collection requirements are due May 16, 2011. Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the FCC seeks specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

In addition to filing comments with the Secretary, a copy of any Paperwork Reduction Act comments on the information collection requirements contained herein should be submitted to Cathy Williams, Federal Communications Commission, Room 1-C823, 445 12th Street, SW., Washington, DC 20554, or via the Internet to Cathy.Williams@fcc.gov, and to Nicholas A. Fraser, Office of Management and Budget (OMB), via the Internet to Nicholas_A._Fraser@omb.eop.gov or by fax to 202-395-5167.

Summary of Second Further Notice of Proposed Rule Making

Recognizing “the risks inherent in applying a section 307(b) preference at the allotment stage for auctionable non-reserved band spectrum,” (First R&O, 75 FR 9797, Mar. 4, 2010, FCC 10-24, rel. Feb. 23, 2010), the Commission sought comment in the Further Notice of Proposed Rule Making, 75 FR 9856, March 4, 2010, FCC 10-24, rel. Feb. 23, 2010 (FNPRM), in this proceeding on whether to establish an auction bidding credit for Tribes seeking to provide commercial FM radio service to their Tribal Lands and members. The Tribal bidding credit was originally proposed to mitigate concerns that, due to the two-step nature of the commercial FM licensing process, Tribes or Tribal entities that employ the Tribal Priority to obtain FM allotments might be outbid by competing, non-Tribal applicants. The only (joint) commenters to address this issue proposed a 35 percent bidding credit that would be available to Tribes or Tribal entities that participated in the allotment proceeding for the FM channel being auctioned, regardless of new entrant status. Under this proposal, a Tribe or Tribal entity without a Commission license also would be entitled to an additional 25 percent new entrant bidding credit, for a total maximum bidding credit of 60 percent.

The present record is inconclusive as to the ultimate effectiveness of Tribal bidding credits. Notwithstanding the useful input received, the Commission was unclear as to whether and how it could craft such credits so as to meaningfully advance its goals consistent with the competitive bidding mandate of 47 U.S.C. 309(j). In this regard, there is a necessary balance between Congress's directive to design competitive bidding systems to recover for the public a portion of the value of spectrum (see 47 U.S.C. 309(j)(3)(C)), which militates in favor of setting the credit as low as possible, and the need to ensure that Tribes and Tribal entities uniquely qualified to serve their communities receive licenses to do so, which militates in the other direction. Most Tribal applicants likely will qualify for new entrant bidding credits of up to 35 percent under the Commission's current rules (given the small number of Tribal-owned stations), and the record did not reflect whether and, if so, how much more of an additional credit would be necessary to address the particular bidding disadvantages that Tribes face. To the extent that such disadvantages are substantial, the Commission was concerned that even a 60 percent credit might not be sufficient to ensure realization of its policy goals in establishing the Tribal Priority.

On further consideration, the Commission believed an alternative approach might be more effective to achieve its policy goals and would be more consistent with its statutory mandate to license spectrum in the public interest. The Commission thus sought comment on whether to require, as a threshold qualification to apply for a commercial FM channel allotted pursuant to the Tribal Priority, that applicants qualify for a Tribal Priority for the channel. This proposed requirement would be similar to procedures used for certain vacant FM allotments reserved for noncommercial educational (NCE) use. Under those procedures, which are intended to safeguard the policy objectives of the channel reservation process (namely, to add new NCE stations where listeners receive limited or no NCE service), applicants for a reserved channel must make a showing at the application stage similar to that required of channel reservation proponents at the allotment stage. Likewise, under the proposed approach here, a Tribe or Tribal entity applying for an FM channel allotted based on the Tribal Priority would be required to establish at the application stage its qualifications to provide the service for which the channel was specifically allotted.

The Commission believes the proposed threshold qualifications would be more effective than Tribal bidding credits in advancing the Tribal Priority's goals. As set forth in the First R&O, the Priority is premised on the unique ability of Tribes and Tribal entities to serve their Tribal communities “[b]ecause of their status as sovereign nations responsible for, among other things, `maintaining and sustaining their sacred histories, languages, and traditions.' ” (First R&O, 25 FCC Rcd at 1587-88). As the Commission previously noted, the identity of the service provider to Tribal areas is critical to Tribal Priority-based allocations. Whereas in AM and NCE radio services the Tribal Priority generally operates as a dispositive preference in the application process, guaranteeing that a qualified applicant will obtain the license, commercial FM licensing is a two-step process in which a dispositive preference at the initial, allotment stage does not guarantee the grant of a license in the second, application step. An unavoidable consequence of the auctions process is that Tribes and Tribal entities uniquely qualified to serve their communities may be outbid in the commercial FM application process by non-Tribal applicants that file mutually exclusive applications. At best, Tribal bidding credits can mitigate this concern by boosting the competitive position of Tribal applicants. They cannot, however, eliminate the risk of qualified Tribal applicants being outbid, thereby frustrating the Commission's goals in allocating the channel pursuant to the Tribal Priority. In contrast, the proposed threshold qualification requirement would ensure that only a Tribe or Tribal entity qualified to provide the unique service contemplated by the allocation is eligible for the license to provide that service. Such an approach would set the commercial FM service on the same footing as other radio services with regard to the Tribal Priority, and avoid undermining the Commission's policy goals in establishing the Tribal Priority.

The Commission further believes the proposed threshold qualifications would be consistent with its statutory mandate under 47 U.S.C. 309(j)(6)(E), which provides, in pertinent part, that “[n]othing in this subsection, or in the use of competitive bidding, shall * * * be construed to relieve the Commission of the obligation in the public interest to continue to use * * * threshold qualifications * * * in order to avoid mutual exclusivity in application and licensing proceedings.” The Commission believes the use of threshold qualifications would serve the public interest because the premise of the Tribal Priority is a Tribe's or Tribal entity's unique ability to serve the needs and interests of its local community. That premise distinguishes the proposal here from the grant of bidding credits to an FM applicant who successfully petitions for the allotment of a channel being auctioned, a proposal that the Commission rejected in 1998 as analogous to the pioneer preferences that Congress has specifically eliminated. The threshold qualification would be based on the Tribe's or Tribal entity's ability to fulfill the purpose for which the channel was allotted under the Tribal Priority, rather than on its participation in the allotment proceeding. Thus, eligible Tribes or Tribal entities may be eligible to apply for a channel allotted pursuant to the Tribal Priority even if they did not petition for the allotment. To the extent that mutually exclusive applications may still be filed under the proposed threshold qualifications approach, thus requiring competitive bidding, the bidders would be limited to qualified Tribes and Tribal entities, so the Commission's policy goals would not be frustrated. The Commission also asked whether to adopt an exception to the general prohibition of collusion set forth in 47 CFR 1.2105(c) applicable to mutually exclusive applications in the commercial FM broadcast service, so that Tribes or Tribal entities that file mutually exclusive applications for a channel allotted pursuant to the Tribal Priority have an opportunity to resolve any mutual exclusivities through engineering solutions or settlement.

The Commission seeks comment on the foregoing threshold qualifications proposal, the issues related to it that are discussed above, and on any and all additional issues that commenters believe it may raise. In particular, the Commission invites comment from the Tribal community on its potential utility in ensuring realization of the goals underlying the Tribal Priority. In the event no applicant meets the threshold qualifications for the Tribal allotment in a filing window, the Commission seeks comment on whether it should routinely include such allotments in subsequent windows. The Commission also seeks comment on when it should permit non-Tribal applicants to seek construction permits through the auctions process for allotments for which potential Tribal applicants have not expressed an interest. The Commission also invites further comment on Tribal bidding credits, on which issue it found the record to be inconclusive. The Commission welcomes additional input from commenters addressing the record deficiencies on this issue, such as evidence as to the particular bidding disadvantages that Tribes may face vis-à-vis non-Tribal bidders for broadcast radio licenses, as well as the capital requirements of Tribes and Tribal-owned entities to provide commercial FM service to Tribal lands. The Commission strongly encourages qualified Tribes and Tribal entities to take advantage of the Tribal Priority by filing rulemaking petitions for commercial FM allotments. With regard to the commercial FM service, the goals of the Tribal Priority can be realized only through the filing of such petitions. Finally, the Commission seeks comment on ways that it could promote a commercial Tribal radio service, including comment on potential barriers that may discourage Tribal participation in the auctions and licensing processes.

Comments and Reply Comments

Pursuant to 47 CFR 1.415 and 1.419, interested parties must file comments on or before April 15, 2011, and must file reply comments on or before May 16, 2011. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS); (2) the Federal Government's eRulemaking Portal, or (3) by filing paper copies.

Comments may be filed electronically using the Internet by accessing the ECFS: http://www.fcc.gov/cbg/ecfs,, or the Federal eRulemaking Portal: http://www.regulations.gov. Filers should follow the instructions provided on the Web sites for submitting comments. For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this proceeding, filers must transmit one electronic copy of the comments for each docket or rulemaking number referenced in the caption. In completing the transmittal screen, filers should include their full name, U.S. Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and should include the following words in the body of the message, “get form.” A sample form and directions will be sent in response.

Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service (although the Commission continues to experience delays in receiving U.S. Postal Service mail). All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission. The Commission's contractor will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, and Priority Mail should be addressed to 445 12th Street, SW., Washington, DC 20554.

Contact the FCC to request materials in accessible formats (braille, large print, electronic files, audio format, etc.) by e-mail at FCC504@fcc.gov, or call the Consumer & Governmental Affairs Bureau at 202-418-0531 (voice), 202-418-7365 (TTY).

The full text of the Further Notice of Proposed Rulemaking is available for inspection and copying during normal business hours in the FCC Reference Information Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554. The full text may also be downloaded at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-30.pdf. Alternative formats are available to persons with disabilities by contacting Martha Contee at (202) 418-0260 or TTY (202) 418-2555.

Ex Parte Rules

This proceeding will be treated as a “permit-but-disclose” proceeding subject to the “permit-but-disclose” requirements under section 1.1206(b) of the Commission's rules (47 CFR 1.1206(b)). Ex parte presentations are permissible if disclosed in accordance with Commission rules, except during the Sunshine Agenda period when presentations, ex parte or otherwise, are generally prohibited. Persons making oral ex parte presentations are reminded that a memorandum summarizing a presentation must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed. More than a one- or two-sentence description of the views and arguments presented is generally required. Additional rules pertaining to oral and written presentations are set forth in 47 CFR 1.1206(b).

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980, as amended (RFA), requires that a regulatory flexibility analysis be prepared for notice and comment rule making proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

As required by the RFA (5 U.S.C. 603), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the SFNPRM. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the SFNPRM provided in paragraph 71 of the SFNPRM. The Commission will send a copy of this entire SFNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the SFNPRM and the IRFA (or summaries thereof) will be published in the Federal Register.

Need for, and Objectives of, the Proposed Rules

This further rulemaking proceeding is initiated to obtain further comments concerning an alternate proposal to assist Tribes seeking to establish new commercial FM service to Tribal communities. In the FNPRM, the Commission proposed an auction bidding credit to Tribes and entities owned by Tribes. The Commission received only one proposal for a potential Tribal bidding credit: To grant Tribes a 35 percent Tribal Bidding Credit (TBC), to be added to any new entrant bidding credit for which they may qualify, to a maximum of 60 percent. The Commission believes this record is inconclusive to adopt a TBC, and believes it is unclear whether and how a TBC could be crafted to advance the dual goals of increasing Tribal ownership of radio facilities and maximizing the value of spectrum through competitive bidding, as mandated by 47 U.S.C. 309(j). On further consideration, the Commission determined that an alternative approach would more effectively achieve the policy goals underlying the Tribal Priority adopted in the First R&O in this proceeding, and be more consistent with its statutory mandate (see 47 U.S.C. 309(j)(6)(e)).

Specifically, the Commission seeks comment on whether to require, as a threshold qualification to apply for a commercial FM channel allotted pursuant to the Tribal Priority, that applicants qualify for a Tribal Priority for that channel. Such an approach is consistent with other procedures used by the Commission, such as those used to reserve vacant FM allotments for noncommercial educational (NCE) use. Additionally, while the Tribal Priority operates as a dispositive preference in the AM commercial and FM NCE application contexts, as currently formulated the priority is not dispositive for FM commercial stations, because a Tribe that adds an FM allotment using the Tribal Priority may still be outbid at auction by a non-Tribal applicant. The alternative approach proposed by the Commission would correct this asymmetry, and would also more effectively ensure that FM allotments added using the Tribal Priority are ultimately licensed to Tribes, who would use such FM channels for their intended purposes of promoting Tribal language, culture, and self-government. The Commission therefore seeks comment on this alternative approach and its potential ramifications, including whether non-Tribal applicants should be allowed to apply for FM allotments added using the Tribal Priority, but for which no Tribe expresses interest. The Commission also seeks additional input from commenters on the TBC, and on other ways in which the Commission could promote commercial Tribal radio service, including comment on potential barriers that may discourage Tribal participation in the broadcast auction and licensing processes.

Legal Basis

The authority for this proposed rulemaking is contained in Sections 1, 2, 4(i), 303, 307, and 309(j) of the Communications Act of 1934, 47 U.S.C. 151, 152, 154(i), 303, 307, and 309(j).

Description and Estimate of the Number of Small Entities to Which the Proposed Rules Will Apply

The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the proposed rules. The RFA generally defines the term “small entity” as encompassing the terms “small business,” “small organization,” and “small governmental entity.” In addition, the term “small Business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

Radio Stations

The proposed rules and policies potentially will apply to all AM and FM radio broadcasting applicants, and proponents for new FM allotments, who qualify for the Tribal Priority adopted in the First R&O in this proceeding. The “Radio Stations” Economic Census category “comprises establishments primarily engaged in broadcasting aural programs by radio to the public. Programming may originate in their own studio, from an affiliated network, or from external sources. The SBA has established a small business size standard for this category, which is: Such firms having $7 million or less in annual receipts. According to BIA Advisory Services, L.L.C., MEDIA Access Pro Database on January 20, 2011, 10,820 (97%) of 11,127 commercial radio stations have revenue of $7 million or less. Therefore, the majority of such entities are small entities. We note, however, that in assessing whether a business concern qualifies as small under the above size standard, business affiliations must be included. In addition, to be determined to be a “small business,” the entity may not be dominant in its field of operation. We note that it is difficult at times to assess these criteria in the context of media entities, and our estimate of small businesses may therefore be over-inclusive.

Description of Projected Reporting, Recordkeeping and Other Compliance Requirements

The proposed rule and procedural changes may, in some cases, impose different reporting requirements on potential radio licensees and permittees, insofar as they would require or allow certain applicants to demonstrate their qualifications to apply for an FM channel allotted using the Tribal Priority. However, the information to be filed is already familiar to broadcasters, and the information requested to claim the Tribal Priority is similar to current section 307(b) showings, so any additional burdens would be minimal.

To the extent that other applicants would be disadvantaged by Tribes qualifying for the Tribal Priority and the proposed alternative “threshold qualifications” approach, the Commission believes that such burdens would be offset by the fact that the Tribal Priority is designed to redress inequities in the number of Tribal radio licensees, compared to the population of Tribal citizens in the United States and the fact that some of these citizens were deprived of their original Tribal lands. The Tribal Priority, then, not only helps the Commission to meet its goals of ownership and program diversity, but also furthers the Federal government's obligations toward Tribes to assist them in promulgating Tribal languages and cultures, and to support Tribal self-government. The approach proposed by the Commission would also apply only to FM allotments added to the Table of Allotments using the Tribal Priority, and thus would apply only to proposed facilities serving primarily Tribal communities. Adoption of the threshold qualifications approach would thus assist Tribes in pursuing commercial radio licensing opportunities and would enable ownership of facilities added to the FM Table of Allotments by Tribes or Tribal-owned entities that are charged with promoting Tribal self-governance.

Steps Taken To Minimize Significant Impact on Small Entities, and Significant Alternatives Considered

The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities (5 U.S.C. 603(b)).

In the SFNPRM, the Commission seeks to provide additional opportunities for participation by Tribes seeking commercial radio facilities, especially FM commercial stations. The Commission seeks comment as to whether its goals could be more effectively accomplished through the use of a “threshold qualifications” approach, limiting applications for Tribal-priority-added FM allotments to those filed by Tribes or Tribal-owned entities. The Commission is open to consideration of alternatives to the proposals under consideration, as set forth herein, including but not limited to alternatives that will minimize the burden on broadcasters, most of whom are small businesses. There may be unique circumstances these entities may face, and we will consider appropriate action for small broadcasters when preparing a Third Report and Order in this matter.

Federal Rules Which Duplicate, Overlap, or Conflict With, the Commission's Proposals

None.

This document is available in alternative formats (computer diskette, large print, audio record, and Braille). Persons with disabilities who need documents in these formats may request them by e-mail at FCC504@fcc.gov, or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

Ordering Clause

Accordingly, it is ordered, pursuant to the authority contained in sections 1, 2, 4(i), 303, 307, and 309(j) of the Communications Act of 1934, 47 U.S.C. 151, 152, 154(i), 303, 307, and 309(j), that this Second Report and Order, First Order on Reconsideration, and Second Further Notice of Proposed Rule Making is adopted.