CURRENT ONLINE

Marilyn Mohrman-Gillis Gigi Sohn
Mohrman-Gillis (left) said public TV would still use DTV channels "primarily" for their missions. "Do they mean 51 percent? Eighty percent?" responded Sohn (right).

Public TV seeks 'flexibility' in
money-making uses of DTV

Originally published in Current, Feb. 22, 1999
By Geneva Collins

Public TV should be allowed to use excess digital transmission capacity to generate revenue, and two pre-existing FCC limitations from the analog age offer sufficient protection from possible abuse of the privilege, America's Public Television Stations has told the FCC.

The lobbying group filed its argument Feb. 16 [1999], in response to the commission's request for comments on how public TV should be able to use ancillary and supplementary services for money. The FCC also sought comment on whether fees should be assessed, as it ruled last November for commercial broadcasters [earlier article]. [The FCC's docket number is MM 98-203.]

The two constraints--that public television stations be used primarily to provide a noncommercial educational service and that the offering of ancillary or supplementary services not interfere with a station's provision of public telecommunications services--provide the industry with the flexibility it needs to fund the expanded mission-related activities that digital technology provides, APTS said in the filing.

"As you know very well, public television stations operate on very marginal budgets and depend upon funding from a combination of very fragile funding services," said APTS Vice President Marilyn Mohrman-Gillis. "At the same time, converting to digital technology and providing digital services while maintaining the analog ones costs money. That's the public-interest basis for asking the commission to allow us to earn revenue."

"She's saying, 'Trust us, pity us, we're public broadcasting'," countered Gigi Sohn, executive director of the Media Access Project, a public-interest law firm. "But they already have licensees that are abusing the underwriting rules. I know the vast majority of public television stations have no interest in doing advertiser-supported programming, but rules are made for the bad guys, not the good guys."

Sohn, representing the United Church of Christ, Independent Television Service (ITVS) and several public-interest groups, and APTS appeared to be the two principal parties filing comments with the FCC on the topic. However, National Datacast, a for-profit subsidiary of PBS, filed papers asking the FCC not to apply new restrictions on its data transmission service (even when it's advertiser supported) when its present analog service moves to DTV. Datacast sells a limited amount of transmission capacity on the vertical blanking interval (VBI) of public TV stations.

The central point of Sohn's filing was that the FCC does not have the authority to permit noncommercial TV stations to carry advertisements--only Congress does. She said her clients are sympathetic to public TV's need for financial support, and they only oppose revenue-generating activities that would lead to advertisements airing on PTV digital spectrum (such as leasing capacity to a Home Shopping Network or other advertiser-supported network).

In its filing, APTS never defined what is meant by "primarily" when it sought flexibility on using its digital spectrum "so long as the digital channel is used primarily to provide a noncommercial educational service." Mohrman-Gillis said "'primarily' will be determined by the local licensee with its local board. We're not assigning any percentages to the word. We think this is something that could be interpreted by the commission on a case-by-case basis."

Sohn was irked by APTS's nonspecific use of the word "primarily" to indicate how much of transmission capacity would be used for stations' mission. "Do they mean 51 percent? Eighty percent? If they're so dedicated, let's have a percentage. It's very easy to quantify the digital spectrum."

Digital broadcasting is a technology still in its infancy, and many public TV stations don't yet have precise plans for how they will use their digital capacity.

However, with broadcasters bandying about such pie-in-the-sky money-making possibilities as data transmission (stock quotes, for example), video subscription services, or leasing capacity to a third party (a library, school, or even an advertiser-supported network), it's understandable that some station execs might feel like kids just given the keys to the candy store [earlier article on revenue potential]. Like Sohn, some inside the system apparently expressed misgivings about how much of the spectrum should be devoted to commercial applications.

Duggan drops separate position

PBS President Ervin Duggan, for instance, attempted this month to stake out a position contrary to the consensus developed by APTS's Legislative Advisory Group, according to several station executives. Duggan, an FCC commissioner before he came to PBS five years ago, suggested then that PBS would file its own comments with the FCC that called for a less commercial approach.

The suggestion generated "one heck of a go-'round on PBS Express," said one station manager who also favored a lower ratio of commercial uses, but accepted the LAG position out of deference to the different economics among stations.

"I let PBS know that, if they took a position contrary to the consensus position developed by the Legislative Advisory Group, in the case of my corporation, they would be harming rather than helping our future prospects here," said Charles Sydnor, president of WCVE in Richmond. "As a community licensee, we're looking to the possibility of at least having some flexibility to use our excess digital capacity to make money."

Burnie Clark, president of KCTS in Seattle, also spoke up strongly against PBS staking out a position contrary to that of its member stations, according to several sources. Clark was traveling in Japan and could not be reached for comment.

The APTS Board sent a "communication" to PBS Board members on the issue, according to Tom Howe, executive director of UNC-TV and chair of the PBS Board's Program Policy Committee. The issue came up only briefly during the PBS Board's recent retreat in California, when Duggan said that PBS would not file with the FCC. "If Ervin had said that they were going to file, there would have been a more lengthy discussion," said Howe.

PBS had "conversations with APTS and stations and opted in this case to defer to APTS and its role representing the stations," said Stu Kantor, spokesman. [In an interview later in February, Duggan declined to discuss his views, saying that they had been expressed privately to stations.]

In its comments to the FCC, APTS noted that 30 percent of its member stations (according to a recent survey) do not intend to use any of their digital capacity for non-mission-related services. Mohrman-Gillis said most of these are licensees who receive substantial funding from state networks or universities. She also said that most of the revenue-generating ideas proposed by stations were mission-related, such as leasing capacity to educational institutions in the community for telecourses. These would not be considered "ancillary or supplementary" even if a PTV station received compensation for the service.

Precedent set with VBI

Central to APTS's argument to the FCC for the right to earn revenue from digital capacity is that the commission has already set a precedent in letting stations engage in a variety of ancillary services, including leasing excess capacity on the VBI. The filing also said nascent DTV technology should not be burdened with restrictions; the FCC can always add them later if abuses occur. Sohn acknowledged that she had not researched the VBI decision and would address that issue in her replies to the FCC.

As for the fee issue, APTS's filing argued that public television stations shouldn't have to pay fees, because all revenue will be funneled back into mission-related activites. The FCC already has decided that commercial broadcasters will have to pay fees equal to 5 percent of gross revenues earned from excess digital capacity.

Sohn accused APTS of wanting to have its digital cake and eat it, too.

"I think APTS is being hypocritical when they say to the FCC, 'Well, the law doesn't distinguish between noncommercial and commercial stations in regard to ancillary and supplementary income, so let us do it.' Then they say, 'We want you to exempt us so that we don't have to pay fees like commercial stations'." Her filing said noncommercial stations should be exempt from fees "if and only if they do not carry commercial advertisements."

"We're not being hypocritical, we're being extraordinarily consistent and straightforward," replied Mohrman-Gillis. "The whole key here is whether the revenue is going straight into the pockets of shareholders or back into the mission."

The next phase in the FCC's rulemaking process is for parties to file replies to the initial comments. That deadline is March 16 [1999]. A final ruling from the commission is not expected for months.

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Station execs discuss DTV revenue potential

Excerpted from a report on the Jan. 8-10 [1999] meeting of the National Forum of Public Television Executives in Phoenix, originally printed in Current, Jan. 25, 1999

Encouraged by the urgings of venture capitalist Geoff Yang, the forum asked its 13-member council to evaluate potential entrepreneurial uses of the stations' aggregated digital TV transmission capacity. The vote was 52-2.

"Yang helped a lot of folks establish our value in the marketplace," said Leon Collins, incoming chairman of the forum and g.m. of WFUM in Flint, Mich.

Marilyn Mohrman-Gillis, v.p. of America's Public Television Stations (APTS), said the lobbying group will ask the FCC to require only that public TV stations use their DTV frequencies "primarily" for noncommercial service, letting stations use up to 49 percent of capacity for revenue generation. [Use of that much of channel capacity for revenue generation may never happen, however, because stations are already discussing expansion of their own services, not only by multicasting several simultaneous streams of programming, but also by carrying HDTV, which takes up a large part of channel capacity.]

Public TV's excess capacity--available to sell to paying customers--will vary continuously with the amount of movement and detail in the video transmitted, said Jack Galmiche, a consultant to Oregon Public Broadcasting. When less data is being sent for video, there's more room for "opportunistic" transmission of data for customers, he said.

However, forum Chairman Burnie Clark said later, it's not clear whether the excess capacity will coincide with the time when customers want their data transmitted.

Station execs listened intently as venture capitalist Geoff Yang exulted in the Internet bull market. "It really is a gold rush out there," said Yang, a partner in Institutional Venture Partners, a firm that invests in startup companies aiming to crack "humongous markets."

But the Internet may be only "a dress rehearsal" for DTV, which offers "mind-blowing" opportunities, Yang said. He said he'd love to join public TV in a DTV venture. "You guys are holding on to very valuable real estate."

In developing new services using those DTV frequencies, Yang recommended that pubcasters take the role that they do best and bring in partners to handle unfamiliar roles. He recommended that pubcasting could: (1) go it alone, creating new services and owning the whole thing; (2) develop joint ventures with startup companies; or (3) outsource the creation of new services and receive license fees.

Yang did not recommend the fourth option: leasing out transmission capacity and receiving carriage fees, which would involve long-term, potentially unhappy commitments.

In high-tech markets, he said, leading companies typically establish market share early on. "You must jump in and figure it out along the way," he advised. "By the time it becomes clear, the game is over."

With new uses of video joining the data stream, Yang saw no danger that there will be any unused DTV transmission capacity. "Having too much bandwidth is like being too rich or too beautiful," he said.

Station execs liked Yang's decisive manner. "He speaks my language," said Rob Shuman, president of Maryland PTV. "He's telling us, 'Guys, you've got assets out here. You've got to figure out how to leverage your assets. You'd better learn to 'ready, shoot, aim!'"

 

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How far can public TV go in revenue uses of DTV?

Originally published in Current, Nov. 23, 1998

The FCC opened a rulemaking last week to consider what kind of revenue-generating services should be permitted on public TV's digital channels.

APTS and PBS last year asked the commission to clarify how stations can use their excess capacity, and whether they would pay the FCC a fee on revenue earned, according to APTS Vice President Marilyn Mohrman-Gillis.

Those are timely questions with the commission ruling last week that commercial DTV broadcasters will have to pay 5 percent of gross revenues for "ancillary and supplementary" uses of DTV capacity--basically, any service other than free broadcasting.

Most commissioners said they recognize that pubcasters need funding for the digital transition as well as operations.

Outright commercial uses of pubcasters' DTV spectrum will face strong opposition from public-interest groups such as the Media Access Project. MAP Executive Director Gigi Sohn, attending the meeting, said public TV would be "foolish" and self-destructive to pursue the right to lease capacity to commercial programmers.

Sohn's remark was "a great sound bite," said Mohrman-Gillis, "but it can't be further from the truth." She said an APTS survey, yet to be released, indicates that stations plan to use only a minority of DTV capacity for revenue generation. She contends that digital channels have capacity enough for multiple educational channels as well as revenue-generation.

Would the FCC let a noncommercial broadcaster lease out DTV capacity to a commercial network that would sell ads? Buck Logan, an FCC Mass Media Bureau staffer, said the commission will seek comment on "how far we should go in that direction."

Mohrman-Gillis said a station could argue that leasing capacity to an advertiser-supported network would fall within "ancillary and supplementary" uses. But stations are talking about less commercial kinds of revenue generation, she said, such as leasing channel capacity for data transmission, software downloading, tuition-supported educational services and teleconferences.

"I think we need to assume a level of integrity and responsibility that has already been there [at stations]," she said, "and not presume the worst."

 

To Current's home page
Current Briefing on DTV
Later news: FCC rules in 2001.
Outside link: FCC's rulemaking proposal in Docket 98-203, November 1998, on the FCC's website in Word Perfect format.

 

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