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FCC okays revenue services in DTV bitstream

Originally published in Current, Oct. 22, 2001
By Dan Odenwald

In a victory for public television lobbyists, the FCC ruled earlier this month that stations can use excess capacity in their digital TV channels to make money as long as they devote a "substantial majority" of their capacity to their primary mission of education.

Chairman Powell and Commissioner CoppsDollars raised from what the FCC calls "ancillary and supplementary" uses of the spectrum may give stations critical help as they launch digital transmission, public TV lobbyists say. No longer will the system be kept "barefoot and pregnant" by opponents who seek to keep public TV from moving toward self-sufficiency, says APTS President John Lawson.

The commission's 3-1 decision ends a five-year debate between public broadcasters, who argue for the most flexible use of their digital spectrum, and public-interest media activists, who want to narrowly restrict that use. Michael J. Copps, the commission's lone Democrat, dissented. (The fifth seat on the FCC is vacant.)

Public TV's victory was incomplete, however. The FCC also ruled that public stations, like their commercial counterparts, must pay a tax of 5 percent of the gross revenues generated by use of their excess spectrum. Lobbyists had argued against the fee.

"This is a historic decision," Lawson says. "In effect, this represents a slight deregulation of public TV. There are new opportunities for stations as well as new responsibilities to manage them wisely."

Critics of the ruling warn that public TV is in danger of losing its soul. The new leniency "has the potential to warp the nation's image of public television and to endanger the identity and even the viability of a national treasure," Copps wrote in his dissent.

Some press coverage has predicted that the FCC decision would have extreme consequences, such as broadcast advertisements and the leasing of entire multicast channels.
"The press have not provided the proper context in which they are reporting this decision, and our viewers are going to get the wrong impression," says Dan Alpert, station manager of Detroit Public Television, in a memo to system colleagues. "The flexibility [in carrying commercial services, permitted by the FCC decision] is explicitly limited to nonbroadcast, subscription-based services that require special receivers, and only to those who subscribe to them."

Most public TV stations have no clear plans for use of excess digital bitstream, according to station execs. Though they believe it holds potential for revenue, no one has identified a viable business model for its commercial use.
Within these limits, pubcasters are contemplating ways to turn bitstream into profit. Some might lease digital transmission capacity to paging services, cell phone companies or data delivery services. Or they might develop videoconferencing and video-on-demand services.

Others could lease capacity to universities and school districts for transmitting course content. For example, Detroit PTV is considering a closed-circuit training or high-speed data service for school systems in its viewing area. By leasing spectrum for this purpose, the station could generate revenue to fund its universal, over-the-air service.

Whatever the business model, public TV spokespeople say profits will mean a better service. Agreeing, FCC Chairman Michael K. Powell congratulated public TV for aspiring to offer more educational programming and acknowledged that the system needs ways to raise the necessary money.

The current federal appropriation of $365 million barely covers 15 percent of what it costs to put one analog channel on the air, APTS says. Without significant federal support, public TV won't be able to buy digital equipment and operate the four to six multicast program streams that a DTV channel can carry. The FCC's decision allows public broadcasters to further diversify their funding base--cashing in on demand for spectrum.

Harold Feld, associate director of the Media Access Project, says he understands that public TV faces a funding crunch, but argues the decision may grease a slide toward commercialism. It blurs the mission and violates the law, he said, even if the transmissions aren't directed at the general public.

Feld objects to the very notion of excess spectrum. Shouldn't public TV use all of its spectrum for education? he asks. If not, why not turn it over to public-access programmers so they can escape the limitations of the cable world?

Ultimately, Feld believes, the decision will do more harm than good. If public TV offers commercial services, it may alienate donors and spur its enemies on Capitol Hill, who are always ready to strip pubcasters of federal support. This may already be happening. On the day of the FCC decision, Rep. Cliff Stearns (R-Fla.) proposed cutting $12 million from CPB digital funding because of stations' newly acquired ability to raise money. Although the amendment was defeated 107-312, it was just a first attempt.

"Essentially this is a Faustian bargain where the more public TV gets into this stuff, the more it becomes dependent on commercial revenue streams, and the more it will alter its character," Feld said.

Critics such as Jerold Starr of Citizens for Independent Public Broadcasting are troubled by the vagueness of the term "substantial majority." If public TV ends up dividing its DTV channels into six multicast streams, for example, Starr expects it will lease two for profit. He expects viewers would never see HDTV, the original reason for the digital transition.
Despite concerns of public-interest lobbies, APTS rejects the notion that public TV is selling its birthright to pay the bills. For-profit services riding on public TV's airwaves will not be bundled with the PBS brand. In fact, the closed-circuit services will be available only to subscribers. General viewers won't even know the services are there.

In fact, APTS argues, stations already lease spectrum for commercial purposes in the analog world, though few people know about it. Using the vertical blanking interval (VBI), stations have been datacasting for years. The FCC's decision only expands on that practice.

In October 1999, APTS agreed to voluntary guidelines for commercial use of stations' excess DTV capacity. The guidelines stipulate that for-profit services can't detract from the station's mission, for-profit content can't conflict with mission, firms that lease spectrum can't influence the station's editorial decisions, and licensees must file an annual statement certifying that they follow the guidelines.

The bottom line, Lawson said, is that the money raised by leasing spectrum will enhance the public service mission of public TV. Without more money from Congress, he contended, public TV must seek new ways to stay in business in the digital environment.

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Copyright 2001


Public TV seeks flexibility in money-making uses of DTV, 1999.


Text of FCC ruling in Mass Media Bureau Docket 98-203, statement by FCC Chairman Michael Powell, dissenting statement by FCC member Michael Copps