Remarks by

Chairman William E. Kennard

Federal Communications Commission

Before the

National Association of Broadcasters

Las Vegas, Nevada

April 11, 2000

\"Broadcasting and Digital: The Best of Two Futures\"

(As Prepared for Delivery)

Thank you Eddie for that introduction.

It is good to be here with you in Las Vegas for my third address to you
as Chairman of the FCC. I feel privileged to have the opportunity to
address the first National Association of Broadcasters convention of the
new millennium.

Innovators of Broadcasting\'s Past

Since this is the first convention of a new century, I thought I would
start today by talking about broadcasting in the last century. On my
flight here I was leafing through a wonderful book by the journalist
David Halberstam, The Powers That Be, about the rise of American
broadcasting. The book is full of vivid characters ‑ ‑ men and women who
dominated your industry in the early years. And reading this book
reminded me that the history of broadcasting is, at its best, a story of
embracing new ideas, imagining the future, and harnessing new
technologies.

It reminded me that no one embodied this spirit of innovation better
than Bill Paley, one of the fathers of modern broadcasting.

In 1928, Paley\'s father used \$400,000 of the family fortune and bought
CBS radio. He told his son to go run the company. No one thought that
radio would amount to very much. NBC was only two years old and that
company was struggling. CBS was in an even more precarious position. It
had only 16 affiliates. It lost money. It didn\'t own a single radio
station. And Paley was 27 years old in 1928 and a man with no
broadcasting experience. He seemed an unlikely figure to take a new
technology and a young business and transform them into one of the most
influential forces in America.

Paley, of course, proved himself to be a brilliant programmer, who
brought talent like Bing Crosby and Jack Benny and George Burns and
Edward R. Murrow to CBS. But Paley\'s true brilliance was in recognizing
that to fulfill radio\'s potential, he had to devise a new business
model for radio.

Paley understood that the power of radio as a medium was in its reach.
He knew that distribution was everything, so he did away with old
business models and gave affiliates free access to network programming.
He did everything he could to reach the widest possible audience because
he saw advertising as the key to radio\'s future.

And while I was thinking about Paley\'s journey from young entrepreneur
to broadcast giant, I was struck by some of the similarities between his
time and our own. Paley stood at a crossroads of new technologies, major
changes in the economy, and new ways of thinking about and doing
business. Today, broadcasters live in an age of new opportunities made
possible by the rise of digital technologies.

Today\'s Pioneers

The NAB convention this year is all about convergence. Convergence is
not just about technology. It is fundamentally about finding new
business models. It means finding a new business model for television in
the digital age.

Frankly, I become frustrated sometimes when I hear people say that
broadcasters cannot or will not be innovators when it comes to DTV ‑ ‑
that they are stuck with a business model that they just will not
change. I also get frustrated when I hear some broadcasters say that
they want to delay the DTV transition, that they have not developed a
business model, so they need more time to make this transition. Or
worse, I become very frustrated when people tell me that the success of
digital television lies in government developing the business model by
micromanaging the transition.

All of these views are wrong‑headed because this digital transition for
broadcasting is inevitable. It will happen as sure as day follows night.
Why? Because the broadcast industry has absolutely no choice in the
matter.

All of broadcasting\'s competitors are going or have gone digital.
Cable, satellite radio, satellite TV, and the whole alphabet soup of
promising new broadband technologies: Multipoint Distribution System
(MDS), Local Multipoint Distribution System (LMDS), 3rd generation
Personal Communication System (PCS), Digital Subscriber Line (DSL).
Americans have awakened to the power and functionality of digital; they
want more and they are never going back to the analog‑only world. Analog
is over. Delay is simply not an option. Resistance is futile.

So I think the important questions that remain are how fast it will
happen, and who will be the pioneers among the broadcast industry who,
like Bill Paley, will invent the new business model for this medium.
What will be the killer application or applications that will reinvent
television for the age of broadband Internet?

I believe that the same innovative spirit that transformed broadcasting
in the beginning of the last century will again transform broadcasting
at the beginning of this century.

Look around this convention this year and you see that the spirit of
Bill Paley lives on in today\'s innovators who are building new business
models for the digital age. People like Michael Lambert, the CEO of
iBlast, who recently formed a partnership with traditional media outlets
to bring digital content to television. And Joseph Horowitz of Geocast
who has joined forces with Hearst‑Argyle and Belo. And Don Cornwell and
Stuart Beck of Granite Broadcasting who envision a nationwide broadband
network built with the broadcast spectrum.

Broadcasting\'s Strength

I also believe that the same inherent value of your medium revealed by
Bill Paley 75 years ago is still the key to your success today. It\'s
still all about distribution.

Broadcasting\'s strength lies in the ability of stations, both
individually and collectively, to distribute popular content that large
numbers of people want to receive simultaneously, like the Super Bowl,
or have available simultaneously for viewing at will, like stock quotes.
It\'s an extremely efficient way to deliver content, and collectively,
no industry is more ubiquitous or more effective in doing this.

The architecture of the Internet, by contrast, is very efficient in
delivering content targeted to a specific user, such as e‑mail and web
browsing. But when you look at what is happening in the Internet, it
turns out that entrepreneurial companies are using satellite systems and
other techniques to move popular content to the edge of the network,
near the end user ‑‑ for example, to be cached by a local Internet
Service Provider (ISP). That accomplishes two things. It eliminates the
cost of repeatedly or simultaneously down‑ loading identical content
across the Internet backbone from a distant server, and it greatly
improves performance by avoiding congestion and delays in the public
Internet.

The Digital Opportunity

No industry is better positioned than broadcasting to transmit content
that is frequently accessed to the end user.

That\'s why I have tried to foster partnerships between companies that
will bid in our upcoming auctions for 700 MHz spectrum ‑ ‑ the so‑called
60‑69 auction ‑ ‑ and broadcasters who operate in that spectrum. This is
a marriage just waiting to happen. And when it does, it will accelerate
convergence and speed the DTV transition.

Convergence means using the functionality of digital to blend the best
of broadcasting ‑ ‑ the ability to reach many with the same information
‑ ‑ with the interactive power of the Internet ‑ ‑ the ability of
individual viewers to store and customize information in digital form.

And let\'s not forget the digital opportunities for radio.

These features that empower consumers of digital products will be
imported to the radio world as well.

Today, when I want to listen to a story on National Public Radio that
has already been broadcast, I have to go to the NPR web site. Why can\'t
that technology be incorporated into my receiver, so that I can store
and retrieve any newscast or talk show or public affairs show I want,
when I want it. I could program my radio to tell me every time Rush
Limbaugh mentions my name. That would be fun. The technology is there.
And digital radio technology will make it real for millions of Americans
in the next few years.

I believe, and many of my colleagues in government believe, that digital
technology is the biggest opportunity for broadcasters in a generation.

We also believe that government has made a huge investment in making it
possible for TV stations to make the transition to digital by giving
broadcasters the spectrum to make the transition. And we have invested
lots of our time and resources in promoting the transition. At the FCC
meeting this coming Thursday, for example, we are scheduled to propose
rules on the two outstanding DTV compatibility issues, labeling and copy
protection.

Public Interest

So we are understandably concerned when some broadcasters tell us that
they are not interested in having a meaningful debate about the public
interest obligations of broadcasters in the digital age.

I know that many broadcasters provide many wonderful services to their
communities. And you should be proud of what you do. But the disconnect
between us seems to be that many in your industry believe that a
station\'s service in the public interest is whatever that broadcaster
happens to be doing to serve the public interest. Now, that may make
sense for many broadcasters who are responsible. But you and I know that
some are, some are not.

And to say that broadcasters contributed \$8.1 billion to serving the
public interest is interesting, and certainly a valuable contribution ‑
‑ even if one quibbles with the way the number was calculated.

But that number alone does not begin to answer all of the relevant
questions. Such as, are there public needs not being served? How can
digital capabilities enhance broadcasters\' ability to serve their
communities? How do we identify areas not served and find ways for
broadcasters to serve them? Let\'s work together in the coming months to
bring 21st century imagination to our dialogue about the public
interest.

Low Power FM

And here is another question on my mind. Why, amidst all this
opportunity for broadcasters, have you chosen to muster your
considerable resources to deny churches and schools and community‑based
organizations just a little piece of the broadcast pie? I am talking
about low power FM radio.

In every one of my speeches to NAB over the last two years, I have asked
this same question. Why won\'t you work with the FCC to find ways for
low power FM to co‑exist with full power stations?

Why, when your communities have so much to gain from a new noncommercial
voice on the airwaves?

Why, when these non‑commercial voices do not in any way threaten the
existence of full power stations.

Why have you squandered your goodwill to fight churches and schools and
community organizations?

You will say interference. But interference is and always has been a
solvable problem. I am committed categorically to protecting every
incumbent FM service from harmful interference, from the radio reading
services to the commercial stations and everything in between.

The FCC has credibility in fighting interference. I have shut down more
pirates than any chairman in the history of the agency, yet you think
that the Commission would create an interference nightmare that the
agency would be responsible for curing.

I again renew my offer to work with you ‑ ‑ in the reconsideration
process now underway at the FCC ‑ ‑ to find ways to address your anxiety
about the low power FM service.

The future of digital broadcasting is very bright. There is a great
excitement here in Las Vegas about all of the possibilities.

Here in our midst are the pioneers who will bring to your industry the
same innovative spirit that made your industry great and that will
ensure its greatness in the digital age.

I want to work with you to make sure that all Americans reap the
benefits.

Thank you.

‑‑FCC‑‑