# Comments of Harold Furchtgott-Roth {#comments-of-harold-furchtgott-roth .unnumbered}

# Commissioner {#commissioner .unnumbered}

# Federal Communications Commission {#federal-communications-commission .unnumbered}

#  {#section .unnumbered}

before the Michigan Association of Broadcasters

##### September 10, 1999 {#september-10-1999 .unnumbered}

###### Mackinac Island, Michigan {#mackinac-island-michigan .unnumbered}

It is a great pleasure to be here in Michigan, celebrating the 50^th^
anniversary of our association. I would like to speak today about four
topics: the lobbying of specialness, the transition to digital
television, low-powered FM radio, and your special honoree---Jim Quello.

# **Lobbying of Specialness**

It is a great honor to be invited to the State Broadcast Association
meetings. Broadcasting is an important industry, an important part of
America. Some would even say, a *special* industry. "Special" can mean
different things. Some good. Some not so good. But always, *special*
means *different*. Different from everyone else.

In the world of regulation, special is not always good. Consider the
FCC. Lobbyists for different companies and industries come to the FCC
every day.

They come to me and say: "regulate less." They don't say they are
special. Indeed they say that they are no different from anyone else,
and everyone should be regulated less.

To the extent a lobbyist claims "specialness," it is that a claim that
they are less privileged if anything. Someone to be pitied. Someone in
need of help. Someone in need of less regulation than everyone else.

These lobbyists don't come in and brag about all of their good deeds.
They do not come to tell me about how much community service they have
done. They don't have fancy reports telling about all of the community
service sponsored by their business or industry. They don't have video
cassettes describing their good deeds.

Have these businesses done good deeds? Of course they have. They just
don't wear it on their sleeve. They would find it offensive and
insulting to be asked about it. They would fear it egotistical and
self-aggrandizing if they bragged about it.

Unless, of course, they were broadcasters.

Is there something different about how the broadcast industry lobbies
the FCC from other industries?

Some people say that broadcasters are different because you have FCC
licenses. It is true that you have FCC licenses.

Practically everyone before FCC receives FCC licenses. We have hundreds
of thousands of licensees. We transfer tens of thousands every year.

Count 'em. Hundreds of thousands of licensees. They are subject to the
same public interest obligations of broadcasters. Do you think the FCC
asks hundreds of thousands of licensees about each of their good deeds?
Do you think we review hundreds of thousands of video casettes?

Having an FCC license is not special. Your local Kiwanis Club or othr
civic organization may have a license. They have a license not because
they do good deeds, but simply because they applied.

Who has an FCC license? Consider the following:

a.  local church

b.  local school

c.  local taxi cab company

d.  cable operator

e.  DBS operator

f.  Telephone company

No one asks these people to list their good deeds.

Broadcasters are treated differently.

You say you are different, and the FCC says you are different.

## Broadcasting is different. So too is cablecasting, or running a DBS system, or running a church.  {#broadcasting-is-different.-so-too-is-cablecasting-or-running-a-dbs-system-or-running-a-church. .unnumbered}

## All right, you are different. So what?  {#all-right-you-are-different.-so-what .unnumbered}

##  {#section-1 .unnumbered}

## The FCC says that you need more regulations. Special regulations just for broadcasters. Not for anyone else. {#the-fcc-says-that-you-need-more-regulations.-special-regulations-just-for-broadcasters.-not-for-anyone-else. .unnumbered}

Federal labor laws, that apply to every business in America and that are
enforced vigorously, are not enough. You need special ones, additional
ones that apply just to broadcasters.

Federal antitrust laws, that apply to every business in America and that
are enforced vigorously, are not enough. Just ask Bill Gates. You need
special ones, additional ones that apply just to broadcasters.

Federal EEOC rules, that apply to every business in America and that are
enforced vigorously, are not enough. You need special ones.

Look around your community. Talk to other business owners, managers, and
employees. Ask them if they have to comply with federal laws and
regulations. They will give you an earful. They have plenty of federal
laws and regulations to deal with. And they do. And they probably can't
even tell you how many FCC licenses they hold.

You know what? You have to comply with every law and rule that other
businesses in your community have to comply with, plus you have to
comply with special FCC rules that just apply to you, the broadcaster.

Moreover, the FCC says we need to know about your community service as
broadcasters.

a.  FCC seems to think you are innately bad.

b.  But for FCC, you would do bad deeds.

c.  The only reason you do anything good is because FCC makes you.

d.  American communities would die without FCC intervention.

Oddly, we don't ask the local bank or hardware store about their good
deeds. Or the local Rotary Club or the local church, or any of the
hundreds of other FCC licensees in your community. We don't even ask
cable operators or DBS about their good deeds. Most of these licensees
do lots of good deeds. They support local charity drives, sponsor local
little league teams, listen to the needs of their community and respond
accordingly.

They do all of this not because the FCC, or any else in Washington,
pretends to be Santa Claus and keeps a list of who has been naughty and
who has been nice. Good citizens, individual or corporate, do good deeds
because that what it means to be a good citizen.

I believe FCC treatment of broadcasters is insulting.

You do good deeds because you are good, and good citizens, not because
FCC coerces you.

Listing good deeds is demeaning.

Your licenses are fundamentally no different from anyone else's.

You should be treated the same as everyone else -- less FCC regulation.

Some people may believe that we have all of these special rules for
broadcasters because that is what the law requires.

Wrong. The Commission has simply made up these rules, and broadcasters
have played along with these special rules for generations. It is time
that the broadcast industry stands up for itself and says "No more." It
is time for the FCC to do the job we were hired to do: follow the law as
it is written and not reinvent it.

# **Digital Television**

There are other problems with being labeled "special." In the case of
the broadcast industry, you are perceived not only as special, but also
as especially rich. Filthy rich.

In Washington, DC, it is intellectually respectable to say that
broadcasters received tens of billions of dollars in windfall benefits
when Congress mandated the transition to digital television.

If you don't believe the Washington politicians, just ask *the New York
Times* and the *Wall Street Journal*. They say the same thing. You can't
think of a value that is bigger than the amount some people think you
all have been enriched at taxpayer expense.

Yup. You are filthy rich at taxpayer expense. There are only a couple of
thousand television licenses in the country, so each of you must have
raked in tens of millions of dollars in windfall profits. Maybe more.
That is what people in Washington believe.

Yesterday you were mere paupers. Today you are filthy rich. Rich at
taxpayer expense. Consequently, it is only appropriate for the FCC to
impose any and all conceivable burdens and expenses on you.

You want to convert to digital television? Go ahead and buy the
equipment. It will only cost ten or twenty million dollars. Pocket
change compared to how much you were enriched.

And while you are at it, buy the new tower, buy the new land, get the
environmental clearances, and deal with countless government agencies.
What a few year's delay to you? Or what difference does it make how many
tens of millions dollars all of this will cost?

And how about some new programming. Digital programming. It is free,
isn't it? That's what everyone in Washington tells me.

Oh, and I am sure that all of your good friends at the networks will be
generating lots of free programming for you. They'll just give it away.

You may have to pay for it? Oh, well.

You're rich! Aren't you?

In all seriousness, the costs of the transition to digital broadcasting
are substantial, while there are limited, if any, opportunities for
additional revenue. These substantial costs are roughly the same for
large market broadcasters and for small market broadcasters. Large
market broadcasters, naturally, can absorb these costs more easily than
can small market broadcasters.

Make no mistake: the transition to digital broadcasting is happening.
Large market broadcasters are on track. I am concerned, however, about
what happens in smaller markets. I also am concerned about what happens
to broadcast operations that rely extensively on translator services
that are not directly covered in the digital transition plan.

### Public interest obligations {#public-interest-obligations .unnumbered}

Some people think that you are so rich that the FCC is thinking about
asking for a little help with some of our social and political programs.
We will call it "new public interest obligations for digital
television."

It sounds nice, doesn't it? If you thought the old public interest
obligations were fun, wait until you see these. They are not actually in
the law, but who cares? You are rich!

Of course, these new public interest obligations will apply just to you.
Not to cable. Not to satellite. Not the to the Internet. Because you are
so special.

We may even ask you to provide some free air time for politicians. You
will like that. Air time is free for you, isn't it? So why not share
some of it with some politicians?

Sure, you won't be able to sell as many paid advertisements, but you
don't really need the money\--do you?

And I am sure that your viewing audience will be delighted to listen to
free political advertisements. Why, all of those viewers who are
watching ESPN and CNN will suddenly switch over to watching your local
broadcast signal just for the opportunity to see the free political ads.
Of course, ESPN and other cable channels won't be required to have any
free political ads.

There is a fundamental principle in economics that if something that
used to be costly suddenly becomes free, demand will go up. Such will be
the case for political ads.

Today, you can sell an advertisement to Bob's car dealership. "Hi, My
name is Bob. I am honest and own a car dealership. Come buy a car from
me."

Tomorrow, you can give away the same advertisement to Bob the candidate:
"Hi, My name is Bob. I am honest and own a car dealership. Come vote for
me in the next election, and perhaps buy a car as well."

# **LPFM**

The Commission spent a decade studying and preparing for the transition
to digital television broadcasting. It was one of the most studied and
prepared issues in recent memories.

With all of that studying and preparing, the FCC got the transition to
digital television exactly right. Didn't we?

I am not suggesting that the Commission should have spent even more time
preparing for the transition. The Telecommunications Act of 1996
required us to move relatively quickly. There is an underlying
likelihood that some things will go wrong when major changes are made.

So what about low-power FM radio?

The Commission has spent perhaps 10 months rather than 10 years thinking
about it.

Have we solved all of the problems? Sure...

There are many myths about low-power radio.

1.  *There are countless voices in America that cannot be heard.*

During the war in the former Yugoslavia, the Kosovo Liberation Army
could not get its message out in the war zone. But it could and did get
its message out to millions of people---and every imaginable broadcast
outlet\--around the world through the Internet. Yet, we are to believe
that there are people in America who have less access to disseminating
their message than did the Kosovo Liberation Army.

There are rebellious political groups in every corner of the world.
Practically every one of them has a Web site. Practically every
organized group in the world\--legitimate, nutcase, and somewhere in
between---has a web site.

And these groups get their message out the old-fashioned way too,
through meetings, newsletters, and word of mouth.

1.  2\. *There is an enormous pent-up demand to become legitimate radio
    broadcasters.* Every year, the Commission issues new licenses, and
    transfers hundreds of existing licenses. There are countless audio
    sites on the Internet that are neither licensed by the FCC nor
    costly to establish.

*3. Radio broadcasting is costless.*

a.  Equipment

b.  Personnel

c.  Programming

d.  Regulation

4\. *Any problems in concentration in Class A licenses can be cured with
LPFM*. I hear much about concentration of full-power radio licenses.
Whether one believes this is an issue, it will not change with the
issuance of low-power licenses. They are not the same.

5\. *Problems of minority ownership can be cured with LPFM.*

6.  *Pirates want to be legitimate.*

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7.  *Interference is not an issue.* Interference is the primary issue.

a\. 3^RD^ Adjacent channel interference?

gone.

2^nd^ Adjacent channel interference?

probably gone.

1^st^ Adjacent channel interference?

threatened so that you will feel grateful when it is not

taken away.

b\. How do radio listeners react to interference?

They tune out; they have many alternatives.

c\. How do advertisers react to interference?

They stop advertising; they have many alternatives too.

d\. What will be the result of interference in each market?

No one knows.

e\. What is the net effect nationwide?

No one knows.

e.  Keep in mind, there is interference not just from new licensees to
    incumbents, but vice versa as well.

Interference is the central issue in this proceeding. If there were no
change in interference standards, this proceeding would be about nothing
more than reducing the power floor for FM transmission and restricting
ownership of low-power to certain entities. Instead, the Commission
plans to change interference limitations.

8.  *1000 watt stations are low power.*

9.  *LPFM licenses will be available in all markets.*

In practice, LPFM licenses will not be available in large markets,
regardless of the change in interference standards. Any LPFM licenses
will be issued in small and medium-sized markets.

#### Process {#process .unnumbered}

We have had a process that can only be described as a rush to judgment.

a.  NPRM issued without engineering study

b.  Little time given for comment

c.  Request for more time only given a few weeks

d.  Quickly prepared engineering studies

The entire process has taken weeks instead of years for digital
television.

We got everything right on digital TV, didn't we?

# In the process, the FCC has raised expectations about LPFM that simply cannot be met. {#in-the-process-the-fcc-has-raised-expectations-about-lpfm-that-simply-cannot-be-met. .unnumbered}

1.  People expecting to get licenses won't get them.

2.  Licenses cannot be kept out of "wrong" hands

3.  Interference will go up

4\. Pirates won't go away.

# Special Honoree

Finally, let me tell you something about the convention's special
honoree. I have always been fascinated by the military and military
history. Part of my fascination are the obvious facets of the military:
duty and honor; discipline and sacrifice. The military can be glorious.

But part of my fascination is war itself and the role of the military
within it. War is not glorious. It is hell. A war is a limitless hell
for those it most directly affects, and a hell that potentially can
spread anywhere.

War is chaos. Bad things here; worse things there; people dying
prematurely; hurt, suffering, and devastation without end; little rhyme
or reason anywhere.

In the midst of this chaos are men who fight. Men who ordinarily
wouldn't risk their lives for an instance, risk their lives continually.
Men who ordinarily would not trust anyone for anything, trust a superior
officer with their lives for months on end.

For centuries on end, military historians have written about what
distinguishes a great military leader from a mere mortal. I have two
insights I would like to share with you that leadership is serving those
for whom you are responsible.

When I finished graduate school, I went to work for a think tank for the
Navy and Marine Corps. On one project, I worked closely with a Marine
Corps major. He worked long hours on the project plus he had a company
of Marines under his command. One day, the officer seemed troubled. One
of his Marines had gotten into some serious trouble with the law. But he
said that his Marine was innocent.

I asked him: "How do you know?"

He said: "He told me so. He wouldn't lie to me."

And so this major, after working during the day on our project, worked
every night for a week to free his Marine from his legal trouble. And it
turns out, he was right: he was innocent.

If you had to choose between this company of Marines or the entire
Soviet army, I would choose the company of Marines. I have no doubt that
when that major said that it was time to go over the top, his Marines
would follow.

Two years ago I went through Senate confirmation to become a
Commissioner. I quickly learned a trick. All I had to do was say
"Commissioner Quello," and people would smile.

I have noticed over the past two years, anywhere in the country, when I
say "Commissioner Quello," people smile.

Jim Quello was a commissioner for many years. Many people worked for him
over those years. They stay in touch with one another. There is Quello
alumni association with annual parties. To a person, they are fiercely
loyal to "The Boss."

And "The Boss" is loyal to his staff. In all the time I have known Jim,
he could have asked me for many things. He's a good friend, and he's
never asked me for anything except one: to help a former staffer.

When I worked for the Navy think tank, I worked substantially on
amphibious warfare and armored warfare. I read about the great
amphibious assaults of World War II.

Men hunched together in tin cans sputtered to shore, exposed to endless
enemy artillery and gunfire. Once ashore, they took 100 pounds of
equipment with them and tried to secure a beachhead. It was a new form
of warfare. A lot of men died in these assaults.

As an analyst decades later, I could marvel at how poor the chances of
survival were. Did the men going ashore at the time know how the risks
they were taking? They must have known.

They put their lives in the hands of, young officers, mere men in this
new form of unproven warfare. One of those young officers was Jim
Quello. He was young. He had a wife and family back in Michigan. He was
not looking to be a hero, just to do his job and survive. When he asked
his men to go over the top, his men followed. He defied odds by staging
not just one, but multiple amphibious assaults.

Amphibious landings were not dangerous enough for the young Jim Quello,
so he joined one of the frontal assault units fighting across France and
Germany. He and his men saw a lot of action. Some did not survive. In
every instance, his men followed him into action. Men die young in this
line of business. It must have been hell.

Obviously, I did not know Jim back during World War II. I can't tell you
for sure that he stayed up nights keeping his troops out of jail. I
can't tell you exactly what great demonstrations of loyalty he gave his
troops. But I know he must have. He and his troops had a distinguished
record. They defied the odds time and again. In the chaos of war, he was
a source of stability.

Somehow, Jim Quello survived it all. He returned to Michigan to become a
broadcaster. He went on to have a distinguished career as an FCC
commissioner.

Today, the Michigan Broadcasters honor Jim Quello, mostly for his career
as a broadcaster, for his service at the Federal Communications
Commission, and for his dedication to his home state.

But Jim Quello was a great American before he was a broadcaster. When he
was younger than just about anyone in this room, he had already done
more for this country than any of us will ever be asked to do in our
lifetimes.

Jim, I only regret I never had the honor to serve under you.