**Before the**

**FEDERAL COMMUNICATIONS COMMISSION**

**Washington, D.C. 20554**

In re Applications of )

)

NELSON ENTERPRISES, INC. ) File No. BNP-20000201AHC

) Facility ID No. 122551

For a New AM Broadcast Station )

at Plano, Illinois )

)

and )

)

D&E COMMUNICATIONS ) File No. BNP-20000128ABF

) Facility ID No. 122396

For a New AM Broadcast Station )

at Baxter, Minnesota )

# MEMORANDUM OPINION AND ORDER

**Adopted: May 25, 2004** **Released: July 16, 2004**

By the Commission: Commissioners Copps and Adelstein concurring and
issuing a joint statement.

1\. The Commission has before it the May 13, 2002, Application for
Review filed by Nelson Enterprises, Inc. ("Nelson"), applicant for a new
AM broadcast station at Plano, Illinois.[^1] Nelson's application was
determined to be mutually exclusive ("MX") with the auction filing
window application of D&E Communications ("D&E") for a new AM broadcast
station at Baxter, Minnesota.[^2] Both applications were filed during
the window for AM Broadcast Auction No. 32, and were designated MX Group
AM 25.[^3] Nelson requests review of the Media Bureau's ("Bureau") April
8, 2002, staff decision ("Staff Decision")[^4] in which the Bureau
awarded D&E's application a dispositive preference under Section 307(b)
of the Communications Act of 1934,[^5] and stated that Nelson's
application would be dismissed upon award of a construction permit to
D&E. For the reasons discussed below, we deny the Application for
Review.

2\. **Background.** In a *Public Notice* released October 27, 2000,[^6]
the Bureau requested amendments to the parties' applications, containing
supplemental information relating to the "fair, efficient, and equitable
distribution of radio service" under Section 307(b). Both Nelson and D&E
timely filed amendments pursuant to the *Mutually Exclusive Public
Notice*. Initially, the Bureau determined that neither application was
entitled to a dispositive Section 307(b) preference, and both were
directed to proceed to auction.[^7] By letter dated October 22, 2001,
the Bureau sent a second request for Section 307(b) amendments to the
parties' applications.[^8] In the October Section 307(b) Request, the
Bureau offered both applicants in MX Group AM 25 the opportunity to
submit either a new Section 307(b) amendment or, at their option, a
letter stating their desire to rely on a previously filed amendment.[^9]
Both parties again timely responded: D&E submitted a new Section 307(b)
showing, while Nelson indicated its desire to rely upon its prior
Section 307(b) submission. The Bureau made a new Section 307(b)
determination and, in the Staff Decision, found that D&E's proposal at
Baxter was entitled to a dispositive Section 307(b) preference.[^10]

3\. **Discussion.** *Mutual exclusivity of applications*: Nelson argues
that the two applications in MX Group AM 25 are not mutually exclusive
with each other, and that therefore neither applicant should have been
required to submit Section 307(b) information. Nelson contends that the
Bureau erroneously relied on Section 73.182 of the Commission's
rules,[^11] which requires applicants to protect existing stations but
does not, in Nelson's view, apply to applicants for new stations.[^12]
However, we rejected this argument in a separate *Memorandum Opinion and
Order*, after Nelson previously challenged the Bureau's determination
that its Plano application and D&E's Baxter application were mutually
exclusive.[^13] We find no reason to revisit our decision in this
regard. The applications are mutually exclusive, and the Bureau properly
sought Section 307(b) information.

4\. *Section 307(b) determination*: Nelson contends that the Bureau
"erred by considering population coverage of well-served areas as a
determinative Section 307(b) consideration when proposals for new
stations are involved, as is the case here."[^14] According to Nelson,
the correct standard to be applied is "the need of \[the\] respective
communities for new service."[^15]

5\. Neither Nelson nor D&E proposes either first or second aural
service, nor do they propose first local transmission service to their
respective communities.[^16] Therefore, the Bureau properly considered
their applications under Priority (4), "other public interest
matters."[^17] It found that D&E would serve ten percent more listeners,
based on a comparison of the respective parties' proposed 0.5 mV/m
daytime contours. The Bureau further found that D&E would serve 24,616
persons in its nighttime interference-free contour, compared to 6,942
persons to be served under Nelson's proposal.[^18] The Bureau found
these differences to be dispositive, justifying a Section 307(b)
preference for D&E's proposal.[^19]

6\. We find no error in the Bureau's use of population coverage, i.e.,
the number of people covered by a given signal contour, to award a
Section 307(b) preference under Priority (4). While Nelson protests that
the Bureau cited only Bureau-level case precedent in support of its
action, the Commission has approved the use of simple net differences in
the number of persons newly served by each proposal when comparing
proposals under Priority (4).[^20] We recognize that *Greenup* involved
channel substitutions and upgrading existing service rather than
proposals for new service. However, the Commission directed the Bureau
in broadcast auction cases to perform a "traditional Section 307(b)
analysis,"[^21] which includes Priority (4), and *Greenup* and similar
cases involved a comparison of proposals under Priority (4).[^22] Thus,
*Greenup* and such cases recognize a rebuttable presumption that, under
Priority (4), a proposal serving a greater number of persons "would best
serve the public interest."[^23] Given this, the Bureau did not err in
applying a Priority (4) analysis based on a population advantage,
especially given Nelson's admission that "there are many more than five
services throughout the proposed service areas."[^24] Until such time,
if any, as we modify the pre-auction Priority (4) Section 307(b) public
interest analysis for mutually exclusive AM applications, the Bureau may
continue to utilize population differentials in its evaluation.

7\. Nelson cites *Beacon Broadcasting*[^25] in support of its argument
that Section 307(b) favors grant of its application over D&E's. However,
*Beacon Broadcasting* is distinguishable, because in that case the
Commission held that Fairforest, South Carolina, as a "minimally"
qualified "licensable" community, was not entitled to consideration as a
first local service under Priority (3). The Commission specifically
stated that its decision "was limited to the particular circumstance
where an applicant proposes to serve a community aptly described as a
'quiet village' and it has no applicability to other cases where service
is proposed for a clearly established, separate and distinct community
with palpable political, economic, social and other needs."[^26] Thus,
contrary to Nelson's assertion, *Beacon Broadcasting* does not disavow
population coverage as a criterion under Section 307(b), or state that
population coverage in well-served areas is disregarded as a factor in
the Section 307(b) analysis. *Beacon Broadcasting* established only that
second local transmission service could be favored over first local
transmission service at a "quiet village" with "tenuous
characteristics." In this case, however, neither community is a "quiet
village," and neither applicant proposes a first local service. *Beacon
Broadcasting* is therefore inapposite.[^27]

8\. Nelson also cites *Blanchard, Louisiana and Stephens,
Arkansas*,[^28] *Cornwall Broadcasting Corp.*,[^29] and *Genoa, Mt.
Morris, and Oregon, Illinois*,[^30] for the proposition that "\[i\]n
general, the most important factor in deciding \[between\] two
communities having the same level of existing service is population \[of
the community\]."[^31] This is incorrect. These cases stand for the
proposition that when comparing proposals, each of which contemplates
*first local transmission service* under Priority (3), we compare the
relative populations of the communities.[^32] Likewise, Nelson's
citation of *Cloverdale, Point Arena, and Cazadero, California*[^33]
does not support its contention that even small differences in
populations of communities suffice to find a Section 307(b) preference
in favor of a larger community. *Cloverdale* involved two non-mutually
exclusive but related allotment proposals: one proposing first local
transmission service at either Cloverdale or Cazadero, California (a
Priority (3) comparison), and one proposing re-allotment of first
competitive service at Cloverdale versus allowing the first competitive
service to remain at Point Arena, California (a Priority (4)
comparison). The Bureau in *Cloverdale* examined community populations
only when comparing proposed first local service at Cloverdale and
Cazadero.[^34] In making the Priority (4) evaluation between competitive
services at Cloverdale and Point Arena, the Bureau focused on the signal
gain and loss areas rather than the difference between the two
communities' populations.[^35] Thus, while Nelson attempts to use
*Cloverdale* to support its argument that community populations should
be the sole criterion used in a Priority (4) evaluation, that criterion
was used only in the non-analogous Priority (3) portion of *Cloverdale*.
We therefore find Nelson's argument unpersuasive, and find the Bureau
decided the Section 307(b) issue correctly.

9\. **Conclusion.** For the foregoing reasons, the Application for
Review filed by Nelson Enterprises, Inc. IS DENIED.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

JOINT STATEMENT OF

COMMISSIONERS MICHAEL J. COPPS AND JONATHAN S. ADELSTEIN

CONCURRING

*Re:* *Green Valley Broadcasters, Inc., For a New AM Broadcast Station
at Sahuarita, Arizona et al., Memorandum Opinion and Order; Nelson
Enterprises, Inc., For a New AM Broadcast Station at Plano, Illinois et
al., Memorandum Opinion and Order; and Robert E. Combs, For a
Construction Permit for a New AM Station at Boise, Idaho, Memorandum
Opinion and Order*

Section 307(b) directs the Commission to distribute licenses across the
nation to ensure the "fair, efficient, and equitable distribution of
radio service." In circumstances of mutually exclusive AM or FM
applications, the Commission uses assignment priorities established in
1982 to effectuate Section 307(b)'s objectives. While the first three
priorities are more straightforward, the fourth priority embodies a
catch-all "other public interest matters."

We are concerned that in practice this priority has devolved into a raw
population comparison where the applicant seeking to serve the larger,
more urban area nearly always wins irrespective of the number of
stations already serving each community. While service to a greater
population is an important criterion under our public interest
examination, we have concerns when it becomes the sole criterion. As a
general public interest priority, an applicant should have a chance to
convince us that there are other compelling reasons -- beyond mere
population -- to award its proposal a dispositive preference. In a
handful of cases the Commission has entertained other showings to
discount the raw population totals, yet that process requires applicants
to undertake complicated and costly engineering calculations, straining
the resources of both applicants and the Commission.

We believe there are ways to simplify the process and ensure rural
applicants an opportunity to compete on a more even footing. We urge
that in the near future the Commission will give some thought to
reevaluating its allocation policies, and in particular its treatment of
the public interest assignment priority. It is vital that the Commission
provide all applicants -- whether seeking to serve rural or urban
America -- an effective process to achieve the distribution goals set
forth by Congress.

[^1]: File No. BNP-20000201AHC.

[^2]: File No. BNP-20000128ABF.

[^3]: *Public Notice*, "AM Auction Filing Window and Application
    Freeze," 14 FCC Rcd 19490 (MMB/WTB 1999) ("*AM Auction Public
    Notice*"), as extended by *Public Notice*, "AM Auction Filing Window
    and Application Freeze Extended to February 1, 2000," 15 FCC Rcd
    1910 (MMB/WTB 2000).

[^4]: *Letter to Nelson Enterprises, Inc., and D&E Communications*, Ref.
    No. 1800B3-JWR (MB Apr. 8, 2002).

[^5]: 47 U.S.C. § 307(b) ("Section 307(b)").

[^6]: *Public Notice*, "AM Auction No. 32 Mutually Exclusive Applicants
    Subject to Auction," 15 FCC Rcd 20449 (MMB/WTB) ("*Mutually
    Exclusive Public Notice*"), as extended by *Public Notice*, "AM
    Auction No. 32 Mutually Exclusive Applicants -- Settlement Period
    and Section 307(b) Filing Period Extended to February 28, 2001," 15
    FCC Rcd 24644 (MMB/WTB 2000).

[^7]: *Letter to Nelson Enterprises, Inc., D&E Communications, KCBR-AM
    Limited Partnership, and Kleven Broadcasting Co. of Minnesota*, Ref.
    No. 1800B3-JWR (MMB June 26, 2001).

[^8]: *Letter to Green Valley Broadcasters, Inc., Kemp Communications,
    Inc., and Nelson Multimedia, Inc.*, Ref. No. 1800B3-TSN (MMB October
    22, 2001) ("October Section 307(b) Request"). The October Section
    307(b) Request bore OMB Control No. 3060-0996.

[^9]: October Section 307(b) Request at 2-3.

[^10]: Staff Decision at 3-4. D&E subsequently filed a complete Form 301
    application, File No. BNP-20020508AAN.

[^11]: 47 C.F.R. § 73.182.

[^12]: *See* Application for Review at 6-7.

[^13]: *Nelson Enterprises, Inc.*, 18 FCC Rcd 3414 (2003) ("*Nelson
    Enterprises*"). In *Nelson Enterprises*, we denied Nelson's
    application for review of the Bureau's determination that its Plano
    application was not a "singleton," or non-mutually exclusive,
    application. *Public Notice*, "AM Auction No. 32 Non-Mutually
    Exclusive Applications, Mass Media Bureau Announces Form 301
    Application Deadline and Ten-Day Petition to Deny Period," 15 FCC
    Rcd 18004 (MMB 2000). In the Application for Review currently before
    us, Nelson also accuses the Bureau of attempting to "dictate when
    the Commission shall act" on its prior application for review of the
    Bureau's mutual exclusivity determination. Application for Review at
    10. Nelson bases its claim on a statement in the Staff Decision that
    Nelson's prior application for review "will be factored into the
    ultimate disposition of Nelson's application." Staff Decision at 2
    n.2. Nelson urges that we "repudiate the Bureau's statement, and act
    promptly on Nelson's applications for review." Application for
    Review at 10. We find no impropriety in the Bureau's statement,
    which we read only as the Bureau's reassurance to Nelson that its
    then-pending application for review would be given due
    consideration. In any event, this argument is moot in light of our
    holding in *Nelson Enterprises*.

[^14]: Application for Review at 7-8.

[^15]: *Id*. at 8.

[^16]: *See Revision of FM Assignment Policies and Procedures*, 90
    F.C.C.2d 88 (1982) ("*FM Assignment Policies*"). The FM allotment
    priorities are as follows: "(1) First full-time aural service. (2)
    Second full-time aural service. (3) First local service. (4) Other
    public interest matters." Co-equal weight is given to Priorities (2)
    and (3). 90 F.C.C.2d at 91. The priorities set forth in *FM
    Assignment Policies* are also used in evaluating applicants for new
    AM stations. *Alessandro Broadcasting Co.*, 99 F.C.C.2d 1 (Rev. Bd.
    1984). The Bureau specifically stated that the priorities set forth
    in *FM Assignment Policies* would be applied in AM Auction No. 32.
    *Mutually Exclusive Public Notice*, 15 FCC Rcd at 20451.

[^17]: *FM Assignment Policies*, 90 F.C.C.2d at 91.

[^18]: Staff Decision at 3-4.

[^19]: *Id*. at 4.

[^20]: *See*, *e.g.*, *Greenup, Kentucky and Athens, Ohio*, 6 FCC Rcd
    1493 (1991), *appeal dismissed sub nom*, *WATH, Inc. v. F.C.C.*, No.
    91-1268 (D.C. Cir. Sept. 26, 1991) ("*Greenup*").

[^21]: *Implementation of Section 309(j) of the Communications
    Act-Competitive Bidding for Commercial Broadcast and Instructional
    Television Fixed Services Licenses*, *First* *Report and Order*, 13
    FCC Rcd 15920, 15965 (1998) ("*Broadcast First Report and Order*"),
    *recon denied*, 14 FCC Rcd 8724, *modified*, 14 FCC Rcd 12541
    (1999).

[^22]: *See*, *e.g.*, *Seabrook, Huntsville, Bryan, Victoria, Kenedy,
    and George West, Texas*, 10 FCC Rcd 9360, 9362 (1995) (in the
    absence of a showing involving comparison of gain areas adjusted for
    number of reception services as described in *Greenup*, 6 FCC Rcd at
    1495, Commission will continue to first consider the raw population
    differential).

[^23]: *Greenup*, 6 FCC Rcd at 1495.

[^24]: Application for Review at 4.

[^25]: 2 FCC Rcd 7562 (1987), *aff'd sub nom*, *New South Broadcasting
    Corp. v. F.C.C*., 879 F.2d 867 (D.C. Cir. 1989).

[^26]: 2 FCC Rcd at 7563.

[^27]: We also note that in *Beacon Broadcasting* the difference in the
    respective population coverage totals was not sufficient to support
    a Section 307(b) preference for one of the proposals.

[^28]: 10 FCC Rcd 9828 (1995) ("*Blanchard*").

[^29]: 89 F.C.C.2d 704 (Rev. Bd. 1982).

[^30]: 14 FCC Rcd 10727 (MMB 1999).

[^31]: Application for Review at 8. We note that both Baxter and Plano
    each currently have one local radio transmission service. However,
    while WWWI(AM) at Baxter is owned by Tower Broadcasting Corp.,
    Plano's existing service, WSPY-FM, is also owned by Nelson. Both
    Nelson's and D&E's proposed service areas are abundantly served.
    *See supra* note 24.

[^32]: *See*, *e.g.*, *Blanchard*, 10 FCC Rcd at 9830 (when comparing
    proposals for first local service under Priority (3) to two
    well-served communities, under "long standing precedent" \[e.g.,
    *Northwye, Cuba, Waynesville, Lake Ozark, and Eldon, Missouri*, 7
    FCC Rcd 1449 (MMB 1992); *West Liberty and Richwood, Ohio*, 6 FCC
    Rcd 6084 (MMB 1991)\], the Commission examines the proposals giving
    substantial weight to the populations of the communities to be
    served, even when the population differential is as small as 38
    persons).

[^33]: 15 FCC Rcd 17927 (MMB 2000) ("*Cloverdale*").

[^34]: *Id*. at 17928.

[^35]: *Id*.