**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

In the Matter of )

)

Ancillary or Supplementary Use of ) MM Docket No. 98-203

Digital Television Capacity by Noncommercial ) Licensees )

)

**NOTICE OF PROPOSED RULE MAKING**

**Adopted:** November 19, 1998 **Released:** November 23, 1998

Comment date: January 28, 1999

Reply Date: March 1, 1999

By the Commission:

**I. INTRODUCTION**

In our *Fifth Report and Order* in the digital television (\"DTV\")
proceeding, we adopted rules implementing a transition to digital
technology for all existing television broadcasters.[^1] Among other
things, we established standards for license eligibility, a transition
and construction schedule and a requirement that broadcasters continue
to provide one free over-the-air television service in accordance with
Section 336 of the Telecommunications Act of 1996 (\"1996 Act\").[^2] We
also adopted rules permitting DTV licensees, without distinguishing
between commercial and noncommercial licensees, to use their DTV
capacity to provide ancillary or supplementary services provided these
services do not derogate the free digital television service.

In their Petition for Reconsideration of the *Fifth Report and Order*,
the Association of America\'s Public Television Stations and the Public
Broadcasting Service (AAPTS/PBS) requested clarification on the ability
of public television stations to use excess capacity on DTV channels for
commercial purposes. In opposing this request in part, Media Access
Project and other public interest parties (\"MAP\"),[^3] jointly argued
that, while public television stations should be able to provide some
revenue-generating ancillary and supplementary services, these services
must be consistent with the noncommercial nature of public television as
set forth in Section 399B of the Communications Act, the provision
restricting advertising by these stations.

We initiate this *Notice of Proposed Rule Making* to seek comment on
whether we should impose limits on remunerative activities undertaken by
noncommercial educational (\"NCE\") television licensees on their DTV
capacity. The request for clarification made by AAPTS/PBS raises
significant issues regarding the service and funding opportunities made
available to NCE stations as a result of the transition to digital
transmission. We recognize the importance of this issue to the future of
public television as it enters the digital age. Therefore, we believe it
is appropriate to seek further comment on the AAPTS/PBS petition in
order to establish a more complete record on the issues it raises.

In their Petition for Reconsideration AAPTS/PBS also requested that the
Commission exempt public television licensees from any fee assessed in
connection with use of digital spectrum for ancillary or supplementary
services to the extent revenues from those service are used to support
the licensee\'s mission-related activities.[^4] Section 336(e) of the
1996 Act requires DTV licensees receiving fees or certain other
compensation for ancillary or supplementary services provided on the DTV
spectrum to return a portion of that revenue to the public. The
Commission was charged with establishing a means of assessing and
collecting fees for those ancillary or supplementary services specified
in the statute.[^5] In the *Notice of Proposed Rule Making* In the
Matter of Fees for Ancillary or Supplementary Use of Digital Television
Spectrum (\"Fees Proceeding\"),[^6] we sought comment on AAPTS/PBS\'s
request. In the Fees Proceeding we determined that the request for such
an exemption should be considered in this proceeding.[^7] We therefore
seek additional comment on this issue in light of the comments received
on this issue in the Fees Proceeding and the tentative proposals
outlined below.

**II. BACKGROUND**

*Ancillary or Supplementary Services on DTV Capacity*. The DTV standard
we adopted will allow for the simultaneous transmission of multiple
streams of programming, information, and other non-broadcast services.
To enable licensees to take full advantage of the opportunities provided
by digital technology, the 1996 Act provided that DTV licensees may use
a portion of their new DTV capacity for ancillary or supplementary
services.[^8]

Specifically, Section 336 of the Communications Act authorizes the
Commission to permit DTV licensees to offer ancillary or supplementary
services on their DTV capacity as long as the provision of these
services does not derogate any advanced television services the
Commission may require and is \"consistent with the public interest,
convenience, and necessity.\"[^9] The statute does not distinguish
between commercial and noncommercial DTV licensees, nor does the
legislative history of Section 336 draw any such distinction.

In the *Fifth Report and Order* in our DTV proceeding we adopted rules
to allow broadcasters the flexibility to respond to the demands of their
audience by providing ancillary or supplementary services, provided that
these services do not derogate the mandated free, over-the-air program
service.[^10] We found that this approach would serve the public
interest by fostering the provision of innovative services to the public
and by permitting the realization of the full possibilities of DTV.[^11]
We recognized the benefit of permitting broadcasters the opportunity to
develop additional revenue streams from innovative digital services. We
also found that allowing such services contributes to efficient spectrum
use and can expand and enhance the use of existing spectrum. At the same
time, we noted our expectation that the fundamental use of the DTV
licenses will be for the provision of free over-the-air television.[^12]

We clarified that \"we will consider as ancillary or supplementary any
service provided on the digital channel other than free, over-the-air
video services.\"[^13] We noted that this approach is consistent with
Commission precedent that has treated telecommunications services
provided by an NTSC station other than the regular television program
service as ancillary.[^14] We also did not impose a requirement that the
ancillary or supplementary services provided by the broadcaster must be
broadcast-related.[^15] We explained that such ancillary or
supplementary services could include, but are not limited to,
subscription television programming, computer software distribution,
data transmissions, teletext, interactive services, and audio
signals.[^16]

Section 336(e)(1) of the 1996 Act also requires that a fee be assessed
upon any ancillary or supplementary services on DTV spectrum \"for which
the payment of a subscription fee is required in order to receive such
services\" or \"for which the licensee directly or indirectly receives
compensation from a third party in return for transmitting materials
furnished by such third party.\"[^17] The Act specifically exempts from
the fee any service which relies only upon \"commercial advertisements
used to support broadcasting for which a subscription fee is not
required.\"[^18] In our Fees Proceeding we have adopted rules to
implement this provision with respect to commercial DTV licensees.

*Noncommercial Educational Television.* Throughout the DTV proceeding,
the Commission has acknowledged that noncommercial licensees will face
unique problems in the transition to DTV.[^19] In the *Fifth Report and
Order*, we recognized the high quality programming service noncommercial
stations have provided to American viewers over the years and reaffirmed
our commitment to noncommercial educational television service.[^20] We
also observed that public broadcasters have been pioneers in
experimenting with the capabilities of digital technology. We further
noted our awareness of the unique financial difficulties faced by
noncommercial stations and reiterated our view that these stations will
need and warrant special relief to assist them in the transition to
DTV.[^21] In this regard, for example, we applied a six-year
construction period timetable to noncommercial stations, the longest
permitted to any category of DTV applicant.[^22] We also found, however,
that at that time it was premature to attempt to resolve the issue of
what additional special treatment, if any, should be afforded to
noncommercial broadcasters. We stated that we would consider these
issues in our periodic reviews examining the progress of the DTV
transition.[^23]

*AAPTS/PBS\'s Request for Clarification \-- Use of DTV Capacity*. In its
Petition for Reconsideration of the *Fifth Report and Order*, AAPTS/PBS
requested clarification on the ability of public television stations to
use capacity on DTV channels for commercial purposes. As neither Section
336 nor the Commission\'s DTV rules distinguishes between commercial and
noncommercial stations, AAPTS/PBS argued that both are intended to allow
public stations to offer ancillary or supplementary services for
revenue-generating purposes.

AAPTS/PBS states that public television stations are exploring various
revenue generating options such as: leasing capacity to other digital
operators; joint ventures with commercial entities; and subscription
channels for popular PBS programming.[^24] It emphasizes the importance
of the revenue potential of these services in order to continue public
television\'s commitment to providing a high quality noncommercial,
educational broadcast service.[^25] AAPTS/PBS has noted that the
multiple programming streams offered by the extra capacity of digital
transmission will enable public broadcasters to extend the reach of
their educational services. New expanded \"multicast\" programming
channels planned by public television as a result of multicasting
capabilities include: PBS\'s Ready-to-Learn service for children; K-12
instructional programming; college credit telecourses; workforce
training; and local public affairs programming. AAPTS/PBS notes that
many public stations are relying on the revenue from ancillary or
supplementary services to help fund the construction of DTV facilities
and the operation of both DTV and NTSC facilities. Such flexibility is
crucial, it maintains, as federal and corporate funding have become
increasingly difficult to obtain.[^26]

Specifically, AAPTS/PBS requests that the Commission clarify that
Section 73.621 of its rules, which requires public stations to provide a
noncommercial service, is not applicable to ancillary or supplementary
services provided on DTV capacity.[^27] It proposes that the Commission
make clear that, as long as a public station provides one noncommercial
broadcast service pursuant to Section 73.621, it can use its additional
DTV capacity as a source of revenue, subject only to the requirement of
non-derogation in Section 73.624.[^28]

AAPTS/PBS notes that its proposal to use its additional DTV capacity as
a source of revenue is consistent with existing Sections 73.621(f) and
(g), and 73.646(b) and (d) of the Commission\'s rules, which allow
public television stations to use the vertical blanking interval
(\"VBI\"), and auxiliary broadcast services for revenue generating
activities.[^29] It argues that use of their DTV capacity as a source of
revenue follows rationally from these provisions. Similarly, public
television licensees seek the opportunity to use that portion of their
DTV spectrum that is not necessary for their primary public television
mission as a means of financing their DTV broadcast operations.[^30]

In opposing AAPTS/PBS\'s request in part, MAP requests that the
Commission make clear that any leased or joint-venture programming
undertaken by public television licensees that is advertiser-supported
would violate the advertising ban of Section 399B of the Act. MAP argues
that AAPTS/PBS\'s request is unclear as to what specific programming
would be offered or whether it would comport with the requirements of
399B. For example, MAP specifies programming that it believes would
violate the advertising ban as \"programming that is predominantly
utilized for the transmission of sales presentations or program length
commercials, such as home shopping or infomercials, or that otherwise
encourages or solicits the purchase of goods and services from
commercial entities.\" MAP also argues that because Section 336 of the
Act does not *explicitly* permit noncommercial stations to broadcast
advertisements on any ancillary or supplementary services, AAPTS/PBS\'s
argument that Section 336 extends to both commercial and noncommercial
entities is possible only if the inconsistent requirements of Section
399B were repealed. MAP notes that, while public television stations
should be able to provide some revenue-generating ancillary services,
these services must be consistent with the nature of noncommercial
public television as set forth in that section.[^31]

In reply, AAPTS/PBS acknowledges that the advertisement ban of Section
399B will apply to the primary noncommercial broadcast service, but
argues that it should not extend to the provision of ancillary and
supplementary services on DTV spectrum. AAPTS/PBS points out that
Section 399B was enacted by Congress in 1981 in an effort to reduce
public television\'s dependence on federal appropriations.[^32] Although
Congress was also concerned that public broadcasting\'s primary
broadcasting service remain noncommercial, AAPTS/PBS notes that the
balance Congress struck in Section 399B was to allow such remunerative
activities, provided that the public broadcast service remained
noncommercial.[^33]

AAPTS/PBS also notes that previous Commission decisions have allowed
noncommercial licensees to provide subsidiary communications services
without regard to whether they include advertisements.[^34] AAPTS/PBS
maintains that even if the Section 399B advertising restrictions are
found to apply to these services, the Commission has discretion under
Section 336(a)(2) to allow public TV licensees to include
advertiser-supported services if it finds these services to be in the
public interest.[^35] AAPTS/PBS urges an interpretation in which the
advertising ban in Section 399B would continue to apply to the primary
noncommercial broadcast service, while any ancillary and supplementary
use of DTV channels would be free from the restrictions of this section.

*AAPTS/PBS\'s Request for Exemption From Fees under Section* 336(e). In
its Petition for Reconsideration of the *Fifth Report and Order*,
AAPTS/PBS requested that the Commission exempt public television
licensees from any fee assessed in connection with revenue-generating
use of the ancillary or supplementary services on their DTV spectrum
\"to the extent that revenues from those service are used to support the
licensee\'s mission-related activities.\"[^36] We sought comment in the
Fees Proceeding on whether noncommercial television licensees should be
exempt from such fees or subject to a nominal fee where they offer
ancillary and supplementary services as a source of funding for public
television.[^37]

In its comments in the Fees Proceeding, AAPTS/PBS argues that public
television stations should be exempt from such fees because the
statutory purposes of Section 336(e)(2) do not apply to services
provided by public television licensees. AAPTS/PBS notes that if these
revenues would be used to support noncommercial activities, there would
be no need to \"recover\" a portion of the value of the spectrum for the
public and that an exemption would not result in any \"unjust
enrichment\". AAPTS/PBS also argues that, as public television stations
are not auctioned, there is no equivalent amount that would have been
received at auction.[^38] Further, AAPTS/PBS contends that such an
exemption would be consistent with other Congressional and regulatory
policies, and that the Commission has concluded in other proceedings
that the imposition of a fee on public broadcasting would dilute the
financial support paid to public broadcasting by Congress.[^39]

MAP generally supports allowing public broadcasters to be exempt from
such fees, but only if they do not provide advertiser-supported
ancillary and supplementary services. MAP asserts that the statute makes
no distinction between noncommercial and commercial licensees, either in
their ability to provide advertiser-supported ancillary and
supplementary services, or in their obligation to pay fees on such
services.[^40] We have determined that AAPTS/PBS\'s request for such
exemption should be considered in this proceeding. Accordingly, we seek
additional comment on this issue in light of the comments received in
the Fees Proceeding and the tentative proposals set forth in this
Notice.

**III.** **REQUEST FOR COMMENTS**

*Noncommercial Educational Television*. Public broadcasting\'s mission
has long been to provide quality educational and cultural programming to
a wide and diverse audience. Noncommercial educational television
stations have also been at the forefront of exploring innovative
services and new technologies to accomplish this mission. These stations
also appear poised to take full advantage of the opportunities made
available by digital technology. We fully recognize the public interest
benefits inherent in the services that may be offered by NCE licensees
on the digital spectrum.

As we stated in the Fifth Report and Order, granting broadcasters the
flexibility to offer the ancillary or supplementary services they choose
will help them attract consumers to the service, which will, in turn,
speed the transition to digital television. We stated that such
flexibility will encourage entrepreneurship and innovation, will
contribute to efficient spectrum use, and will expand and enhance use of
existing spectrum. We seek comment on whether these same considerations
apply to the NCE context.

Throughout the development of the public broadcasting system, both
Congress and the Commission have continually balanced the desire to
maintain the integrity of its noncommercial status with the fact that
public television must have access to adequate funding in order to
survive. Congress enacted the Public Broadcasting Act of 1967 in
response to increasing public demand for the government to sponsor
independent sources of broadcast programming as an alternative to
commercial broadcasting. This legislation sought to promote the
development of noncommercial, educational broadcasting stations and
established the framework for today\'s public broadcasting system.[^41]

Public television has since flourished and developed from an
experimental educational service into the valuable and unique
programming service that exists today. The Commission has supported the
goals of the public broadcasting system and promulgated rules to
implement the public broadcasting provisions of the Communications Act.
For example, in 1952, recognizing the important and unique role to be
served by public television, the Commission reserved spectrum
exclusively for the noncommercial broadcasting service.[^42]

We are consequently sympathetic to the relief requested in the AAPTS/PBS
petition. The petition describes a range of revenue-generating ancillary
or supplementary services that could help NCE stations flourish in a
digital age. We seek comment on these new services and specifically on
NCE stations\' plans for using excess digital capacity. We note that the
costs of converting to digital service will be considerable, and that
many NCE stations rely on public funds to provide the build-out to DTV
service. At the same time we are sensitive to the concerns raised by MAP
that in permitting NCE stations flexibility in providing such services
we must be consistent with Section 399B and also not undermine their
fundamental mission of providing a noncommercial educational broadcast
service. To help us determine the limits, if any, on the remunerative
activities of NCE licensees on their DTV capacity, we seek comment below
on a number of issues.

*Noncommercial Educational Television: Funding Issues*. Many NCE
stations have traditionally received most of their funding from federal,
state and local government sources in addition to corporate and viewer
contributions.[^43] In its request for clarification, AAPTS/PBS notes
the uncertainty of continued federal financial support and the
tightening of support from the corporate sector. We seek comment on such
funding trends and on NCE licensees\' specific funding needs to convert
to digital and maintain a robust NCE television service. We also seek
comment on the appropriate role of the Commission in ensuring that such
funding needs are met.

*Ancillary or Supplementary Services.* In the *Fifth Report and Order*,
we adopted rules implementing Section 336 to allow broadcasters the
flexibility to respond to the demands of their audience by providing
ancillary or supplementary services, including subscription television,
providing that these services do not derogate the mandated free,
over-the-air program service.[^44] As an initial matter, we generally
invite comment on AAPTS/PBS\'s request that we clarify that Section
73.621 of our rules, which requires public stations to provide a
noncommercial service, is not applicable to ancillary or supplementary
services provided on DTV capacity. We also seek comment on whether such
a clarification is consistent with the provisions of Section 399B.

The Communications Act defines a \"noncommercial educational broadcast
station\" and \"public broadcast station,\" as \"a noncommercial
educational radio or television broadcast station which is owned and
operated by a public agency or nonprofit private foundation,
cooperation, or association\" or \"is owned and operated by a
municipality and which transmits only noncommercial programs for
educational purposes.\"[^45] In 1981, Congress amended the
Communications Act to give public broadcasters more flexibility to
generate funds for their operations.[^46] As amended, Section 399B of
the Act permits public stations to provide facilities and services in
exchange for remuneration as long as those uses do not interfere with
the stations\' provision of public telecommunications services.[^47] In
addition, under Section 73.621 of the Commission\'s rules, public
television stations are required to furnish primarily an educational as
well as a nonprofit and noncommercial broadcast service.[^48]

We have previously been called on to determine the extent to which
public television stations can transmit subscription television
(\"STV\") or other revenue-generating services on their analog channels
consistent with the statutory and regulatory requirements we have just
described. In particular, in 1984, the Commission considered amending
its rules to permit public television stations to engage in subscription
television operations.[^49] The Commission stated that it \"clearly has
the authority \[under Section 399B of the Act\] in particular instances
and under certain circumstances to permit STV operation by public
television.\"[^50] But the Commission expressed sympathy with concerns
expressed by some parties in that proceeding that such a rule change
could result in public television service, then operating with analog
technology, being \"dominated\" by STV.[^51] It therefore concluded at
the time that it should not generally authorize such operation through a
rule change.

The Commission nonetheless recognized that STV operations can benefit
public stations as a supplementary funding source. It consequently
stated that it would permit individual public television stations to
engage in STV operations on a waiver basis.[^52] The Commission has also
given public television stations flexibility in their use of the analog
channels in other ways. In particular, the Commission has ruled that
noncommercial spectrum, like commercial spectrum, can be used for
remunerative ancillary services such as data delivery or teletext
provided by NTSC licensees on the vertical blanking interval (VBI) and
the video portion of the analog signal in accordance with Section 399B
of the Act.[^53]

The AAPTS/PBS petition raises many of the same legal and policy
questions raised by our previous consideration of requests to provide
STV and other revenue-generating ancillary services on analog NCE
channels. Unlike the previous requests, however, the AAPTS/PBS petition
concerns *digital* television, which offers significant new challenges
and opportunities to NCE stations. We are inclined to permit NCE
stations to take advantage of these opportunities and offer innovative
ancillary and supplementary services that are remunerative and
consistent with their educational mission. We therefore seek comment on
whether, and under what conditions, NCE licensees should be permitted to
use their DTV capacity to offer ancillary or supplementary services,
including STV, on a remunerative basis.

In particular, we seek comment on whether and how we should amend
Section 73.621 of our Rules, which requires NCE stations to provide a
noncommercial service that \"primarily\" serves the educational needs of
the community. For example, should we extend this requirement to
ancillary or supplementary services provided by noncommercial licensees
on their DTV capacity? Should we clarify that an NCE licensee\'s
obligation to provide a primarily educational service applies to its
entire DTV bitstream? Under this proposal, NCE stations would be
permitted to provide ancillary or supplementary services, but still
would be required to ensure that their overall digital bitstream was
primarily devoted to serving the educational needs of the community.
Should we clarify that the requirement to provide a primarily
educational service applies only to the single, free-over-the-air
broadcast service it is required to provide? We seek comment on these
and any other options for amending Section 73.621 in this regard.

We also seek comment on whether and how we can permit NCE stations to
provide remunerative ancillary or supplementary services in a manner
that does \"not interfere with the provision of public
telecommunications services\" by such stations as required by Section
399B of the Act.[^54] In particular, we seek comment on whether NCE DTV
stations will have the capacity to provide ancillary or supplementary
services without interfering with their ability to provide a primarily
educational NCE service. We also seek comment on whether such ancillary
or supplementary services can provide an important funding source that
could facilitate the transition to DTV for NCE stations, and, more
generally, enhance their primary mission of providing a robust
noncommercial, educational broadcasting service.

We ask commenters specifically to address how the provision of ancillary
or supplementary services would affect our noncommercial channel
reservation policies, regulatory treatment of noncommercial licensees,
and other government support for noncommercial stations. While we are
inclined to give NCE stations some flexibility in offering remunerative
ancillary or supplementary services, we will continue to expect these
stations to adhere to their fundamental mission of providing a
noncommercial, educational broadcast service, as required by Section
73.621(a) of the Commission\'s rules. We therefore seek comment on
whether parties believe our proposed amendment to Section 73.621 should
incorporate any particular safeguards regarding a public television
station\'s use of its DTV capacity to provide remunerative services to
ensure that its DTV license is primarily being used for a noncommercial
educational broadcast service, and that the proceeds of such services
are used to support its NCE programming. We also ask commenters to
address whether the accounting procedures and funding restrictions
outlined in Section 399B should apply to the provision of ancillary or
supplementary services by NCE licensees on DTV capacity.[^55]

We note that in addition to those restrictions imposed by provisions in
the Communications Act and the Commission\'s rules, the commercial
activities of NCE stations are also restricted by their status as
nonprofit corporations, as well as by state and local government
oversight. We seek comment on the scope of these existing limits and
oversight and on the extent to which they help ensure that public
television stations offering remunerative ancillary or supplementary
services continue to serve their mission of providing a noncommercial
educational broadcasting service?

*Advertising.* We also seek comment on how the advertising ban set forth
in Section 399B of the Communications Act implicates the provision of
remunerative services by public DTV stations. Section 399B prohibits a
public station from \"making its facilities available to any person for
the broadcasting of any advertisement.\"[^56] By its plain language,
this section would appear to prohibit advertisements on any service that
would constitute \"broadcasting,\" while permitting a public DTV station
to air advertisements on any \"nonbroadcast\" service. The term
\"broadcasting\" is defined in the Communications Act as \"the
dissemination of radio communications intended to be received by the
public, directly or by the intermediary of relay stations.\"[^57] The
Commission further clarified the definition of \"broadcasting\" in its
1986 *Subscription Video* proceeding.[^58] In that decision the
Commission determined that the term \"broadcasting\" as defined by the
Communications Act \"refers only to those signals which the sender
intends to be received by the indeterminate public.\"[^59] We therefore
found that \"a necessary condition for the classification of a service
as broadcasting is that the licensee\'s programming is available to all
members of the public, without any special arrangements or
equipment.\"[^60] Based on these criteria, the Commission ruled that
subscription television does not constitute broadcasting.

Applying these factors to the issue before us, we tentatively conclude
that while Section 399B continues to apply to all video broadcast
programming streams provided by public DTV stations, it does not apply
to any subscription services they provide on their DTV channels since
such services do not constitute \"broadcasting.\"[^61] We seek comment
on this view. We also seek comment on the extent to which Section 399B
applies to advertising carried on any other non-subscription ancillary
or supplementary services carried by a public TV station. Finally, we
ask parties to address AAPTS/PBS\'s argument that even if Section
399B\'s advertising restrictions apply to some ancillary or
supplementary services, the Commission has discretion under Section
336(a)(2) of the Act to allow public TV licensees to include
advertiser-supported services if it finds these services to be in the
public interest.[^62]

*Fees Under Section 336.* In the Fees Proceeding we determined that the
issue of whether ancillary or supplementary services offered by
noncommercial licensees are subject to fees should be considered in this
proceeding. We take this opportunity to seek additional comment in light
of the comments received in the Fees Proceeding and the tentative
proposals outlined above. In the event that we clarify that Section
73.621 does not apply to ancillary or supplementary services provided by
noncommercial licensees on their DTV capacity, we seek comment on
whether noncommercial licensees should be exempt from DTV fees when they
offer ancillary or supplementary services as a source of funding for
their mission related activities.

AAPTS/PBS submitted comments in the Fees Proceeding arguing that there
is no need to \"recover\" a portion of the value of the DTV spectrum for
the public if the revenue is used to support noncommercial services that
Congress has declared to be in the public interest. AAPTS/PBS also
argues that exemption would not result in any \"unjust enrichment\"
because these revenues would be used to support noncommercial
activities, and that as public television stations are not auctioned,
there is no equivalent amount that would have been received at auction.
An exemption from fees would allow public television stations to
dedicate greater resources to their mission. Indeed, this reasoning has
prompted Congress and the Commission to exempt public television
stations from other regulatory and filing fees.[^63] We seek comment
generally on AAPTS/PBS\'s arguments to exempt noncommercial licensees
from fees for remunerative ancillary or supplementary services offered
on their excess digital capacity.

We particularly seek comment on whether such an exemption is consistent
with Section 336. Specifically, Section 336(e)(1) draws no distinction
between commercial and noncommercial stations in stating that the
Commission \"shall establish a program to assess and collect . . . . an
annual fee\" from DTV licensees offering subscription-based ancillary or
supplementary services. Can this provision, or the criteria for
establishing the fee set forth in Section 336(e)(2) be interpreted to
permit an exemption from such fees for noncommercial licensees? If an
exemption is inconsistent with the statute, would a nominal or reduced
fee be consistent with the statute? We also ask parties to address
MAP\'s argument that if we allow noncommercial licensees to include
advertising in any ancillary or supplementary services, these licensees
should pay a fee comparable to that imposed on commercial broadcasters.

**IV. ADMINISTRATIVE MATTERS**

*Comments and Reply Comments.* Pursuant to applicable procedures set
forth in Sections 1.415 and 1.419 of the Commission\'s Rules, 47 C.F.R.
§§ 1.415 and 1.419, interested parties may file comments on or before
January 28, 1999, and reply comments on or before March 1, 1999.
Comments may be filed by filing paper copies or using the Commission\'s
Electronic Comment Filing System (ECFS). *See Electronic Filing of
Documents in Rulemaking Proceedings*, 63 Fed. Reg. 24,121 (1998).

To file paper copies formally in this proceeding, you must file an
original plus four copies of all comments, reply comments, and
supporting comments. If you want each Commissioner to receive a copy of
your comments, you must file an original plus nine copies. You should
send comments and reply comments to Office of the Secretary, Federal
Communications Commission, 445 Twelfth Street, S.W.; TW-A306;
Washington, D.C. 20554. Comments and reply comments will be available
for public inspection during regular business hours in the FCC Reference
Center (Room 239), 1919 M Street, N.W., Washington, D.C. 20554.

Comments filed through the ECFS can be sent as an electronic file via
the Internet to \<http://www.fcc.gov.e-file/ecfs.html\>. Generally, only
one copy of an electronic submission must be filed. If multiple docket
or rulemaking numbers appear in the caption of this proceeding, however,
commenters must transmit one electronic copy of the comments to each
docket or rulemaking number referenced in the caption. In completing the
transmittal screen, commenters should include their full name, Postal
Service mailing address, and the applicable docket or rulemaking number.
Parties may also submit an electronic comment by Internet e-mail. To get
filing instructions for e-mail comments, commenters should send am
e-mail to ecfs@fcc.gov, and should include the following words in the
body of the message, \"get form \<your e-mail address.\" A sample form
and directions will be sent in reply.

*Initial Paperwork Reduction Act of 1995 Analysis*. This *Notice*
explores the potential applicability to noncommercial broadcasters of a
new fee assessment program which may contain an information collection
requirement. As part of our continuing effort to reduce paperwork
burdens, we invite the general public and the Office of Management and
Budget (\"OMB\") to take this opportunity to comment on the information
collection contained in the *NPRM* in the Fees Proceeding, *Notice of
Proposed Rule Making* In the Matter of Fees for Ancillary or
Supplementary Use of Digital Television Spectrum Pursuant to Section
336(e)(1) of the Telecommunications Act of 1996, MM Docket No. 97-247,
12 FCC Rcd 22821 (1997), as required by the Paperwork Reduction Act of
1995, Pub. L. No. 104-13. Public and agency comments are due at the same
time as other comments on this *Notice*; OMB comments are due 60 days
from the date of publication of this *Notice* in the Federal Register.
Comments should address: (a) whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission\'s burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology. In
addition to filing comments with the Secretary, a copy of any comments
on the information collections contained herein should be submitted to
Judy Boley, Federal Communications Commission, Room C‑1804, 445 12th
Street, SW 20054, or via the Internet to jboley@fcc.gov and to Timothy
Fain, OMB Desk Officer, 10236 NEOB, 725 - 17th Street, N.W., Washington,
DC 20503 or via the Internet to fain_t@al.eop.gov.

*Ex Parte Rules.* This proceeding will be treated as a
\"permit-but-disclose\" proceeding. *Ex parte* presentations are
permissible if disclosed in accordance with Commission rules, except
during the Sunshine Agenda period when presentations, *ex parte* or
otherwise, are generally prohibited. Persons making oral *ex parte*
presentations are reminded that a memorandum summarizing a presentation
must contain a summary of the substance of the presentation and not
merely a listing of the subjects discussed. More than a one or two
sentence description of the views and arguments presented is generally
required. *See* 47 C.F.R. § 1.1206(b)(2), as revised. Additional rules
pertaining to oral and written presentations are set forth in Section
1.1206(b).

*Initial Regulatory Flexibility Analysis.* As required by the Regulatory
Flexibility Act, *see* 5 U.S.C. § 603, the Commission has prepared an
Initial Regulatory Flexibility Analysis (IRFA) of the possible impact on
small entities of the proposals suggested in this document. The IRFA is
set forth as Attachment A. Written public comments are requested with
respect to the IRFA. These comments must be filed in accordance with the
same filing deadlines for comments on the rest of the *NPRM*, but they
must have a separate and distinct heading, designating the comments as
responses to the IRFA. The Office of Public Affairs, Reference
Operations Division, will send a copy of this *NPRM*, including the
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration, in accordance with the Regulatory Flexibility Act.

Accordingly, IT IS ORDERED that pursuant to authority contained in
Sections 4(i), 303, and 336 of the Communications Act of 1934, as
amended, 47 U.S.C. §§ 154(i), 303, 307 and 336, this Notice of Proposed
Rulemaking IS ADOPTED.

IT IS FURTHER ORDERED that the Commission\'s Office of Public Affairs,
Reference Operations Division, SHALL SEND a copy of this *Notice,*
including the Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.

*Additional Information*. For additional information on this proceeding,
please contact Jane Gross or Robert Somers, Policy and Rules Division,
Mass Media Bureau (202) 418-2130.

**FEDERAL COMMUNICATIONS COMMISSION**

Magalie Roman Salas

Secretary

**APPENDIX A**

**INITIAL REGULATORY FLEXIBILITY ANALYSIS**

As required by the Regulatory Flexibility Act (RFA),[^64] the Commission
has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the
possible significant economic impact on small entities by the policies
and rules proposed in the present *Notice of Proposed Rulemaking*,
*Ancillary or Supplementary Use of Digital Television Capacity by
Noncommercial Licensees*. Written public comments are requested on this
IRFA. Comments must be identified as responses to the IRFA and must be
filed by the deadlines for comments on the IRFA provided above in
paragraph 46. The Commission will send a copy of the *NPRM*, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration. *See* 5 U.S.C. § 603(a). In addition, the *NPRM* and
*IRFA* (or summaries thereof) will be published in the Federal Register.
*See id.*

**I. Need For and Objectives of the Proposed Rule Change:** In the
*Fifth Report and Order* the Commission adopted rules permitting
broadcasters to offer feeable ancillary or supplementary use of digital
television (DTV) capacity. In their Petition for Reconsideration, the
Association of America\'s Public Television Stations and the Public
Broadcasting Service (AAPTS/PBS) requested clarification on the ability
of public television stations to use excess capacity on DTV channels for
commercial purposes. Media Access Project and other public interest
parties jointly opposed this request, arguing that while public
television stations should be able to provide some revenue-generating
ancillary and supplementary services, these services must be consistent
with the noncommercial nature of public television as set forth in
Section 399B of the Communications Act, the provision restricting
advertising by these stations. AAPTS/PBS also requested that the
Commission exempt, to the extent feasible, public television licensees
from any obligation to pay fees when they offer ancillary services on
their DTV capacity as a source of funding for their public television
operation.

The petition describes a range of revenue-generating ancillary or
supplementary services that could help noncommercial educational
(\"NCE\") stations flourish in a digital age. The *Notice* in this
proceeding notes that the costs of converting to digital service will be
considerable, and that many NCE stations rely on public funds to provide
the build-out to DTV service. This *Notice* seeks comment on these new
services and on whether, and under what conditions, NCE licensees should
be permitted to use their DTV capacity to offer ancillary or
supplementary services, including subscription television, on a
remunerative basis. This *Notice* also seeks comment on whether and in
what circumstances NCE stations should be subject to fees for these
ancillary or supplementary services.

**II. Legal Basis:** Authority for the actions proposed in this *Notice*
may be found in Sections 4(i), 303 and 336 of the Commissions Act of
1934, as amended, 47 U.S.C. §§ 154(i), 303, 307 and 336.

**III. Description and Estimate of the Number of Small Entities to Which
the Rules Would Apply:** The RFA directs agencies to provide a
description of and, where feasible, an estimate of the number of small
entities that may be affected by the proposed rules, if adopted.[^65]
The RFA generally defines the term \"small entity \" as having the same
meaning as the terms \"small business,\" \"small organization,\" and
\"small governmental jurisdiction.\"[^66] The RFA[^67] generally defines
the term \"small organization\" to mean \"any not-for-profit enterprise
which is independently owned and operated and is not dominant in its
field.\" A small organization is generally \"any not-for-profit
enterprise which is independently owned and operated and is not dominant
in its field.\"[^68] Nationwide, as of 1992, there were approximately
275,801 small organizations.[^69] Below, we further describe and
estimate the number of small entity licensees and regulatees that may be
affected by the proposed rules, if adopted.

The proposed rules and policies will apply to television broadcasting
licensees, particularly those television stations licensed to operate on
channels reserved as \"noncommercial educational.\" Television
broadcasting stations consist of establishments primarily engaged in
broadcasting visual programs by television to the public, except cable
and other pay television services.[^70] Included in this industry are
commercial, religious, educational, and other television stations.[^71]
Also included are establishments primarily engaged in television
broadcasting and which produce taped television program materials.[^72]
There were 1,509 television stations operating in the nation in 1992, of
which 362 were noncommercial educational stations.[^73] That number has
remained fairly constant as indicated by the approximately 1,583
operating television broadcasting stations in the nation as of August
31, 1998, of which 368 were noncommercial educational stations.[^74]

In addition to owners of operating television stations, any entity who
seeks or desires to obtain a television broadcast license, particularly
for a noncommercial educational station, may be affected by the
proposals contained in this item. The number of entities that may seek
to obtain a noncommercial educational television broadcast license is
unknown.

We seek comment on these estimates and data regarding the number of
small entities affected by the proposals in this *Notice*.

**IV. Reporting, Recordkeeping, and Other Compliance Requirements:** The
Commission is not proposing any new or modified reporting,
recordkeeping, information collection, or compliance requirements in
this proceeding.

**V. Any Significant Alternatives Minimizing the Impact on Small
Entities and Consistent**

**with the Stated Objectives:** This *Notice* solicits comment on a
variety of alternatives discussed herein. Any significant alternatives
presented in the comments will be considered. This proposal may
ultimately benefit all noncommercial educational television stations. We
seek comment on the alternatives proposed in this *Notice* and on
whether there is a significant economic impact on any class of small
licensees or permittees as a result of any of our proposed approaches.

**VI. Federal Rules that Overlap, Duplicate, or Conflict with the
Proposed Rules:** The initiatives and proposed rules raised in this
proceeding do not overlap, duplicate or conflict with any other rules.

[^1]: *Fifth Report and Order* in MM Docket No. 87-268, In the Matter of
    Advanced Television Systems and Their Impact upon the Existing
    Television Broadcast Service, 12 FCC Rcd 12809 (1997) (\"*Fifth
    Report and Order*\"). We subsequently adopted a Memorandum Opinion
    and Order on Reconsideration of the *Fifth Report and Order* in the
    DTV proceeding, *Reconsideration of Fifth Report and Order* in MM
    Docket No. 87-268, In the Matter of Advanced Television Systems and
    Their Impact upon the Existing Television Broadcast Service, 13 FCC
    Rcd. 6860 (1998) (\"*Reconsideration of Fifth Report and Order*\").
    We address the ancillary and supplementary use of DTV by
    noncommercial licensees in this proceeding.

[^2]: Pub. L. No. 104-104, 110 Stat. 56 (1996), *codified at* 47 U.S.C.
    §336 (\"1996 Act\").

[^3]: Media Access Project filed jointly with the Center for Media
    Education, the Consumer Federation of America, the Minority Media
    and Telecommunications Council, and the National Federation of
    Community Broadcasters.

[^4]: Petition for Reconsideration and Clarification of Association of
    America\'s Public Television Stations and Public Broadcasting
    Service in MM Docket No. 87-268 filed June 13, 1997, p. 28, n. 29.

[^5]: *Id*. at § 336(e)(1)(A)-(B). *See also* H.R. Conf. Rep. No. 458,
    104th Cong., 2nd Sess. 160 (1996) (\"Subsection (d) requires the
    Commission to establish a fee program for any ancillary or
    supplementary services if subscription fees or any other
    compensation fees apart from commercial advertisements are required
    in order to receive such services\").

[^6]: *Notice of Proposed Rule Making* in MM Docket No. 97-248, In the
    Matter of Fees for Ancillary or Supplementary Use of Digital
    Television Spectrum Pursuant to Section 336(e)(1) of the
    Telecommunications Act of 1996, 12 FCC Rcd 22821 (1997).

[^7]: *Report and Order* in MM Docket No. 97-248, In the Matter of Fees
    for Ancillary or Supplementary Use of Digital Television Spectrum
    Pursuant to Section 336(e)(1) of the Telecommunications Act of 1996,
    FCC 98-303, ¶ 43 (1998) (\"Fees Report and Order\").

[^8]: 47 U.S.C. § 336

    \(a\) COMMISSION ACTION. \-- If the Commission determines to issue
    additional licenses for advanced television services, the Commission
    \--

    \(1\) should limit the initial eligibility for such licenses to
    persons that as of the date of such issuance, are licensed to
    operate a television broadcast station or hold a permit to construct
    such a station (or both); and

    \(2\) shall adopt regulations that allow the holders of such
    licenses to offer such ancillary or supplementary services on
    designated frequencies as may be consistent with the public
    interest, convenience, and necessity.

    \(b\) CONTENTS OF REGULATIONS. \-- In prescribing the regulations
    required by subsection (a), the Commission shall \--

    \(1\) only permit such licensee or permittee to offer ancillary or
    supplementary services if the use of a designated frequency for such
    services is consistent with the technology or method designated by
    the Commission for the provision of advanced television services;

    \(2\) limit the broadcasting of ancillary or supplementary services
    on designated frequencies so as to avoid derogation of any advanced
    television services, including high definition television
    broadcasts, that the Commission may require using such frequencies;

    \(3\) apply to any other ancillary or supplementary service such of
    the Commission\'s regulations as are applicable to the offering of
    analogous services by any other person, except that no ancillary or
    supplementary service shall have any rights to carriage under
    section 614 or 615 or be deemed a multichannel video programming
    distributor for purposes of section 628;

    \(4\) adopt such technical and other requirements as may be
    necessary or appropriate to assure the quality of the signal used to
    provide advanced television services, and may adopt regulations that
    stipulate the minimum number of hours per day that such signal must
    be transmitted; and

    \(5\) prescribe such other regulations as may be necessary for the
    protection of the public interest, convenience, and necessity.

[^9]: 47 U.S.C. § 336(a)(2).

[^10]: *Fifth Report and Order*, 12 FCC Rcd at 12820-21. Section 73.624
    of the Commission\'s rules provides in pertinent part:

    \(b\) At any time that a DTV broadcast station permittee or licensee
    transmits a video program signal on its analog television channel,
    it must also transmit at least one over-the air video program signal
    at no direct charge to viewers on the DTV channel that is licensed
    with the analog channel. The DTV program service provided pursuant
    to this paragraph must be at least comparable in resolution to the
    analog television station programming transmitted to viewers on the
    analog channel but, subject to paragraph (f) of this section, DTV
    broadcast stations are not required to simulcast the analog
    programming.

    \(c\) Provided that DTV broadcast stations comply with paragraph (b)
    of this section, DTV broadcast stations are permitted to offer
    telecommunications services of any nature, consistent with the
    public interest, convenience, and necessity, on an ancillary or
    supplementary basis. The kinds of services that may be provided
    include, but are not limited to computer software distribution, data
    transmissions, teletext, interactive materials, aural messages,
    paging services, audio signals, subscription video, and any other
    services that do not derogate DTV broadcast stations\' obligations
    under paragraph (b) of this section. Such services may be provided
    on a broadcast, point‑to‑point or point‑to‑multipoint basis,
    provided, however, that no video broadcast signal provided at no
    direct charge to viewers shall be considered ancillary or
    supplementary.

[^11]: *Fifth Report and Order*, 12 FCC Rcd at 12822.

[^12]: *Fifth Report and Order*, 12 FCC Rcd at 12820.

[^13]: *Fifth Report and Order*, 12 FCC Rcd at 12821. *See* 47 C.F.R. §
    73.624(c).

[^14]: *Fifth Report and Order*, 12 FCC Rcd at 12823. NTSC is the
    acronym for the National Television Systems Committee, which
    developed the standards for the television broadcast system
    currently employed in the United States.

[^15]: *Fifth Report and Order*, 12 FCC Rcd at 12821.

[^16]: *Fifth Report and Order*, 12 FCC Rcd at 12820-21. *See* 47 C.F.R.
    § 73.624(c).

[^17]: 47 U.S.C. § 336

    \(e\) FEES

    \(1\) SERVICES TO WHICH FEES APPLY \-- If the regulations prescribed
    pursuant to subsection (a) permit a licensee to offer ancillary or
    supplementary services on a designated frequency \--

    \(A\) for which the payment of a subscription fee is required in
    order to receive such services, or

    \(B\) for which the licensee directly or indirectly receives
    compensation from a third party in return for transmitting material
    furnished by such third party (other than commercial advertisements
    used to support broadcasting for which a subscription fee is not
    required),

    the Commission shall establish a program to assess and collect from
    the licensee for such designated frequency an annual fee or other
    schedule or method of payment that promotes the objectives described
    in subparagraphs (A) and (B) of paragraph (2).

    \(2\) COLLECTION OF FEES.\-- The program required by paragraph (1)
    shall\--

    \(A\) be designed (i) to recover for the public a portion of the
    value of the public spectrum resource made available for such
    commercial use, and (ii) to avoid unjust enrichment through the
    method employed to permit such uses of that resource;

    \(B\) recover for the public an amount that, to the extent feasible,
    equals but does not exceed (over the term of the license) the amount
    that would have been recovered had such services been licensed
    pursuant to the provisions of section 309(j) of this Act and the
    Commissions\'s regulations thereunder; and

    \(C\) be adjusted by the Commission from time to time in order to
    continue to comply with the requirements of this paragraph.

[^18]: *Id.* at § 336(e)(1)(B). The Conference Report states that the
    Commission must \"establish a fee program for any ancillary or
    supplementary services if subscription fees or any other
    compensation apart from commercial advertisements are required in
    order to receive such services.\" H.R. Conf. Rep. No. 458, 104th
    Cong., 2nd Sess. 160 (1996).

[^19]: In the *Fourth Further Notice of Proposed Rulemaking/Third Notice
    of Inquiry* 10 FCC Rcd 10541, 10551-52 (1995), we asked what types
    of relief could be afforded to noncommercial broadcasters to assist
    them in the conversion to DTV. The *Notice* sought comment on
    various proposals such as mandating that only the minimum required
    broadcast programming must be \"noncommercial,\" minimizing
    restrictions on public television operations, and allowing these
    stations greater flexibility. *Id*.

[^20]: *Fifth Report and Order*, 12 FCC Rcd at 12852.

[^21]: *Fifth Report and Order*, 12 FCC Rcd at 12852.

[^22]: *Fifth Report and Order*, 12 FCC Rcd at 12852.

[^23]: *Fifth Report and Order*, 12 FCC Rcd at 12852.

[^24]: AAPTS/PBS Petition on Reconsideration of the *Fifth Report and
    Order* at 26-27.

[^25]: AAPTS/PBS Reply to MAP Opposition at 7.

[^26]: AAPTS/PBS Petition at 27. AAPTS/PBS has also noted that it has
    requested 45% of the estimated \$1.7 billion DTV transition cost, or
    \$771 million, in its FY 1999 budget submission to the Office of
    Management and Budget.

[^27]: AAPTS/PBS Petition at 26-27.

[^28]: AAPTS/PBS Petition at 27. *See* n. 10 for description of
    nonderogation requirement under Section 73.624 of the Commission\'s
    rules.

[^29]: AAPTS/PBS Petition at 28.

[^30]: AAPTS/PBS Petition at 27.

[^31]: MAP Opposition to AAPTS/PBS Petition for Reconsideration of the
    *Fifth Report and Order* at 8-9.

[^32]: AAPTS/PBS Reply to MAP Opposition at 4.

[^33]: AAPTS/PBS Reply to MAP Opposition at 5-6.

[^34]: AAPTS/PBS Reply to MAP Opposition at 5-6 (*citing Transmission of
    Teletext by TV Stations*, 53 R.R.2d 1309, 1322 (1983)).

[^35]: AAPTS/PBS Reply at 6-7 (*citing* 47 U.S.C. § 336 (a)(2)).

[^36]: Petition for Reconsideration and Clarification of Association of
    America\'s Public Television Stations and Public Broadcasting
    Service in MM Docket No. 87-268 filed June 13, 1997, p. 28, n. 29.

[^37]: *See n.* 6, *supra*.

[^38]: AAPTS/PBS Comments in Fees Proceeding at 6-7.

[^39]: For example, Congress has repeatedly confirmed its commitment to
    universal access to public service programming in its appropriations
    deliberations and in its reauthorization of funding. Since 1967,
    Congress has appropriated approximately \$4.67 Billion (through FY
    1998) to fund public service programming through the Corporation for
    Public Broadcasting, and approximately \$734.8 million (through FY
    1998) for the planning and construction of public television and
    radio facilities, including the public broadcasting satellite
    distribution system. AAPTS/PBS Comments in Fees Proceeding at 8. The
    Commission has consistently concluded that \"exacting fees from
    noncommercial educational applicants would dilute the financial
    support offered by Congress.\" The Commission exempts noncommercial
    educational broadcasters from application fees and annual regulatory
    fees. AAPTS/PBS Comments in Fees Proceeding at 10 *citing* In the
    Matter of Establishment of a Fee Collection Program to Implement the
    Provisions of the Consolidated Omnibus Budget Reconciliation Act of
    1985, Docket No. 86-285, 3 FCC Rcd 5987, 5988 (1988); In the Matter
    of Implementation of Section 9 of the Communications Act, Assessment
    and Collection of Regulatory Fees for the 1994 Fiscal Year, MM
    Docket No. 94-19, 9 FCC Rcd 6957 (1994).

[^40]: MAP Comments in Fees Proceeding at 15-17.

[^41]: Pub. L. 90‑129, 81 Stat. 365, codified at 47 U.S.C. § 390 *et
    seq.* Until 1962, Congress did not provide any direct financial
    assistance to noncommercial, educational broadcasting. *See*
    Educational Television Act of 1962, Pub. L. 87‑447, 76 Stat. 64. An
    expanded federal effort to address public broadcasting was not
    undertaken until 1967 when the Carnegie Corporation sponsored a
    commission to review the state of educational broadcasting. The
    Carnegie Commission found that the future of an expanded public
    broadcasting system rested on the strength of its local stations,
    but also found that these stations were greatly restricted by
    chronic funding shortfalls. The Carnegie Commission called upon the
    Federal Government to supplement existing state, local, and private
    financing in order that educational broadcasting could realize its
    full potential as a viable alternative to commercial broadcasting.
    The Carnegie Commission\'s Report and proposals became the
    foundation for the Public Broadcasting Act of 1967. *See* Carnegie
    Commission on Educational Television: A Program for Action (1967).

[^42]: *See* Table of Allotments, 41 F.C.C. 148, 159, 161 (1952)
    (codified at 47 C.F.R. §§ 73.606(a), 73.621).

[^43]: Legislation that would overhaul the federal funding structure of
    public television by creating a federal trust fund has been
    introduced in Congress. For example, a bill was introduced that
    would create a federal trust fund to provide 70 percent of the
    financing for public television. The fund would be financed by
    voluntary contributions from commercial TV stations in return for
    exemption from fulfilling content-based public interest broadcasting
    requirements. *See* H.R. 4067, 105th Congress, 2d Sess. 1-6 (June
    16, 1998) (\"Public Broadcasting Reform Act of 1998\").

[^44]: *Fifth Report and Order*, 12 FCC Rcd at 12820-21. *See* 47 C.F.R.
    § 73.624

[^45]: 47 U.S.C. § 397(6).

[^46]: Omnibus Budget Reconciliation Act of 1981, Pub. Law No. 97-35, §
    1231, 95 Stat. 357, 731 (codified at 47 U.S.C. §399B). *See also*
    H.R. Rep. No. 97-82, at 13-14.

[^47]: Section 399B also requires that public stations engaged in
    revenue generating activities comply with accounting procedures
    designed to separately identify these commercial revenues and costs,
    and it prohibits Corporation for Public Broadcasting funds from
    being used to defray any costs associated with these activities. 47
    U.S.C. § 399B.

[^48]: Section 73.621 of the Commission\'s Rules, 47 C.F.R. § 73.621,
    provides in pertinent part:

    \(a\) . . . noncommercial educational broadcast stations will be
    licensed only to nonprofit educational organizations upon a showing
    that the proposed stations will be used primarily to serve the
    educational needs of the community; for the advancement of
    educational programs; and to furnish a nonprofit and noncommercial
    television broadcast service.

    \(e\) Each station shall furnish a nonprofit and noncommercial
    broadcast service. . . . .

[^49]: *Amendment of Part 73.642(a) of the Commission\'s Rules
    Concerning Subscription Television Authorization for Noncommercial
    Licensees*, 97 FCC 2d 411 (1984).

[^50]: *Id.* at 413.

[^51]: *Id.*

[^52]: *Id.* To date, no waivers have been granted to noncommercial
    television stations. Approximately six waivers have been granted to
    commercial television stations.

[^53]: *See 47* C.F.R. §§ 73.621 (f), (g) and 73.646 (b), (d).

[^54]: 47 U.S.C. § 399B(c)*. See* ¶ 28, *supra*, for definition of a
    \"noncommercial educational broadcast station\" and \"public
    broadcast station\" under Section 397(6) of the Communications Act
    of 1934, 47 U.S.C. § 397(6). Section 73.621(a) of the Commission\'s
    Rules, 47 C.F.R. § 73.621(a), reiterates the purpose of public
    television stations, stating that such licenses will be granted only
    upon a showing that the stations will be used primarily to serve the
    educational needs of the community; for the advancement of
    educational programs; and to furnish a nonprofit and noncommercial
    television broadcast service.

[^55]: Section 399B(c) and (d) requires that public stations engaged in
    revenue generating activities comply with accounting procedures
    designed to separately identify these commercial revenues and costs,
    and it prohibits Corporation for Public Broadcasting funds from
    being used to defray any costs associated with these activities. 47
    U.S.C. § 399B(c),(d).

[^56]: 47 U.S.C. § 399B. An advertisement is defined as a \"message or
    other programming material which is broadcast or otherwise
    transmitted in exchange for any remuneration, and which is intended
    (1) to promote any service, facility, or product offered by any
    person who is engaged in such offering for profit; (2) to express
    the views of any person with respect to any matter of public
    importance or interest; or (3) to support or oppose any candidate
    for political office.\" Under Section 399A, public stations may
    acknowledge underwriting contributions with brief messages that
    identify but do not promote (*e.g*., do not provide information on
    sales or discounts, call upon the viewer to take action, provide
    qualitative claims such as \"the best,\" etc.) underwriters and
    their products. Moreover, although public stations may conduct
    fundraising activities on-air to benefit their stations, they may
    not suspend or alter regular programming to raise funds for any
    other entity. 47 U.S.C. § 399A.

[^57]: 47 U.S.C. § 153(6).

[^58]: *Subscription Video,* 2 FCC Rcd 1001 (1987), *aff\'d sub nom.
    National Association for Better Broadcasting v. FCC,* 849 F.2d 665
    (D.C. Cir. 1988).

[^59]: *Id.* at 1004.

[^60]: *Id.*

[^61]: For example, a public television station would not be permitted
    to enter into an agreement that would allow \"Network A\" to
    *broadcast* its advertiser-supported \"Popular Program B\" over the
    public television station\'s excess digital capacity, while an
    agreement that would allow \"Network A\" to transmit its \"Popular
    Program B\" on a *subscription basis* would be permitted.

[^62]: AAPTS/PBS Reply at 6-7. Section 336(a)(2) requires the FCC to
    \"adopt regulations that allow \[DTV licensees\] to offer such
    ancillary or supplementary services on designated frequencies as may
    be consistent with the public interest, convenience, and
    necessity.\" 47 U.S.C. § 336(a)(2).

[^63]: *See* n. 39, *supra*.

[^64]: [See]{.underline} 5 U.S.C. § 603. The RFA, [see]{.underline} 5
    U.S.C. § 601 [et. seq.]{.underline}, has been amended by the
    Contract With America Advancement Act of 1996, Pub. L. No. 104-121,
    110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small
    Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).

[^65]: 5 U.S.C. § 603(b)(3).

[^66]: [Id]{.underline}. § 601(6).

[^67]: 5 U.S.C. § 601(4).

[^68]: 5 U.S.C. § 601(4).

[^69]: 1992 Economic Census, U.S. Bureau of the Census, Table 6 (special
    tabulation of data under contract to Office of Advocacy of the U.S.
    Small Business Administration).

[^70]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 CENSUS OF TRANSPORTATION,
    COMMUNICATIONS AND UTILITIES, ESTABLISHMENT AND FIRM SIZE, Series
    UC92-S-1, Appendix A-9 (1995).

[^71]: *Id. See* Executive Office of the President, Office of Management
    and Budget, Standard Industrial Classification Manual (1987), at
    283, which describes \"Television Broadcasting Stations (SIC Code
    4833) as:

    Establishments primarily engaged in broadcasting visual programs by
    television to the public, except cable and other pay television
    services. Included in this industry are commercial, religious,
    educational and other television stations. Also included here are
    establishments primarily engaged in television broadcasting and
    which produce taped television program materials.

[^72]: Economics and Statistics Administration, Bureau of Census, U.S.
    Department of Commerce, 1992 CENSUS OF TRANSPORTATION,
    COMMUNICATIONS AND UTILITIES, ESTABLISHMENT AND FIRM SIZE, Series
    UC92-S-1, Appendix A-9 (1995). Separate establishments primarily
    engaged in producing taped television program materials are
    classified under another SIC number. SIC 7812 (Motion Picture and
    Video Tape Production); SIC 7922 (Theatrical Producers and
    Miscellaneous Theatrical Services (producers of live radio and
    television programs).

[^73]: FCC News Release No. 31327, Jan. 13, 1993; Economics and
    Statistics Administration, Bureau of Census, U.S. Department of
    Commerce, *supra* note 78, Appendix A-9.

[^74]: FCC News Release \"Broadcast Station Totals as of August 31,
    1998,\" issued September 11, 1998.