Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | * | MM Docket No. 00-105         |
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**REPORT AND ORDER**

**Adopted:** March 22, 2001 **Released:** March 28, 2001

By the Commission:

# Introduction

1.  By this [Report and Order]{.underline} we eliminate the experimental
    broadcast multiple ownership rule, Section 74.134 of the
    Commission's Rules.[^1] That rule provides that no entity may
    control more than one experimental license absent a showing of
    need.[^2] We are convinced that this rule is no longer necessary to
    achieve the goals of competition and diversity in the broadcast
    market, and that elimination of the rule would serve the public
    interest.

# BACKGROUND

2.  Experimental stations are "licensed for experimental or
    developmental transmissions of radio telephony, television,
    facsimile, or other types of telecommunication services intended for
    reception and use by the general public."[^3] Under this licensing
    scheme, stations can carry on research and experimentation for the
    development of new broadcast technology, equipment, systems, or
    services that could not be accomplished using other licensed
    broadcast stations. Section 74.134 generally limits a licensee's
    ability to hold experimental station licenses to a single license,
    except in cases where a showing was "made that the program of
    research requires a licensing of two or more separate stations."

3.  The Commission initiated consideration of its rule concerning the
    ability of a broadcaster to hold more than one license for an
    experimental broadcast station when it issued a [Notice of
    Inquiry]{.underline} ("NOI")[^4] as the first step in its Biennial
    Ownership Review of the broadcast ownership and other rules as
    required by § 202(h) of the Telecommunications Act of 1996 ("1996
    Act").[^5] In the [NOI]{.underline}, the Commission sought comment
    on whether the experimental broadcast station multiple ownership
    rule remained in the public interest.

4.  In response to the NOI, the Commission received one comment. The
    National Association of Broadcasters ("NAB") recommended the repeal
    of the experimental station multiple ownership rule. NAB argued that
    regulatory change and dislocation faced by broadcast auxiliary
    facilities create a need for more responsible use of experimental
    stations.[^6]

5.  In its May 26, 2000 [Biennial Review Report]{.underline},[^7] the
    Commission addressed the continued need for the rule, focusing on
    the purposes for licensing experimental broadcast stations and the
    restrictions placed on them by our rules.[^8] After reviewing the
    experimental station multiple ownership rule, the Commission
    tentatively concluded that the rule, adopted in 1946 and
    re-designated in 1963 as § 74.134,[^9] may no longer serve the
    public interest.

6.  As a consequence of the tentative conclusions reached in the
    [Biennial Review Report]{.underline}, we issued the [Notice of
    Proposed Rule Making]{.underline} ("NPRM")[^10] in this proceeding
    proposing to eliminate the multiple ownership rule for experimental
    stations.[^11] There, we stated that the experimental broadcast
    station multiple ownership rule no longer appeared necessary because
    of safeguards established by other existing rules pertaining to
    experimental stations. These rules, we noted, prevent experimental
    licensees from charging for the production or transmission of any
    programming, from transmitting program material unless it is
    necessary to the experiments being conducted or, indeed, from
    providing any regular broadcast service.[^12] Additionally, we
    pointed out that other experimental broadcast station rules prohibit
    a licensee from making exclusive use of a single frequency. We
    stated that these stations, by their nature, do not exert influence
    on the competitive marketplace and that allowing a party to have
    more than one experimental broadcast station license might permit
    efficiencies to be realized in the operation of such stations. This
    would further our statutory charge pursuant to Section 303(g) of the
    Communications Act of 1934, as amended, to "\[s\]tudy new uses for
    radio, provide for experimental uses of frequencies, and generally
    encourage the larger and more effective use of radio in the public
    interest."[^13] Accordingly, we issued the [NPRM]{.underline} in
    this proceeding seeking comment on whether this rule remains in the
    public interest. Also, we encouraged commenters to offer alternative
    proposals involving less than the outright repeal of the rule.[^14]

# DISCUSSION

7.  Section 74.134 was intended to limit experimental licensees to the
    minimum spectrum use necessary to enable them to carry out research
    and experimentation that might not otherwise be possible under
    regular broadcasting licensing schemes. The rule also prevented such
    licensees from aggregating enough stations to enable them to operate
    a commercial service under the guise of experimentation. The
    Commission believes the experimental station multiple ownership
    limitation is no longer necessary given that other rules and
    requirements will adequately assure the goals of § 74.134 are met.

8.  NAB, the sole commenter responding to the NPRM, supports the
    Commission's proposal, urging it to eliminate what NAB characterizes
    as an "unnecessary and outdated restriction on the multiple
    ownership of experimental broadcast stations." NAB notes that
    current requirements[^15] and limitations are "sufficient to ensure
    that they \[experimental broadcast stations\] are used only for
    [bona]{.underline} [fide]{.underline} experimental purposes, rather
    than for commercial broadcast purposes \[and\] accordingly, the
    repeal of the rule strictly limiting ownership of experimental
    stations should not affect the competitiveness or the diversity of
    the commercial broadcast marketplace."[^16]

9.  We agree. Repeal of the experimental station multiple ownership rule
    will not affect the Commission's ability to ensure that experimental
    stations are used specifically for [bona]{.underline}
    [fide]{.underline} experimental purposes and not for commercial
    purposes, as the Commission can continue to do so under Section
    74.182. Nor will experimental stations be able to tie up excessive
    spectrum even absent § 74.134 because, under other Commission rules,
    experimental licensees are limited to the minimum frequencies
    necessary to conduct their experimental operations and an
    experimental license does not grant the licensee exclusive use of a
    frequency.[^17] If interference would be caused by simultaneous
    operation of stations licensed experimentally, our rules require
    that the parties arrange a satisfactory time division of the
    frequency or frequencies involved.[^18] Accordingly, we have
    determined that these ownership limits for experimental broadcast
    stations are no longer necessary.

10. We believe that granting more than one experimental broadcast
    station license to qualified applicants may, in fact, allow
    resources to be devoted to research more efficiently during the
    operation of such stations. As noted above, such an expanded
    licensing scheme would also promote the Commission's statutory
    responsibilities under Section 303(g) of the Communications
    Act.[^19]

# cONCLUSION

11. In view of the foregoing, we conclude that the experimental station
    multiple ownership rule is unnecessary to achieving the purposes for
    which it was adopted. Other rules prevent the use of experimental
    licenses for commercial purposes or for controlling more spectrum
    than is needed for experimental purposes. It is hereby repealed as
    indicated in Appendix B.

# Administrative matters

12. [Paperwork Reduction Act of 1995 Analysis]{.underline}. This [Report
    and Order]{.underline} has been analyzed with respect to the
    Paperwork Reduction Act of 1995 and found to impose no new reporting
    requirements on the public.

13. R[egulatory Flexibility Analysis]{.underline}. Pursuant to the
    Regulative Flexibility Act of 1980, as amended, 5 U.S.C. § 601
    [et]{.underline} [seq]{.underline}*.*, the Commission\'s Final
    Regulatory Flexibility Analysis in this [Report and
    Order]{.underline} is attached as Appendix A.

# ordering clauses

14. Accordingly, IT IS ORDERED that, pursuant to the authority contained
    in Sections 4(i), 303(g) and 303(r), of the Communications Act of
    1934, as amended, 47 U.S.C. §§ 154(i), 303(g) and 303(r), Part 74 of
    the Commission\'s Rules, 47 C.F.R. Part 74 IS AMENDED as set forth
    in Appendix B below.

15. IT IS FURTHER ORDERED that the amendment set forth in Appendix B
    SHALL BE EFFECTIVE 30 days after publication in the Federal
    Register.

16. IT IS FURTHER ORDERED that the Commission\'s Office of Public
    Affairs, Reference Operations Division, SHALL SEND a copy of this
    [Report and Order]{.underline}, including the Final Regulatory
    Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
    Business Administration.

17. IT IS FURTHER ORDERED that this proceeding is terminated.

18. [Additional Information]{.underline}. For additional information
    concerning this proceeding, please contact Roger Holberg, Mass Media
    Bureau, (202) 418-2134.

FEDERAL COMMUNICATIONS COMMISSION

Magalie Roman Salas

Secretary

# APPENDIX A {#appendix-a .unnumbered}

**FINAL REGULATORY FLEXIBILITY ACT ANALYSIS**

As required by the Regulatory Flexibility Act (RFA),[^20] an Initial
Regulatory Flexibility Analysis (IRFA) was incorporated in the [Notice
of Proposed Rule Making]{.underline} in this proceeding.[^21] The
Commission sought written public comment on the proposals in this
Notice, including comment on the IRFA. The comments received are
discussed below. This present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.[^22]

**I. Need For, and Objectives of, Report and Order**

In February 1996, the Telecommunications Act of 1996 (\"1996 Act\") was
signed into law. Section 202 of the 1996 Act directed the Commission to
make a number of significant revisions to its broadcast media ownership
rules. Section 202(h) also requires us to review our broadcast ownership
rules every two years commencing in 1998. One of the rules reviewed in
our first such biennial reviews was Section 74.134, the experimental
broadcast station multiple ownership rule. In our [Biennial Review
Report]{.underline}[^23] we tentatively concluded that this rule was no
longer necessary in the public interest. Accordingly, we issued a
[Notice of Proposed Rule Making]{.underline} proposing the elimination
of this rule consistent with the goals of the 1996 Act. This [Report and
Order]{.underline} eliminates this rule on the basis that it is no
longer necessary in the public interest and that other existing
Commission rules are sufficient to preclude the abuse of experimental
broadcast station authorizations in the absence of the rule.

**II. Significant Issues Raised by the Public in Response to the Initial
Analysis**

No comments were received concerning the Initial Regulatory Flexibility
Analysis. Indeed, only the National Association of Broadcasters ("NAB")
submitted comments in this proceeding, and it did not specifically
address the IRFA or the impact of the proposed rule change on small
businesses more generally. It did, however, favor elimination of the
subject rule.

# Description and Estimate of the Number of Small Entities to Which the Rules Will 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.[^24] The Regulatory
Flexibility Act defines the term "small entity as having the same
meaning as the terms "small business," "small organization," and "small
governmental jurisdiction.[^25] In addition, the term "small business"
has the same meaning as the term "small business concern" under section
3 of the Small Business Act.[^26] A small business concern is one which:
(1) is independently owned and operated; (2) is not dominant in its
field of operation; and (3) satisfies any additional criteria
established by the SBA.[^27]

Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small
business applies \"unless an agency after consultation with the Office
of Advocacy of the SBA and after opportunity for public comment,
establishes one or more definitions of such term which are appropriate
to the activities of the agency and publishes such definition(s) in the
Federal Register. A "small organization" is generally "any
not-for-profit enterprise which is independently owned and operated and
is not dominant in its field." [^28] Nationwide, as of 1992, there were
approximately 275,801 small organizations.[^29]^0^ "Small governmental
jurisdiction" generally means "governments of cities, counties, towns,
townships, villages, school districts, or special districts with a
population of less than 50,000."[^30]^1^ As of 1992, there were
approximately 85,006 such jurisdictions in the United States.[^31]^2^
This number includes 38,978 counties, cities, and towns; of these,
37,566, or 96 percent, have populations of fewer than 50,000.[^32]^3^
Thus, of the 85,006 governmental entities, we estimate that 81,600 (91
percent) are small entities.

The Small Business Administration defines a radio broadcasting station
that has \$5 million or less in annual receipts as a small
business.[^33]^4^ A radio broadcasting station is an establishment
primarily engaged in broadcasting aural programs by radio to the
public.[^34]^5^ Included in this industry are commercial, religious,
educational, and other radio stations.[^35]^6^ The 1992 Census indicates
that 96 percent (5,861 of 6,127) radio station establishments produced
less than \$5 million in revenue in 1992. Official Commission records
indicate that 11,334 individual radio stations were operating in
1992[^36]^7^ As of September 30, 2000, Commission records indicate that
12,717 radio stations (both commercial and noncommercial) were operating
of which 2,140 were noncommercial educational FM radio stations.[^37]^8^
Applying the 1992 percentage of station establishments producing less
than \$5 million in revenue ([i.e]{.underline}., 96 percent) to the
number of radio stations in operation, ([i.e]{.underline}., 12,717)
indicates that 12,208 of these radio stations would be considered "small
businesses" or "small organizations."

The SBA defines small television broadcasting stations as television
broadcasting stations with \$10.5 million or less in annual
receipts[^38]^9^ As of September 30, 2000, there were 1,288 commercial
television stations and 375 non-commercial educational television
stations on the air.[^39]^0^ According to Commission staff review of the
BIA Publications, Inc., Master Access Television Analyzer Database,
fewer than 800 commercial TV broadcast stations (65%) have revenues of
less than \$10.5 million dollars. We note, however, that under SBA's
definition, revenues of affiliates that are not television stations
should be aggregated with the television station revenues in determining
whether a concern is small. Our estimate may thus overstate the number
of small entities since the revenue figure on which it is based does not
include or aggregate revenues from non-television affiliated companies.
Accordingly, it appears that the proposed revisions would affect no more
than 800 television stations that might be considered "small businesses"
or "small organizations."

**IV. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements**

The [Report and Order]{.underline} imposes no reporting, recordkeeping,
or compliance requirements.

**V. Steps Taken to Minimize Significant Economic Impact on Small
Entities and Significant Alternatives Considered**

We believe that the elimination of the experimental station multiple
ownership rule strikes the appropriate balance between allowing
broadcast stations to realize the efficiencies of conducting research
via multiple ownership of experimental stations on the one hand, and
preventing experimental facilities from being used for commercial
purposes or to prevent other legitimate use of broadcast spectrum on the
other. Repeal of the experimental station multiple ownership rule will
not affect the Commission's ability to ensure that experimental stations
are used specifically for [bona]{.underline} [fide]{.underline}
experimental purposes and not for commercial purposes, as the Commission
can continue to do so under Section 74.182. Nor will experimental
stations be able to tie up excessive spectrum even absent § 74.134
because, under other Commission rules, experimental licensees are
limited to the minimum frequencies necessary to conduct their
experimental operations and an experimental license does not grant the
licensee exclusive use of a frequency. We believe that the elimination
of the experimental multiple ownership rule aids all licensees, and it
especially benefits small entities who will no longer incur the
expensive of filing a special request should they need more than one
experimental license, as would have been the case under the previous
regulation.[^40] Since the elimination of the subject rule in this
[Report and Order]{.underline} will in all probability confer such a
benefit on smaller entities within the group of small businesses
affected, the alternative of retaining the rule was not selected.

# VI. Report to Congress  {#vi.-report-to-congress .unnumbered}

The Commission will send a copy of this [Report and Order]{.underline},
including this FRFA, in a report to be sent to Congress pursuant to the
Small Business Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C.
§ 801(a)(1)(A). In addition, the Commission will send a copy of this
[Report and Order]{.underline}, including FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration. A copy of this Report and
Order and FRFA (or summaries thereof) will also be published in the
Federal Register. [See]{.underline} 5 U.S.C. § 604(b).

**APPENDIX B**

**RULE CHANGE**

Part 73 of Title 47 of the U.S. Code of Federal Regulations is amended
to read as follows:

PART 73 -- RADIO BROADCAST SERVICES

### The Authority citation for Part 74 continues to read as follows:

AUTHORITY: 47 U.S.C. 154, 303, 307, and 554.

> 2\. Section 74.134 is deleted.

\* \* \* \* \*

[^1]: 47 CFR § 74.134.

[^2]: For a discussion of the rule's history [see]{.underline} Biennial
    Review Report in MM Docket No. 98-35, 15 FCC Rcd 11058, 11066-70,
    11119 (2000) ("[Biennial Review Report]{.underline}").

[^3]: 47 CFR § 74.101.

[^4]: [Notice of Inquiry]{.underline} in MM Docket No. 98-35, 13 FCC Rcd
    11276 (1998) ("NOI").

[^5]: Pub. L. No. 104-104, 110 Stat. 56 (1996).

[^6]: NAB Comments to [NOI]{.underline} at 16.

[^7]: [Biennial Review Report]{.underline}, [supra]{.underline}.

[^8]: [Id]{.underline}. at 11119-20.

[^9]: 28 FR 13706, Dec. 14, 1963.

[^10]: [Notice of Proposed Rule Making]{.underline} in MM Docket No.
    00-105, 15 FCC Rcd 11196 (2000)("NPRM").

[^11]: Section 202(h) of the 1996 Act requires the Commission to "repeal
    or modify any regulation it determines to be no longer in the public
    interest" in its Biennial Reviews.

[^12]: [Notice]{.underline}, [supra]{.underline} at 11198;
    [see]{.underline} [also]{.underline} 47 CFR §§ 74.182(a) and (b).

[^13]: 47 U.S.C. § 303(g).

[^14]: [Id]{.underline}. at 11196.

[^15]: 47 CFR § 74.182 \[Revised as of October 1, 1999\].

[^16]: NAB Comments to [NPRM]{.underline}, at 1-2.

[^17]: 47 CFR § 74.103(b), 74.131(b).

[^18]: 47 CFR § 74.131(b). If they cannot reach such an agreement, the
    rule requires the Commission to specify a time division.
    [Id]{.underline}.

[^19]: 47 U.S.C. § 303(g).

[^20]: ^1^ [See]{.underline} 5 U.S.C. § 603. The RFA, (
    [see]{.underline} 5 U.S.C. § 601 [et]{.underline}*.*
    [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).

[^21]: ^2^ [Notice of Proposed Rulemaking]{.underline} in MM Docket No.
    00-105, 15 FCC Rcd. 11196 (2000).

[^22]: ^3^ [See]{.underline} 5 U.S.C. § 604.

[^23]: ^4^ [Biennial Review Report]{.underline} in MM Docket No. 98-35,
    15 FCC Rcd 11058 (2000).

[^24]: ^5^ 5 U.S.C. § 603(b)(3).

[^25]: ^6^ Id. § 601(6).

[^26]: ^7^ [Id]{.underline}. § 601(3).

[^27]: ^8^ 15 U.S.C. § 632.

[^28]: ^9^ 5 U.S.C. § 601(4).

[^29]: ^10^ 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).

[^30]: ^11^ 5 U.S.C § 601(5).

[^31]: ^12^ U.S. Dept. of Commerce, Bureau of the Census, "1992 Census
    of Governments."

[^32]: ^13^ [Id]{.underline}.

[^33]: ^14^ 13 C.F.R. § 121.201 (SIC Code 4832).

[^34]: ^15^ 1992 Census, Series UC92-S-1, at Appendix A-9.

[^35]: ^16^ [Id]{.underline}. The definition used by the SBA also
    includes radio broadcasting stations which also produce radio
    program materials. Separate establishments that are primarily
    engaged in producing radio program material are classified under
    another SIC number, however. [Id]{.underline}.

[^36]: ^17^ FCC News Release, No. 31327 (January 13, 1993).

[^37]: ^18^ FCC Press Release, [Broadcast Station Totals as of September
    30, 2000]{.underline}, (issued November 29, 2000).

[^38]: ^19^ 13 C.F.R. § 121.201 (SIC Code 4833).

[^39]: ^20^ FCC Press Release, [Broadcast Station Totals as of September
    30, 2000]{.underline}, (issued November 29, 2000).

[^40]: Experimental licensees would still have to make a showing of need
    in order to be assigned more than one frequency pursuant to Section
    74.103(b) of the Commission's Rules.