Report No. DC-95-103                                            ACTION IN DOCKET CASE                 July 28, 1995
     
                                                                   
                                                                                                                                               ADVANCED TELEVISION SYSTEMS AND THEIR IMPACT UPON THE
     EXISTING TELEVISION BROADCAST SERVICE 
     (MM Docket No. 87-268)
     
     
              The FCC today took the next major step toward bringing digital television to
     the American public.   The Commission issued a Notice of Proposed Rule Making to
     invite comment on a broad range of topics affected by the transition to digital
     broadcasting and to revisit decisions made in an earlier 1992 order when it was not
     apparent that digital technology would permit, among other things, multiple program
     streams to be delivered using a single 6 MHz channel.  The NPRM recognizes the
     evolution of digital technology and advances made in the development of a standard
     for digital broadcasting of video, including high definition television (HDTV). 
     
              Today's Notice identified four goals which will guide the on-going rule
     making process:
     
                To preserve our nation's free, universal broadcasting service.
                To foster an expeditious and orderly transition to digital technology which       
             will allow the public to receive the benefits of digital television, including         
             HDTV.
                To eventually recover spectrum in contiguous blocks from coast-to-coast                 
             for new, as yet undefined services, to allow the public the full benefit of its
            spectrum.
                To ensure that the spectrum will be used in a manner which best serves the
             public interest.
     
              The Commission reaffirmed its decision that current broadcast licensees be
     granted initial eligibility to shift from the existing analog broadcast technology  to a
     more efficient digital service.  In a departure from previous decisions, broadcasters
     would be allowed greater flexibility in responding to market demand by transmitting a
     mix of HDTV, standard definition (SDTV), and perhaps other services.  
     
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              The Commission requested comment on these and other issues:
     
                What limits should there be on use of the ATV channel, and should there                 
             be a minimum requirement for HDTV transmissions?
                How should broadcasters' public interest obligations be affected by the shift
             to digital broadcasting?
                How should the end of the transition be determined, and are there ways to     
             shorten the transition that would preserve the interests of both broadcasters    
             and consumers?
                Should a simulcast requirement be imposed upon licensees?
                What steps should be taken to optimize recovery of spectrum?
                Should small market stations receive special consideration?
                Can the special needs of non-commercial licensees be accommodated?
                Should mandatory receiver standards be adopted?
                How are existing laws, such as must carry, affected by the transition to                
             digital broadcasting?
     
              In addition to exploring these critical transitional issues, the Commission also
     released a Notice of Inquiry.  This NOI asks questions regarding how to best allocate
     future uses of recovered spectrum.
     
              It is expected that this Notice will be followed by two additional proceedings 
     later this year.  After receipt of a recommendation of a standard from the
     Commission's Advisory Committee on Advanced Television Services (ACATS),
     expected this November, one item will seek comment on the specific issues relevant
     to the endorsement of that standard.  The other item will study the issues related to
     the allotment and assignment of channels during the transition period.  These, in turn,
     would be followed by a final report and order sometime next year which will launch  
     the Advanced Television System.
     
              Action by the Commission July 28, 1995 by Fourth Further Notice of
     Proposed Rule Making and Third Notice of Inquiry (FCC 95-315).  Chairman Hundt,
     Commissioners Quello, Barrett, Ness and Chong.  
     
                                    - FCC -
     
     News media contacts: Audrey Spivack and David Fiske at (202) 418-0500.
     Mass Media Bureau contact: Saul Shapiro at (202) 418-2600.
     
     
     
     
     
     
     
     
     
     
     
     Statement of Chairman Reed E. Hundt
     Advanced Television Systems
     and Their Impact Upon the Existing Television Broadcast Service
     MM Docket No. 87-268
     
     July 28, 1995
     
     
              This is an immensely important proceeding.  It is now clear that the transition
     to digital broadcasting is different in kind, not just degree, from the transition from
     black and white to color.  
     
              One could not have said that in 1992 when we issued our last order in this
     proceeding, which assumed that this venture was simply about whether broadcasters
     could provide a prettier, eye-popping, high definition picture.  But one cannot avoid
     that now.  The flexibility that the digital broadcast standard will allow -- the
     opportunity for broadcasters to provide not only high definition programs, but also
     multiple standard definition programs and other services -- makes it unavoidable that
     television broadcasting in the 21st century will be vastly different from television
     broadcasting of the 20th.
     
              So this proceeding marks the beginning of the end of the analog chapter of
     television's history, and the beginning of the beginning of the digital chapter.  
     
              At this watershed, the Commission has an obligation to review all of the major
     policy issues that the transition to digital broadcasting presents.  And the Notice of
     Proposed Rule Making that we adopt today quite appropriately seeks comment on all
     of those issues, especially including the question of what public interest obligations
     are appropriate for the digital broadcasting world.
     
              This proceeding gives the Commission an opportunity to ensure that free over
     the air television finally fulfills the vision of one of my predecessors, Chairman Paul
     Porter, who in 1945, at the dawn of the analog television era, expressed the hope that
     television would truly "inform, educate and entertain an entire nation." 
     
              I look forward to the participation in this proceeding of everyone it affects --
     representatives of industry as well as viewers, people on both sides of the television
     screen.  I especially look forward to the participation of parents, educators and others
     who can speak for America's children, because it is our kids who stand the most to
     gain, and the most to lose, from our decisions in this proceeding.  
     
     
     
     
     
     
     
     
     
     
     July 28, 1995
     
     
     
     
     SEPARATE STATEMENT
                                      OF
                           COMMISSIONER SUSAN NESS
                                        
     
     Re:  Advanced Television Systems and Their Impact Upon the Existing
            Television Broadcast Service (MM Docket No. 87-268)
     
     
              Today we begin a crucial phase of our proceeding on advanced television
     (ATV).  Our attention centers on the ramifications of permitting broadcasters to
     employ digital advanced television technology.  I believe it essential that broadcasters
     have the ability to compete in the increasingly crowded digital multimedia
     marketplace.  
     
              The video world has changed dramatically since the black-and-white NTSC
     standard was adopted in 1941 and modified for color in 1953.  The broadcasters saw
     these changes coming when they petitioned to initiate this proceeding in 1987.  They
     were right that the world was changing.  The surprise is in how substantial those
     changes are.
     
              Today, cable delivers a multitude of channels, both broadcast and exclusively
     cable programming, to two-thirds of US households.  Direct broadcast satellite (DBS)
     has trailblazed with its superior quality digital picture.  Wireless cable is planning to
     convert to digital transmission.  Local multipoint distribution service (LMDS) and
     video dialtone (VDT) promise to become additional providers of innovative
     programming services. (There are even experiments using the Internet as a program
     delivery medium.)  Each of these systems has the potential also to offer high
     definition television with its significantly enhanced picture and compact disk-quality
     sound.
     
              Competitors to broadcasting can move into the digital multichannel world --
     and offer HDTV -- without FCC action.  For broadcasters to remain competitive,
     however, the FCC must act to provide them with the tools to compete.  The necessary
     tools include temporary additional spectrum to enable digital conversion while
     continuing to serve the analog community; a market-responsive conversion schedule; a
     digital transmission standard that can dynamically deliver both HDTV and multiple
     streams of standard definition programming (or some form of future programming
     that may or may not resemble interactive media); and reasonable flexibility in product
     offerings to generate additional revenue to pay for the cost of digital and HDTV
     conversion.  Today, and in upcoming proceedings, we propose such tools.
     
              For the American public, this new technology holds the promise of
     substantially more and, I hope, better quality programming.  Broadcasting is the only
     video delivery system that is offered free of charge, universally available and,
     therefore, accessible to all, young or old, rich or poor.  Advanced television assures
     the future viability of free over-the-air television.   
              The American public also will continue to benefit from the public interest
     obligations required of broadcasters by law.  These mandates include airing
     educational and informational children's programming, making time available for
     political debate, and preventing the broadcast of indecent or obscene programming. 
     In return, broadcasters are not charged for use of the public's airwaves.  With
     multiple channels and vastly improved quality through digitization, broadcasters will
     have ample resources to better fulfill these public obligations.  The Commission and
     the public should demand no less.
     
              In addition to new service offerings, the American public will gain a
     significant amount of valuable spectrum for other uses.  That spectrum will be
     reclaimed from the broadcasters in the next decade without cost to the taxpayer.  Our
     proposal requires existing broadcasters to return their original channels once
     conversion to digital transmission is substantially completed.  The obligation to return
     their original spectrum after a reasonable transition period is the underpinning of this
     proceeding, justifying the decision to allow incumbent broadcasters temporary access
     to an additional channel for the transition.  If the obligation to return that channel is
     not carved in stone, the public interest in providing the tools for conversion to digital
     is seriously undermined.
     
              For broadcasters, the cost of the transition to ATV is considerable.  During
     the temporary transition period, they will have to run two separate stations, one
     digital and one analog.  They will have to replace much of their studio equipment and
     obtain a new transmitter and antenna.  
     
              The cost to the American consumer is also considerable.  For the first time,
     advances in television transmission will not be backward compatible.  Our old TV
     sets won't receive the new signals.  Consumers eventually will need to buy new
     television sets or decoder boxes or rent such equipment.  If this is to succeed,
     consumers must be able to see the benefits of conversion; it will not be free.  For
     both the broadcaster and the consumer, we seek a transition procedure couched in
     market realities, yet sensitive to the needs of the consumer.
     
              There is no template for dealing with flexible spectrum use in a digital world. 
     Nor is there a template for determining how best to assure that the public reaps the
     benefit of this new digital marketplace.  I am certain, however, that whatever regime
     we ultimately establish for transitioning broadcasters from analog to digital must
     assure that the original spectrum is returned and that broadcasters' public interest
     obligations are reaffirmed.
     
              In short, broadcasters must continue to play a leading role in the video
     marketplace as we move from analog to digital technology.  The considerable value of
     free over-the-air broadcasting must be preserved -- and enhanced.  Today's action sets
     the stage.  
     
     
     
     July 28, 1995
     
     
                             SEPARATE STATEMENT OF 
     
                         COMMISSIONER RACHELLE CHONG
                                        
     
     Re:      Advanced Television Systems and Their Impact Upon the Existing Television
              Broadcast Service, MM Docket No. 87-268
     
              There are times when the pace of technology overtakes all else, including the
     pace of regulations.  Advances in digital technology have brought us to a stage where
     it is prudent for the Commission to look at our past advanced television ("ATV")
     decisions with a fresh eye.  We must ensure that our path is still true -- that is, it is
     the one that serves the public interest best.
     
              In the coming digital world, information -- whether it be data, voice or video -
     - will consist of digital bits flowing effortlessly across wired or wireless transmission
     pipelines.  Digital encoding and transmission technology will give broadcasters the
     potential to send on a simultaneous basis not only video, but voice and data too. 
     Thus, licensees of ATV channels can look forward to substantially increased technical
     capabilities due to this advanced technology.  The public can look forward to a broad
     panoply of benefits from this advanced technology:  (1) sharper, brighter and bigger
     pictures through high definition television ("HDTV"); (2)  more channel options; and
     (3) and innovative services such as the ability to choose a different camera angle
     while watching a live sporting event.  I am proud to be one of the facilitators bringing
     on this new digital age.
     
              We have posited four revised goals in this Fourth Further Notice:  (1)
     preserving a free, universal broadcasting service; (2) fostering an expeditious and
     orderly transition to digital technology which would allow the public to receive the
     benefits of digital television while taking account of consumer investment in analog
     television sets; (3) managing the spectrum to permit the recovery of contiguous blocks
     of spectrum; and (4) ensuring that the spectrum -- both ATV channels and recovered
     channels now assigned to NTSC service  -- will be used in a manner that best serves
     the public interest.  I believe these are the right goals, and that we must balance them
     carefully as we continue to make the challenging transition.
     
     
     Preserving Free Universal Broadcasting
     
              I write separately to highlight my staunch belief that our overarching goal in
     this proceeding should be to ensure that we preserve a free, universal over-the-air
     television broadcasting service for Americans.  I believe that free, over-the-air
     broadcasting is fundamental to the health of a democratic society.  Broadcasters help
     safeguard freedom of speech and of the press.  Broadcasters bring us a wide variety
     of entertainment, news, election updates, educational fare and other public service
     information.  Television has become an integral part of the American life, giving us
     shared national experiences, inspiring and entertaining us, and sometimes disgusting
     and horrifying us.  But always, television gives us ways to experience the broader
     world from the comfort of our own homes.
     
              In a digital world, there will be a continuing and vital role for broadcasters. 
     The chararacteristic that separates commercial broadcasters from other
     communications industries is the fact that broadcasting is advertiser-supported and is
     freely available to anyone who owns a television set.  Broadcasters have successfully
     built mass audiences and therefore wield significant influence among our citizenry.
     
              Advances in digital technology since our last major decisions in this docket
     have enabled broadcasters to consider new horizons beyond just a single high
     definition digital channel.  The Grand Alliance has promised a transmission standard
     that may provide either one channel of HDTV, multiple streams of Standard
     Definition Television ("SDTV") services, or a host of other nonbroadcast services
     alone or in combination with broadcast services.
     
              This promise of flexibility has tremendous appeal.  Broadcasters have voiced
     interest in providing new nonbroadcast services, utilizing their digital spectrum. 
     Some believe that broadcasters should be completely unfettered and granted total
     flexibility as to use of its new digital channel, so long as, at a minimum, a single
     SDTV channel is delivered free to audiences.  
     
              At this time, it is my view that the spectrum at issue in this proceeding should
     be used primarily for free, over-the-air broadcasting, consistent with the notion that
     broadcasters are public trustees of the airwaves.  As such, they may use the public's
     spectrum so long as they provide in return free, over-the-air broadcasting and a
     variety of public service offerings.  As they do now with their analog channels, I
     believe that broadcasters should be able to make some ancillary or concomitant uses
     of their new digital channels for nonbroadcast uses, so long as such uses do not
     interfere with or detract from the main broadcast services provided by the licensees. 
     Should broadcasters desire greater flexibility than this, I welcome their input as to
     what extent and how this is consistent with their special status as broadcasters. 
     Should a broadcaster desire to use its new ATV spectrum for a primary purpose other
     than free broadcast, I would ask whether such ATV spectrum ought to be given
     without charge to someone who is not committed to free, over-the-air broadcasting. 
     In such a case, should such spectrum be returned to the government and relicensed to
     someone who is dedicated to the primary delivery of free broadcasting?
     
     
     Fostering an Expeditious and Orderly Transition to Digital
     
              I support our goal to foster an expeditious and orderly transition to digital
     broadcasting.  While we naturally wish to make the transition in a speedy manner, I
     caution us not to disenfranchise those Americans who rely on their analog TV sets for
     over-the-air broadcast service.  I hope that we can provide incentives for the industry
     (broadcasters, manufacturers, and programmers) to make the switch to digital TV
     more rapidly, while still safeguarding consumer interests.
     
              I am especially concerned about how to effectively assist small and
     noncommercial broadcasters who may face challenging financial issues in making the
     digital transition.  I am keenly interested in ideas about how the Commission can help
     such broadcasters make the transition, while ensuring that the spectrum assigned to
     them during the transitional period does not lie fallow.
     
     
     Managing Spectrum to Recover Contiguous Blocks
     
              I also believe that we must be mindful of spectrum efficiency issues as we
     review our decisions to date.  Spectrum is a hot commodity.  I am particularly
     interested in hearing from commenters about whether we have modeled our transition
     to digital broadcasting in the most spectrally efficient way.   Further, if we are able to
     "repack" the existing broadcasters into a smaller amount of overall spectrum at the
     end of this transition period and free up contiguous blocks of spectrum, how can we
     optimize use of this spectrum?
     
     
     Flexible Regulatory Frameworks
     
              Finally, I note how rapidly the pace of technology in this proceeding has made
     our last set of decisions in this docket potentially pass.  This underscores the
     importance of this Commission putting in place a flexible framework of regulations. 
     We must keep our eye on our goals to ensure they remain valid.  We must not be
     afraid to put aside decisions that have been overtaken by advances in technology, and
     be forward looking to a new age in which we adapt proven successes like free, over-
     the-air broadcasting to new technologies like digital.