*Pages 1--14 from  Microsoft Word - 52307*
 Federal  Communications  Commission  FCC  05-  175 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 


 In  the  Matter  of 
 Amendment  of  the  Television  Table  of  Allotments  to  Delete  Noncommercial 
 Reservation  of  Channel  *39,  620-  626  MHz,  Phoenix,  Arizona,  and  to  Add  Noncommercial 
 Reservation  on  Channel  11,  198-  204  MHz,  Holbrook,  Arizona 


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 MB  Docket  No.  04-  312  RM  No.  11049 


 MEMORANDUM  OPINION  AND  ORDER 
 Adopted:  October  5,  2005  Released:  October  13,  2005 
 By  the  Commission:  Commissioner  Copps  concurring  and  issuing  a  statement. 
 I.  INTRODUCTION 
 1.  The  Commission  has  before  it  a  Memorandum  Opinion  and  Order  and  Notice  of  Proposed  Rulemaking  (NPRM),  1  concerning  a  proposal  by  NBC  Telemundo  Phoenix,  Inc.  (Telemundo), 
 licensee  of  stations  KPHZ(  TV),  Channel  11,  Holbrook,  Arizona,  and  KDRX-  CA  and  KPHZ-  LP,  Phoenix,  Arizona,  and  Community  Television  Educators,  Inc.  (CTE),  licensee  of  noncommercial  educational 
 television  station  KDTP(  TV),  Channel  *39,  Phoenix,  Arizona  (collectively,  petitioners),  to  amend  the  Television  Table  of  Allotments  to  remove  the  noncommercial  reservation  of  analog  Channel  *39  at 
 Phoenix  and  reserve  analog  Channel  11  for  noncommercial  educational  use  at  Holbrook.  The  petitioners  further  propose  that  the  Commission  modify  Telemundos  KPHZ(  TV)  license  to  specify  Channel  39, 
 Phoenix  and  CTEs  KDTP(  TV)  license  to  specify  Channel  *11,  Holbrook  without  opening  the  channels  to  competing  applications.  For  the  reasons  set  forth  below,  we  grant  the  proposal  with  conditions. 


 II.  PROCEDURAL  BACKGROUND 
 2.  In  their  Joint  Petition  to  Amend  the  Television  Table  of  Allotments  (Joint  Petition),  the  petitioners  requested  that  the  Commission  amend  Section  73.606  of  the  Commissions  Rules  2  pursuant  to 
 Section  1.420(  h)  of  the  rules  3  to  delete  the  noncommercial  reservation  of  analog  Channel  *39  at  Phoenix  and  reserve  analog  Channel  11  for  noncommercial  educational  use  at  Holbrook.  They  further  requested 
 that  the  Commission  modify  Telemundos  KPHZ(  TV)  license  to  specify  Channel  39,  Phoenix  and  CTEs 
 1  Amendment  of  the  Television  Table  of  Allotments  to  Delete  Noncommercial  Reservation  of  Channel  *39,  620-626 
 MHz,  Phoenix,  Arizona,  and  to  Add  Noncommercial  Reservation  on  Channel  11,  198-  204  MHz,  Holbrook,  Arizona,  19  FCC  Rcd  14930  (2004)(  NPRM). 


 2  47  C.  F.  R.    73.  606. 
 3  47  C.  F.  R.  1.  420(  h)  states  that:  [  W]  here  licensees  (or  permittees)  of  television  broadcast  stations  jointly 
 petition  to  amend  Section  73.  606(  b)  and  to  exchange  channels,  and  where  one  of  the  licensees  (or  permittees)  operates  on  a  commercial  channel  while  the  other  operates  on  a  reserved  noncommercial  educational  channel  within 


 the  same  band,  and  the  stations  serve  substantially  the  same  market,  then  the  Commission  may  amend  Section  73.  606(  b)  and  modify  the  licenses  (or  permits)  of  the  petitioners  to  specify  operation  on  the  appropriate  channels 
 upon  a  finding  that  such  action  will  promote  the  public  interest,  convenience,  and  necessity. 
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 KDTP(  TV)  license  to  specify  Channel  *11,  Holbrook,  without  opening  the  channels  to  competing  applications.  In  support  of  the  proposed  channel  changes,  petitioners  asserted  that  their  proposal  would 
 give  nearly  one  million  Hispanics  in  the  Phoenix  area,  as  well  as  advertisers,  a  choice  between  two  Spanish-  language  full  service  television  stations    station  KTVW-  TV,  Channel  33,  Phoenix,  licensed  to 
 Univision  Communications,  Inc.  (Univision),  and  station  KPHZ(  TV)  on  dereserved  Channel  39  in  Phoenix.  They  also  asserted  that  their  proposal  would  ensure  that  Holbrook  would  not  lose  its  only  over-the- 
 air  service  because,  according  to  petitioners,  Channel  11  can  only  survive  as  a  noncommercial  educational  outlet.  Petitioners  also  stated  that  the  channel  change  would  give  Telemundo  much-  needed 
 credibility  with  advertisers,  who  are  disinclined  to  buy  time  on  low  power  television  stations,  and  that  the  increased  revenue  flow  would  support  an  increase  in  local  news  on  its  Phoenix  outlet  directed  to  the 
 Hispanic  audience. 
 3.  In  the  NPRM,  the  Division  concluded  that  based  upon  the  petitioners  submission,  it  did  not  appear  that  the  exchange  would  result  in  an  improvement  of  the  quality  of  service  by  the  educator,  a 
 basic  tenet  of  the  Commissions  intraband  swap  policy.  4  The  Division  also  concluded  that  the  proposal  did  not  meet  the  threshold  requirement  of  Section  1.420(  h)  that  stations  serve  substantially  the  same 
 market.  5  The  Division  did  acknowledge  that  it  might  be  possible  to  effectuate  the  petitioners  proposal  through  a  rulemaking  proceeding  coupled  with  a  license  modification  under  Section  316  of  the 
 Communications  Act  6  should  the  proposal  be  found  to  be  in  the  public  interest.  Thus,  the  Division  sought  comment  on  whether  grant  of  the  proposal  is  consistent  with  the  Commissions  prior  implementation  of 
 its  mandate,  under  Section  307(  b)  of  the  Communications  Act,  7  to  ensure  a  fair,  efficient  and  equitable  distribution  of  radio  service.  The  Division  also  asked  commenting  parties  to  address  the  extent  to  which 
 the  Spanish-  speaking  population  is  presently  served  by  video  providers,  and  whether  any  unserved  needs  could  be  fully  met  by  the  commercial  and  noncommercial  stations  already  serving  the  community, 
 without  the  need  to  dereserve  Channel  *39. 
 III.  COMMENTS 
 4.  Comments  were  filed  by  Telemundo,  CTE,  Univision,  which,  through  a  subsidiary,  is  the  licensee  of  KTVW-  TV,  Phoenix;  CoxCom,  Inc.  d/  b/  a  Cox  Communications  Phoenix  (Cox),  a  provider  of 
 cable  television  service  in  Phoenix  and  its  suburbs;  and  Council  Tree  Communications  (Council  Tree),  a  media  investment  company.  Telemundo  and  Univision  both  filed  reply  comments,  and  Council  Tree  filed 
 supplemental  comments.  8 
 5.  Petitioners  contend  that  their  proposal  is  unique  both  in  its  underlying  factual  circumstances  and  the  benefits  it  will  deliver  to  the  public.  According  to  petitioners,  both  stations  have 
 operated  for  less  than  five  years,  and  neither  received  a  paired  digital  channel.  The  proposal  will  not  result  in  a  net  reduction  of  the  number  of  reserved  channels  in  the  Phoenix  DMA,  and  if  approved, 
 Telemundo  will  assign  KDRX-  CA,  its  Class  A  television  station  in  Phoenix,  to  CTE,  which  CTE  can  use  to  continue  to  provide  the  noncommercial  educational  service  currently  available  to  viewers  on 


 4  See  NPRM,  supra. 
 5  47  C.  F.  R.    1.  420(  h);  MO&  O,  19  FCC  Rcd  at  14932,  7. 
 6  47  U.  S.  C.    316. 
 7  47  U.  S.  C.    307. 
 8  We  also  received  numerous  letters  from  Phoenix  area  political  and  educational  leaders  supporting  the  proposal, 
 which  petitioners  also  submitted  as  an  attachment  to  their  joint  reply  comments.  In  addition,  28  people  identified  as  noncommercial  or  religious  broadcasters  signed  a  petition  supporting  the  channel  exchange,  in  which  they  argue  that 


 Section  1.  420  is  applicable  because  the  stations  are  located  in  the  same  DMA  and  that  unique  public  interest  benefits  justify  the  proposal. 
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 KDTP(  TV).  They  also  contend  that  approval  of  the  proposal  will  serve  the  public  interest  by  promoting  local  television  competition  and  diversity  for  almost  one  million  Spanish-  language  viewers  in  the  Phoenix 
 area. 
 6.  With  respect  to  Holbrook  (population  4,  917),  KPHZ(  TV)  is  the  only  station  allotted  to  that  community  and  is  the  only  full-  service  television  station  which  places  a  predicted  Grade  B  or  better 
 signal  over  the  community.  Thus,  Holbrook  is  a  gray  area  for  allotment  purposes.  9  According  to  petitioners,  KPHZ(  TV)  has  generated  no  revenue  since  it  started  operating  in  2000,  and  the  station  cannot 
 reach  most  of  Telemundos  target  audience,  particularly  Hispanics  living  in  Phoenix,  many  of  whom  rely  on  over-  the-  air  signals,  rather  than  cable  or  satellite.  Under  these  circumstances,  it  is  virtually  certain, 
 states  Telemundo,  that  it  will  cease  operating  the  station  as  a  commercial  outlet,  thus  creating  a  white  area  in  and  around  Holbrook  10  and  a  net  loss  of  television  service  available  in  the  DMA.  Petitioners  state, 
 however,  that  the  proposed  channel  exchange  would  forestall  the  creation  of  a  white  area,  because,  CTE  is  ready,  willing  and  qualified  to  preserve  Holbrooks  only  local  full-  power  television  outlet. 


 7.  Although  the  Commission  allotted  Channel  *18  to  Holbrook  in  1965,  that  reserved  channel  was  never  applied  for  and  was  deleted  thirty  years  later  with  all  other  unapplied  for  NTSC 
 channels  in  the  TV  Table  of  Allotments.  11  As  to  whether  Holbrook  is  capable  of  sustaining  a  noncommercial  educational  station,  petitioners  state  that  [  t]  he  answer  is  simple    CTE  should  be  given 
 an  opportunity  to  try  to  save  free,  over-  the-  air,  full-  power  television  service  in  Holbrook.  Although  they  acknowledge  that  the  reserved  channel  earlier  allotted  to  Holbrook  was  never  applied  for,  they  argue  that 
 this  merely  underscores  the  fact  that  Holbrook  is  a  very  challenging  broadcast  market  for  noncommercial  and  commercial  broadcasters  alike.  According  to  petitioners,  CTE,  with  an  existing  base  of  committed 
 financial  supporters,  clearly  is  better  suited  than  other  groups  to  sustain  the  station.  Moreover,  they  assert  that  the  consideration  to  be  paid  to  CTE  by  Telemundo  will  provide  further  support  and  assist  CTE 
 in  making  the  transition  to  full  digital  broadcasting. 
 8.  Petitioners  also  claim  that  their  proposal  is  unique  in  that  Phoenix  --  the  sixth-  largest  Hispanic  population  center  and  ninth-  largest  Hispanic  DMA  in  the  country    is  the  only  top  ten  DMA  that 
 lacks  a  full-  service  competitor  to  Univision.  12  Thus,  according  to  petitioners,  permitting  the  channel  exchange  would  eliminate  a  television  gray  area  for  Spanish-  language  services.  Petitioners  further  state 
 that: 
 The  Commission  unquestionably  views  speakers  of  Spanish  as  a  distinct  segment  of  the  population  that  requires  special  FCC  protections  with  regard  to  their  access  to  multiple 
 and  diverse  television  programming  choices.  .  .  .  Indeed,  the  Commission  has  repeatedly  found  that  the  substantial  public  interest  in  achieving  this  goal  justifies 
 waiving  certain  of  its  rules  and  modifying  long-  standing  policies.  That  goal  has  become  even  more  important  as  Univision  solidifies  its  dominant  position  in  Spanish-  language 
 programming.  .  .  .  There  is  much  evidence  that  the  Spanish-  language  television  market  should  be  viewed  as  a  distinct  market  for  Commission  purposes.  That  the  only  parties   


 9  A  TV  gray  area  is  an  area  served  by  only  one  Grade  B  television  signal.  See  Service  Rules  for  the  746-  764  and 
 776-  794  Bands,  15  FCC  Rcd  20845,  20871,  n.  125  (2000).  10 
 A  TV  white  area  is  an  area  that  is  not  served  by  any  Grade  B  television  service.  See  KNTV  License,  Inc.,  19  FCC  Rcd  15479,  15486,  n.  8  (2004). 


 11  See  Fostering  Expanded  Use  of  UHF  Television  Channels,  41  FCC  1077,  1097  (1965);  Advanced  Television 
 Systems  and  Their  Impact  upon  the  Existing  Television  Broadcast  Service,  Sixth  Report  and  Order,  12  FCC  Rcd  14588,  14639  (1997). 


 12  According  to  petitioners,  the  Los  Angeles  DMA  has  six  full-  service  Spanish-  language  stations,  Houston  has 
 five,  and  the  New  York,  Miami  and  Dallas-  Ft.  Worth  DMAs  have  four  in  their  major  urban  cores. 
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 other  than  Telemundo    who  have  been  willing  to  enter  this  fast-  growing  market  in  any  substantial  way  are  Mexicos  top  two  television  services  itself  is  an  indication  of  the 
 uniqueness  of  (and  entry  barriers  to)  this  market. 


 9.  Although  there  are  three  Class  A  television  stations  in  the  Phoenix  area  that  air  Spanish-language  programming  and  these  stations  all  have  approximately  the  same  predicted  over-  the-  air  signal 
 coverage  as  Univisions  full-  service  station,  petitioners  claim  that  Telemundos  Class  A  television  station  (and  presumably  the  other  two  Spanish-  language  Class  A  stations)  cannot  adequately  compete  with 
 Univision.  Petitioners  assert  that  under  Commission  precedent,  Class  A  stations  are  not  counted  as  independent  media  voices  in  a  market  to  assess  compliance  with  the  local  and  cross-  ownership  rules,  or 
 considered  in  determining  whether  an  area  is  unserved  or  underserved  in  ruling  on  requests  for  satellite  status  by  full-  service  stations.  According  to  petitioners,  if  the  Commission  truly  believed  that  these 
 stations  were  adequate  substitutes  for  full-  power  stations,  they  would  be  counted  in  measuring  the  competitive  profile  of  the  market.  They  also  claim  that  because  Class  A  stations  are  accorded  fewer 
 rights  in  the  digital  transition  and  are  not  accorded  must-  carry  rights  except  in  very  limited  circumstances,  they  cannot  be  considered  to  be  competitively  equal  with  full-  service  stations.  Further,  the  petitioners 
 point  out  that  Cox,  the  largest  cable  operator  in  the  market,  carried  KDRX-  CA  on  an  expanded  basic  tier  that  costs  significantly  more  than  the  basic  tier  on  which  the  Univision  full-  service  station  is  carried. 
 Finally,  although  the  Spanish-  language  Class  A  stations  are  available  via  cable  and  satellite,  petitioners  also  argue  that  pay  services  are  not  an  adequate  substitute  for  free,  over-  the  air  television  under  any 
 Commission  precedent.  This  is  especially  the  case  in  Phoenix,  they  maintain,  where  fewer  than  one-  third  of  Spanish-  dominant  television  viewers  subscribe  to  cable,  compared  with  the  overall  Phoenix  average  of 
 60%.  13 
 10.  As  further  evidence  of  Telemundos  inability  to  compete  with  Univision,  petitioners  state  that  at  the  time  they  filed  their  comments,  Univision  claimed  84%  of  the  Spanish-  language  television 
 advertising  revenues  and  93%  of  the  Hispanic  viewers  in  the  market.  14  Petitioners  also  submitted  letters  from  dozens  of  advertisers  and  other  media  buyers,  stating  that  they  have  little  choice  but  to  limit  our 
 purchases  of  advertising  time  on  Low  Power  Class  A  television  stations  such  as  KDRX-  CA,  which,  due  to  regulatory  constraints,  have  a  less  robust  signal,  far  more  limited  potential  audience  reach  and  no 
 guarantee  of  basic-  tier  cable  carriage.  Telemundo  states  that  it  is  confident  these  advertisers  will  support  a  full-  service  station  and  pledges  to  broadcast  a  minimum  of  one  hour  of  locally-  produced  programming 
 each  week  day  once  it  commences  operations  on  Channel  39. 
 11.  Univision  responds  that  Section  1.420(  h)  is  inapplicable  here.  Univision  argues  that  amending  the  table  of  allotments  and  using  Section  316  of  the  Act  to  modify  a  stations  license  to 
 conform  to  the  change  in  allotment  would  be  an  unique  application  of  the  Commissions  discretion  under  the  public  interest  standard  and  Section  316  of  the  Communications  Act,  because  the  Commission  has 
 only  done  so  in  connection  with  channel  exchanges  between  commercial  and  noncommercial  licenses  where  the  number  of  reserved  and  unreserved  channels  available  to  provide  service  to  a  given  community 


 13  In  support,  petitioners  cite  to  a  February  2001  Nielsen  Media  Research  study  commissioned  by 
 NBC/  Telemundo,  which  concluded  that  cable  subscribership  among  Spanish-  dominant  viewers  in  Phoenix  was  24.1%.  In  a  more  recent  telephone  survey  commissioned  by  NBC/  Telemundo,  34%  of  the  Spanish-  dominant 


 viewers  reported  subscribing  to  cable,  11%  reported  subscribing  to  satellite,  and  7%  specified  another  source  for  receiving  local  programming. 
 14  They  state  that  the  television  revenues  not  claimed  by  Univision  are  attributable  to  KDRX-  CA.  A  review  of 
 the  BIA  Publications  Media  Access  Pro  database  by  Commission  staff  indicates  that  the  database  reports  that  KDRX-  CA  had  revenue  of  $4.  2  million  in  2003  and  that  Univisions  station  had  revenue  of  $19.5  million  during  the 


 same  period. 
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 remained  the  same.  Here,  Holbrooks  only  commercial  television  allotment  would  be  replaced  with  a  reserved  channel,  despite  the  fact  that  Channel  *18  was  fallow  for  30  years,  strongly  suggesting  that 
 there  is  no  demand  for,  or  ability  to  financially  support,  a  noncommercial  educational  service  in  Holbrook.  Univision  also  argues  that  such  relocation  would  run  counter  to  an  efficient  and  equitable 
 distribution  of  radio  services,  and  to  the  primary  premise  of  the  Commissions  channel  swap    which  is  that  the  noncommercial  station  will  be  financially  aided  by  the  proposed  change  in  channels  --  because  it 
 would  reduce  the  service  presently  provided  by  noncommercial  educational  station  KDTP  from  3  million  persons  residing  within  its  current  predicted  Grade  B  contour  to  only  7,147  persons.  Univision  also 
 questions  how  long  KDTP  could  survive  as  a  Holbrook  station  reaching  only  7,000  persons,  even  with  the  unspecified  amount  of  compensation  that  would  be  paid  to  CTE  if  the  proposal  is  implemented. 


 12.  With  respect  to  Phoenix,  Univision  argues  that  grant  of  the  proposal  would  not  improve  commercial  television  service,  since  KDRX-  CA  already  reaches  a  population  of  3,105,109  viewers, 
 which  is  almost  exactly  the  reach  of  Univisions  full-  service  station,  KTVW-  TV,  as  well  as  that  of  station  KDTP(  TV).  According  to  Univision,  the  fact  that  Telemundos  station  is  a  Class  A  station  is  not  relevant 
 to  its  ability  to  compete  with  KTVW-  TV.  15  Univision  also  argues  that  the  Commission  has  .  .  .  left  no  doubt  in  its  prior  rulings  that  Spanish-  language  and  English-  language  stations  do  not  compete  in  separate 
 markets.  16  Therefore,  Univision  argues,  the  Commission  cannot  base  its  decision  in  this  case  on  that  distinction. 


 13.  Univision  also  argues  that  the  proposed  channel  swap  is  contrary  to  the  public  interest  as  it  would  deprive  the  Phoenix  community  of  one  of  only  two  reserved  noncommercial  educational 
 television  stations  in  the  market.  Univision  states  that  the  Commission  has  a  long-  standing  commitment  to  encourage  and  preserve  noncommercial  educational  television  stations.  17  The  channel  swap,  Univision 
 maintains,  would  run  contrary  to  the  Commissions  policy  of  ensuring  that  the  top  television  markets  have  more  than  one  reserved  noncommercial  channel. 


 14.  In  its  comments  and  supplemental  comments,  Council  Tree  states  that,  although  channel  exchanges  between  commercial  and  noncommercial  stations  may,  at  times,  clearly  serve  the  public 
 interest,  this  proposal  does  not.  Instead,  Council  Tree  believes  grant  of  the  proposal  would  exacerbate  the  continuing  consolidation  of  media  ownership  and  the  erosion  of  localism  in  media,  and  provide  no 
 additional  benefits  to  Phoenix.  Council  Tree  agrees  that  Section  1.420(  h)  is  not  applicable  here  because  the  stations  do  not  serve  substantially  the  same  market.  Council  Tree  also  argues  that  there  are  insufficient 
 public  interest  reasons  to  waive  the  requirement.  Council  Tree  argues  that  this  case  is  distinguishable  from  the  WQED  Pittsburgh  case  18  because,  in  that  case,  the  Commission  dereserved  one  of  two  reserved 
 channels  in  Pittsburgh,  which  were  licensed  to  the  same  entity  and  being  simulcast,  permitting  the  commercial  station  to  be  sold,  ensuring  that  the  financially-  ailing  licensee  could  continue  to  operate  on  its 
 remaining  channel  and  adding  an  independent  voice  to  the  market.  Council  Tree  also  points  out  the 
 15  Univision  also  argues  that,  in  addition  to  Telemundos  ownership  of  the  Holbrook  and  Phoenix  stations, 
 Telemundos  parent,  National  Broadcasting  Company,  Inc.  (NBC),  holds  a  network  affiliation  agreement  with  KPNX(  TV),  Mesa,  KMOH-  TV,  Kingman,  and  KNAZ-  TV,  Flagstaff,  and  holds  a  32%  non-  voting  equity  interest  in 


 Paxson  Communications,  licensee  of  station  KPPX(  TV),  Tolleson,  a  suburb  of  Phoenix.  Telemundos  parent  corporation  also  holds,  among  other  interests,  an  ownership  interest  in  approximately  90  full  power  stations, 
 affiliation  agreements  with  over  250  additional  stations,  two  television  networks,  and  numerous  cable  channels  such  as  USA  Networks,  MSNBC,  CNBC  and  Bravo.  Thus,  Univision  argues,  Telemundo  is  well  suited  to  compete  with 
 Univision  in  Phoenix. 
 16  See,  Shareholders  of  Hispanic  Broadcasting  Corporation,  18  FCC  Rcd  18834,  18855-  57  (2003)(  HBC). 
 17  See,  e.  g.,  WQED  Pittsburgh,  15  FCC  Rcd  202  (1999),  recon  .granted,  15  FCC  Rcd  2534  (2000). 
 18  Amendment  of  Section  73.606(  b),  Pittsburgh,  Pennsylvania,  17  FCC  Rcd  14038  (2002)(  WQED  Pittsburgh). 
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 6 
 Commission  cannot  modify  CTEs  license  to  specify  channel  11  in  Holbrook  because  CTE  has  not  demonstrated  its  eligibility  to  become  the  licensee  of  a  reserved  channel  in  Holbrook. 
 15.  Cox  operates  a  cable  system  serving  Phoenix  and  surrounding  areas,  and  confines  its  comments  to  addressing  the  Divisions  request  for  comment  on  the  extent  to  which  the  Spanish-  speaking 
 population  is  served  by  cable  and  the  extent  to  which  the  channel  exchange  would  affect  the  mandatory  carriage  rights  of  KPHZ(  TV)  and  KDTP.  Cox  currently  carries  24  channels  of  Spanish-  language 
 programming,  including  KTVW  (Univision),  KDRX-  CA  (Telemundo),  KPDF-  CA  (Azteca)  and  KFTU-CA  (Telfutura).  In  addition  to  the  local  Spanish-  language  programming  channels,  Cox  co-  created,  with 
 Belo  Communications,  a  24-  hour  Spanish-  language  news  and  sports  channel  called  MasArizona,  and  Mas  Notas,  a  locally-  produced  Spanish-  language  channel  which  features  music  videos  and  a  local  news  ticker. 
 In  addition  to  these  local  channels,  Cox  also  carries  Univisions  Galavision  on  an  analog  tier,  as  well  as  19  other  national  and  international  Spanish-  language  programming  channels  on  its  Paquette  Latino 
 digital  tier,  including  Spanish-  language  versions  of  various  popular  cable  channels  such  as  ESPN,  CNN,  Discovery,  History  and  Bloomburg.  19 


 IV.  DISCUSSION 
 16.  After  a  review  of  the  record  and  comments  in  this  case,  we  believe  that  compelling  and  unique  circumstances  justify  waivers  of  the  Commission's  policy  disfavoring  dereservation  of  reserved 
 noncommercial  educational  channels  and  the  uncodified  rule  requiring  opening  of  dereserved  channels  for  competing  applications.  20  When  analyzing  a  request  for  a  waiver  of  Commission  rules  or  policies,  agency 
 rules  are  presumed  valid,  and  an  applicant  for  waiver  faces  a  high  hurdle  even  at  the  starting  gate.  21  A  rule  or  policy  may  be  waived  where  the  particular  facts  make  strict  compliance  inconsistent  with  the 
 public  interest.  22  In  addition,  we  may  take  into  account  considerations  of  hardship,  equity,  or  more  effective  implementation  of  overall  policy  on  an  individual  basis.  23  Waiver  is,  therefore,  appropriate  if 
 special  circumstances  warrant  a  deviation  from  the  general  rule  or  policy,  and  such  deviation  would  better  serve  the  public  interest  than  strict  adherence  to  the  general  rule.  24 


 17.  As  we  noted  in  the  NPRM  in  this  docket,  the  Joint  Petition  does  not  meet  the  requirements  of  the  intraband  swap  policy  set  forth  in  Section  1.420(  h)  of  our  rules.  It  is  our  general 
 policy  to  disfavor  dereservation  of  reserved  channels.  We  believe,  however,  that  the  Joint  Petition  shares  some  of  the  essential  attributes  with  the  channel  exchange  policy  set  forth  in  1.420(  h)  and  advances  some 
 of  the  Commissions  goals  underlying  that  rule.  25  Specifically,  as  discussed  further  below,  we  conclude 
 19  Cox  states  that  if  NBC/  Telemundo  operated  on  Channel  39  in  Phoenix,  Cox  would  be  required  by  the  must-carry 
 provisions  to  carry  the  station.  According  to  Cox,  CTEs  operation  on  Channel  11  at  Holbrook  would  not  be  entitled  to  must-  carry  rights  on  the  Phoenix  cable  system. 


 20  See  WQED  Pittsburgh,  17  FCC  Rcd  at  14048,  n.  33  and  accompanying  text  citing  Deletion  of  Noncommercial 
 Reservation  of  Channel  *16,  Pittsburgh,  Pennsylvania,  11  FCC  Rcd  11700,  11707-  11710  (1996);  WQED  Pittsburgh,  17  FCC  Rcd  at  14055,  n.  58  and  accompanying  text  citing  Sixth  Report  and  Order,  41  FCC  148,  212  n.  51  (1951)  (if 


 a  noncommercial  educational  television  station  operating  on  reserved  channel  seeks  to  operate  on  a  commercial  basis  it  must  petition  to  change  the  character  of  the  channel  assignment  and  file  an  application  for  a  new  license,  in 
 competition  with  any  others  who  make  seek  the  channel).  21 
 See  WAIT  Radio  v.  FCC,  418  F.  2d  1153,  1158  (D.  C.  Cir.  1969),  cert  denied,  409  U.  S.  1027  (1972).  22 
 Northeast  Cellular  Telephone  Co.  v.  FCC,  897  F.  2d  1164,  1166  (D.  C.  Cir.  1990).  23 
 WAIT  Radio,  418  F.  2d  at  1157.  24 
 Northeast  Cellular,  897  F.  2d  1266.  25 
 See  Intraband  TV  Channel  Exchanges,  59  RR  2d  1455  (1986)  (stating  that  the  Commission  is  not  providing  for  the  elimination  of  any  reservation  but  rather  is  providing  for  more  effective  use  of  [NCE]  channels  by  shifting 


 (continued....) 
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 that  waiver  of  the  rule  is  warranted  because  the  proposal  facilitates  a  potentially  beneficial  exchange,  with  consequent  advantages  for  the  public.  26  This  is  the  rare  situation  in  which  a  waiver  of  our  dereservation 
 policy  is  warranted.  Council  Tree  argues  that  grant  of  the  Joint  Petition  would  be  contrary  to  precedent  because  the  Commission  has  only  granted  proposals  like  this  one  in  connection  with  channel  exchanges 
 between  commercial  and  noncommercial  licensees  where  the  number  of  reserved  and  unreserved  channels  available  to  provide  service  to  a  given  community  remained  the  same.  Univision  similarly 
 argues  that  Section  1.420(  h)  defines  the  exact  boundaries  of  what  constitutes  sufficiently  compelling  circumstances  to  justify  a  channel  swap.  27  By  definition,  however,  waiver  requests  demand  consideration 
 of  specific  circumstances  that  might  warrant  deviation  from  a  general  rule  or  policy.  28  Therefore,  under  the  waiver  standard,  we  are  not  limited  by  the  constraints  suggested  by  Council  Tree  and  Univision  and 
 we  must  consider  the  proposal  on  its  individual  merits. 
 18.  It  seems  clear  to  us  that  creating  a  more  competitive  environment  for  the  continuing  growth  and  development  of  Spanish  language  network  programming  in  the  Phoenix  market  is  in  the 
 public  interest.  29  The  hallmark  of  our  regulatory  responsibility  is  to  increase  and  strengthen  program  diversity  and  thereby  provide  multiple  viewing  choices  in  the  community.  30  We  conclude  that  grant  of 
 the  Joint  Petition  will  create  the  first  and  only  full-  power  Spanish-  language  competitor  to  Univisions  KTVW-  TV  in  Phoenix.  This  is  important  because  we  recognize  Phoenixs  importance  as  a  top-  ten 
 Hispanic  DMA  and  the  fact  that  it  is  the  only  top-  ten  DMA  without  two  full-  power  commercial  Spanish-language  TV  stations.  31  We  also  recognize  that  there  is  a  marked  disparity  between  Univision  and 
 Telemundo,  the  two  major  Spanish  language  networks,  in  terms  of  market  share  and  viewers  reached,  both  nationally  and  locally  in  Phoenix.  32  In  the  eight  major  markets  where  Univision  and  Telemundo 
 compete  directly,  Univision  serves  anywhere  from  two  to  three  times  more  viewers  than  Telemundo.  33  Although  there  are  many  possible  reasons  for  this  disparity,  we  believe  we  should,  where  possible, 
 eliminate  facilities-  based  disadvantages  so  as  to  facilitate  competition  based  on  the  merits  of  program  services.  34 


 (...  continued  from  previous  page)  reservations  within  the  same  band  from  one  channel  to  another  in  light  of  evidence  of  substantial  public  interest 
 benefits);  Joint  Petition  at  12-  13  (arguing  that  the  proposal  serves  1.  420(  h)  s  goals  by  benefiting  both  stations  involved,  with  consequent  advantages  for  the  public). 
 26  See  Joint  Petition  at  12-  13;  Intraband  TV  Channel  Exchanges,  59  RR  2d  1455  at    20  (explaining  that  purpose 
 of  1.420(  h)  is  to  allow  potentially  beneficial  exchanges  that  otherwise  would  be  discouraged  by  the  possiblity  that  third  parties  may  express  an  interest  in  applying  for  the  affected  and  already  occupied  channels). 


 27  See  Univision  Comments  at  9. 
 28  See  Northeast  Cellular,  897  F.  2d  at  1266. 
 29  See,  e.  g.,  Review  of  the  Commissions  Broadcast  Ownership  Rules  and  Other  Rules  Adopted  Pursuant  to 
 Section  202  of  the  Telecommunications  Act  of  1996,  18  FCC  Rcd  13620,  13695  (2003)(  stating  the  Commissions  continued  interest  in  promoting  competition  at  the  nework  level). 


 30  See  Review  of  the  Commissions  Regulations  Governing  Television  Broadcasting,  14  FCC  Rcd  12903,  12910 
 (1999)  (stating  that  one  of  the  ultimate  objectives  of  the  broadcast  ownership  rules  is  to  promote  diversity).  31 
 See  Joint  Comments  at  iii.  32 
 See  Joint  Petition  at  5-  8  and  35-  36;  Joint  Comments  at  2-  4,  10-  11  and  31;  see  also  HBC,  18  FCC  Rcd  at  18866-  18867  (dissenting  statements  of  Commissioners  Adelstein  and  Copps). 


 33  BIA  Publications  Media  Access  Pro  database. 
 34  Univision  also  argues  that  Telemundo  is  able  to  successfully  compete  because  it  is  able  to  rely  on  the  financial 
 resources  of  NBC.  We  conclude,  however,  that  Telemundos  potential  access  to  NBCs  financial  resources  does  not  make  up  for  its  facilities-  based  disadvantages. 
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 19.  The  record  demonstrates  that  Telemundo  is  unable  to  be  competitive  with  the  Class  A  station  it  now  operates    KDRX-  CA.  We  agree  with  the  petitioners  that,  although  Class  A  stations  may 
 have  coverage  areas  that  equal  some  full-  power  stations,  Class  A  stations  are  not  competitive  substitutes  for  full-  power  stations  because  such  stations  have  fewer  rights  in  the  digital  transition  35  and  are  not 
 accorded  must-  carry  rights  except  in  very  limited  circumstances.  36  Although  Univision  argues  that  KDRX-  CA  is  currently  carried  on  cable  systems  in  the  Phoenix  market,  the  fact  remains  that  Cox,  the 
 largest  cable  operator  in  the  market,  carries  the  station  on  an  expanded  basic  tier  that  costs  potential  viewers  more  than  twice  as  much  as  its  basic  tier.  37  Furthermore,  KDRX-  CA  is  not  carried  on  Direct 
 Broadcast  Satellite  systems  offering  local-  into-  local  service  in  the  Phoenix  market.  38 
 20.  Univision  maintains  that  our  action  is  contrary  to  the  Commissions  decision  in  HBC.  We  find  that  our  decision  is  consistent  with,  and  would  further  the  public  policy  underlying  that  decision. 
 The  Commission  has  previously  supported  changes  in  its  policies  and  waivers  of  its  rules  partly  or  sometimes  solely  on  the  basis  that  such  waivers  would  result  in  greater  consumer  access  to  foreign-language 
 programming  and,  more  specifically,  Spanish-  language  programming.  For  example,  the  Commissions  grant  of  network  representation  rule  waivers  were  based  in  part  on  its  finding  that  such 
 waivers  would  encourage  the  growth  and  development  of  new  networks  and  foster  foreign  language  programming.  39  In  addition,  on  a  number  of  occasions,  the  Commission  has  granted  waivers  of  the 
 minimum  interference  spacing  rules  based  in  part  on  substantial  service  gains  to  Spanish-  and  Asian-language  viewers.  40  The  Commission  also  approved  a  channel  exchange  in  San  Francisco/  San  Mateo  41 
 based  in  part  on  a  commercial  stations  improved  ability  to  serve  an  important  part  of  the  total  Spanish  language  population  in  a  10-  county  area  by  virtue  of  the  new  equipment  it  can  use  on  Channel  14.  In 
 1980,  the  Commission  based  its  change  in  policy  concerning  time  brokerage  agreements  in  part  on  its  desire  to  increase  foreign-  language  program  diversity.  42  The  Commission  also  recognized  the  importance 
 of  serving  the  Spanish-  language  community  when  it  adopted  its  rules  concerning  closed  captioning  and  the  telecommunications  relay  service.  43  In  connection  with  its  recent  revision  of  its  multiple  ownership 


 35  Unlike  full-  service  stations,  Class  A  television  stations  were  not  allocated  a  paired  digital  channel  as  part  of  the 
 Commissions  digital  television  transition.  Class  A  stations  will  have  an  opportunity  to  obtain  digital  channels  but  not  until  after  the  full  service  digital  channel  election  process  has  been  completed.  See  Amendment  of  the 


 Commissions  Rules  to  Establish  Rules  for  Digital  Low  Power  Television,  Television  Translator,  and  Television  Booster  Stations  and  to  Amend  Rules  for  Digital  Class  A  Television  Stations,  Report  and  Order,  19  FCC  Rcd  19331 
 (2004).  Also,  digital  channels  assigned  to  Class  A  stations  will  be  assigned  on  a  secondary  or  non-  interference  protection  basis.  Id.  Therefore,  unlike  the  digital  channels  of  full  service  stations  that  are  licensed  on  a  primary  or 
 interference-  protected  basis,  the  digital  channels  of  Class  A  stations  are  not  afforded  such  status.  36 
 Sections  614(  c)  and  (h)(  2)  of  the  Communications  Act  of  1934  provides  limited  must  carry  rights  for  certain  low  power  television  stations  including  Class  A  stations.  See  47  U.  S.  C.  614(  c)  and  (h)(  2). 


 37  See  Joint  Comments  at  20-  21.  The  petitioners  also  rely  on  a  telephone  survey  of  Phoenix's  Hispanic  residents 
 in  support  of  their  contention  that  a  second  full-  power  TV  station  is  needed  to  adequately  serve  Spanish-  language  viewers  in  the  market.  See  Joint  Petition  at  37-  39.  However,  we  decline  to  place  any  weight  on  the  survey  because 


 of  concerns  about  its  reliability.  38 
 See  Joint  Reply  Comments  at  n.  39.  39 
 See  Network  Representation  of  TV  Stations  in  National  Spot  Sales,  5  FCC  Rcd  7280,  7281-  7182  (1990).  40 
 See,  e.  g.,  KRCA  License  Corp.,  15  FCC  Rcd  1794  (1999).  41 
 68  FCC  2d  860  (1978)  (San  Francisco/  San  Mateo).  42 
 See  Petition  for  Issuance  of  Policy  Statement  of  Notice  of  Inquiry  on  Part-  Time  Programming,  82  FCC  2d  107,  108  (1980). 


 43  See  Closed  Captioning  and  Video  Description  of  Video  Programming,  Implementation  of  Section  305  of  the 
 Telecommunications  Act  of  1996,  13  FCC  Rcd  3272  (1997);  and  Telecommunications  Relay  Services  and  Speech-  to-Speech  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  15  FCC  Rcd  5140,  5154-  5155  (2000). 
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 rules,  the  Commission  revised  its  definition  of  daily  newspaper  to  include  non-  English  dailies  based  on  the  conclusion  that  [  t]  hose  whose  primary  language  is  not  English  deserve  the  same  protections  of 
 diversity  and  competition  as  do  English  speakers.  44  In  1964,  when  the  Commission  granted  a  second  commercial  television  allotment  to  Phoenix  it  relied  on  an  argument  from  the  proponent  that  there  was  a 
 pressing  need  for  a  TV  station  to  serve  the  large  Spanish-  language  speaking  population  of  Phoenix  and  its  environs.  45  Finally,  with  respect  to  cable  carriage,  the  Commission  has  distinguished  foreign-  language 
 stations  to  account  for  distinct  characteristics  of  such  stations  or  their  audiences.  46 
 21.  In  the  HBC  decision,  the  Commission  approved  a  merger  between  Univision,  which  held  32  full  service  television  licenses  and  Hispanic  Broadcasting  Corp  which  held  62  full  service  radio  station 
 licenses.  The  Commission  rejected  the  argument  that  the  merger  would  harm  competition  and  diversity  within  a  distinct  Spanish-  language  TV-  radio  market,  consistent  with  its  general  assumption  that  radio 
 and  television  stations  do  not  compete  in  the  same  product  market.  47  It  also  rejected  the  possibility  of  harm  to  a  distinct  Spanish-  language  radio  market  because  Univision  owns  no  radio  stations.  48  Although 
 the  Commission  in  HBC  expressed  doubt  about  the  existence  of  separate  and  independent  Spanish-language  markets,  nothing  prevents  us  from  taking  into  account  the  public  interest  benefits  of  an 
 additional  Spanish-  language  station  for  purposes  of  a  waiver. 
 22.  The  Commission  also  concluded  in  HBC  that,  even  if  it  treated  the  Spanish-  language  radio  market  as  independent,  the  showing  of  alleged  harms  was  unpersuasive  given  evidence  of 
 significant  market  competition,  relative  ease  of  entry,  and  diverse  programming  available  to  local  and  national  Hispanic  audiences,  including  both  Spanish-  and  English-  language  alternatives.  Again,  however, 
 the  Commission  was  concerned,  in  that  case,  with  a  different  issue:  whether  anticompetitive  effects  justified  denying  or  conditioning  the  proposed  merger.  The  Commissions  conclusions  there  do  not 
 preclude  us  from  determining  here  that  grant  of  the  Joint  Petition  would  have  substantial  competitive  and  diversity  benefits  under  the  circumstances  presented  here. 


 23.  Univision  argues  that  Telemundo  failed  to  consider  other  options  for  serving  additional  Spanish-  language  viewers  such  as  a  power  increase  for  KPHZ-  DT,  Holbrook.  49  However,  as  Telemundo 
 notes,  the  station  was  not  assigned  a  paired  DTV  channel  and  would  be  required  to  flash-  cut  to  digital  on  the  channel  authorized  for  its  existing  analog  operations  (i.  e.,  cease  analog  transmissions  and  begin 
 operation  of  new  digital  transmitting  equipment  on  the  same  date).  We  find  that,  instead  of  improving  the  stations  service,  such  a  flash-  cut  prior  to  the  DTV  transition,  could  deprive  viewers  of  the  stations 
 signal.  50  Univision  also  argues  that  fostering  Spanish-  language  program  competition  is  unnecessary  in  the  Phoenix  market  because  there  are  abundant  broadcast  and  non-  broadcast  options  available.  51  While 
 there  may  be  other  sources  of  Spanish-  language  programming  in  the  Phoenix  market,  many  of  those  cited  by  Univision  are  not  full-  service  stations  or  were  pay  services  and  we  do  not  recognize  the  availability  of 


 44  See  2002  Biennial  Regulatory  Review    Review  of  the  Commissions  Broadcast  Ownership  Rules  and  Other 
 Rules  Adopted  Pursuant  to  Section  202  of  the  Telecommunications  Act  of  1996,  18  FCC  Rcd  13620,  13799-  13800  (2003). 


 45  See  Fostering  Expanded  Use  of  UHF  Television  Channels,  41  FCC  1069  (1964). 
 46  See  HBC,  18  FCC  Rcd  at  18872-  18873  (dissenting  statements  of  Commissioners  Adelstein  and  Copps). 
 47  HBC,  18  FCC  Rcd  at  18893. 
 48  Id. 
 49  Univision  Comments  at  18-  19. 
 50  See  Joint  Reply  Comments  at  9-  10. 
 51  Univision  Comments  at  23-  24;  Univision  Reply  Comments  at  22-  24. 
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 pay  services  as  an  adequate  substitute  for  free,  over-  the-  air  broadcasting  of  the  kind  that  we  find  would  be  fostered  by  approval  of  the  Joint  Petition.  52 
 24.  Granting  the  Joint  Petition  will  also  give  KPHZ(  TV)  (as  a  Phoenix  station)  increased  credibility  with  advertisers  in  the  Phoenix  DMA,  as  demonstrated  by  the  numerous  statements  submitted 
 by  local  advertisers.  53  Telemundo  has  pledged  that  this  increased  credibility  will,  in  turn,  support  an  expanded  local  programming  effort  including  increased  local  news  directed  to  the  Hispanic  audience.  54 
 Univision  argues  that  such  a  pledge  is  illusory  because  Telemundos  existing  Class  A  station  already  airs  an  hour  of  local  news  programming  Monday  through  Friday.  55  Although  Telemundo  may  be 
 providing  some  local  programming  in  its  existing  Class  A  station,  we  conclude  that  its  local  programming  efforts  will  be  improved  by  its  ability  to  operate  a  full  power  television  station  in  the  Phoenix  market. 
 Although  we  agree  that  the  Commission  is  not  in  the  business  of  dictating  programming  to  broadcast  stations,  we  frequently  have  accepted  programming-  related  commitments  from  licensees  seeking  waivers 
 and  other  actions.  56  We  are  also  satisfied  that  Telemundo  is  committed  to  maintaining  a  Hispanic-oriented  format  on  Channel  39  if  we  approve  the  Joint  Petition.  57  Telemundo  claims  a  strong  tradition  of 
 meeting  the  needs  and  interests  of  its  predominantly  Spanish-  speaking  audience  by  producing  and  airing  local  news  and  other  programs  on  its  owned  and  operated  stations.  58  From  the  earliest  days  of 
 broadcasting,  the  Commission  has  pursued  policies  aimed  at  encouraging  localism.  59  While  we  leave  to  the  discretion  of  our  licensees  the  best  means  of  fulfilling  their  obligation  to  present  news  and  public 
 affairs  programming,  locally  produced  news,  public  affairs  and  other  local  programs  are  a  preferred  means  of  responding  to  local  needs  and  interests. 


 25.  Grant  of  the  proposal  will  also  preserve  two  full-  power  television  stations,  while  we  find  that  the  record  evidence  demonstrates  that  denial  of  the  proposal  likely  will  result  in  the  discontinuance  of 
 operation  by  KPHZ(  TV)  in  Holbrook.  60  We  attach  significance  to  Telemundos  view  because  it  is  the  most  familiar  with  the  challenges  of  operating  the  station.  We  agree  that  allowing  KPHZ(  TV)  to  operate 
 as  a  noncommercial  station  could  improve  the  stations  operations  because  it  may  be  able  to  draw  on  sources  of  funding  independent  of  advertising  revenues  such  as  direct  financial  contributions.  61  Although 
 Univision  does  not  believe  that  noncommercial  educational  service  in  Holbrook  is  feasible,  we  note  that  CTE  has  experience  successfully  operating  noncommercial  stations.  62  CTE  owns  and  operates  other 
 noncommercial  television  stations  that  are  supported  by  a  variety  of  support  mechanisms  including  cash  donations,  pledges,  bequests,  gifts  of  property,  charitable  gift  annuities,  trusts  and  more.  Although 


 52  See  Joint  Reply  Comments  at  21. 
 53  See  Joint  Comments  at  Exhibit  3. 
 54  See  Joint  Petition  at  25  and  34-  35. 
 55  See  Univision  Reply  Comments  at  n.  52. 
 56  See,  e.  g.,  WNWO  Associates,  11  FCC  Rcd  18595  (1996);  WHTM-  TV,  Inc.,  11  FCC  Rcd  5829  (1996); 
 Stockholders  of  CBS,  Inc.,  11  FCC  Rcd  3733  (1995).  57 
 Accordingly,  we  disagree  with  Univision  that  the  proposal  should  be  denied  because  Telemundo  could  change  program  formats. 


 58  See  Joint  Petition  at  2-  4  and  Exhibit  1. 
 59  Council  Tree  maintains  that  grant  of  the  Joint  Petition  will  actually  increase  ownership  concentration  and  harm 
 localism.  See  Council  Tree  Comments  at  2-  3.  The  fact  that  the  channel  exchange  will  not  increase  ownership  diversity  is  outweighed  by  its  public  interest  benefits  including  expanded  local  programming. 


 60  See  Joint  Petition  at  8  and  20-  21;  Joint  Comments  at  8-  9  and  25-  27. 
 61  See  Joint  Petition  at  21-  22. 
 62  See  Univision  Comments  at  13-  16;  Joint  Reply  Comments  at  24-  25. 
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 Univision  has  offered  to  operate  the  Holbrook  station,  it  offers  no  evidence  or  information  to  support  its  view  that  a  commercial  station  may  be  profitably  operated  in  Holbrook  despite  Telemundos  experience 
 to  the  contrary.  63  Grant  of  the  proposal  would  also  bring  the  first  noncommercial  educational  station  to  Holbrook,  thereby  furthering  one  of  our  allotment  priorities.  64 


 26.  We  also  conclude  that  reserving  Holbrooks  sole  commercial  channel  is  consistent  with  our  long-  standing  allotment  policies.  Although  in  a  majority  of  communities,  the  Commission  has 
 ensured  that  the  community  would  first  receive  a  commercial  allotment  before  a  reserved  channel  was  allotted,  we  find  that  preserving  Holbrooks  sole  television  transmission  service  outweighs  this  policy 
 under  the  circumstances  here.  Similarly,  we  conclude  that  dereserving  one  of  the  two  reserved  channels  in  Phoenix  will  not  unduly  deprive  the  market  of  noncommercial  educational  service.  Univision  argues 
 that  a  grant  of  the  Joint  Petition  would  put  Phoenix  at  odds  with  the  noncommercial  allotments  of  similarly  sized  markets.  65  Nothwithstanding  that  Phoenix  will  be  left  with  only  one  noncommercial 
 station  we  believe  that  public  interest  would  be  served  by  a  waiver  for  the  reasons  outlined  herein.  In  addition,  Phoenix  will  continue  to  be  served  by  reserved  channel  8*  and  CTE  has  pledged  to  continue  to 
 operate  KDRX-  CA  as  a  noncommercial  station.  66  Univision  also  argues  that  changing  the  reserved  allotment  from  Phoenix  to  Holbrook  will  result  in  a  net  loss  of  noncommercial  educational  service.  67  We 
 find  that  this  detriment  is  outweighed  by  the  benefit  of  preserving  Holbrooks  sole  local  television  transmission  service,  the  opportunity  to  foster  local  and  national  Spanish-  language  network  competition, 
 and  to  expand  and  improve  local  programming  in  Phoenix.  68 
 27.  On  balance,  we  find  that  these  public  interest  factors  weigh  in  favor  of  granting  the  proposed  de-  reservation  of  channel  39*  in  Phoenix  and  reservation  of  channel  11  in  Holbrook,  Arizona 
 and  waiving  the  Commission's  policy  disfavoring  dereservation  of  reserved  noncommercial  educational  channels  and  the  uncodified  rule  requiring  opening  of  dereserved  channels  for  competing  applications. 
 Based  on  Telemundos  commitments,  we  also  find  that  a  grant  of  the  proposal  will  result  in  expanded  and  improved  local  news  and  other  local  programming.  Finally,  and  more  importantly,  grant  of  the  proposal 
 will  create  the  first  full-  power  competition  to  Univision  in  the  Phoenix  market,  thereby  giving  Spanish-speaking  viewers  an  additional  meaningful  choice  by  enhancing  diversity  of  programming,  a  long-standing 
 Commission  objective.  69 
 28.  We  note  that  licensees  operating  on  channels  reserved  for  noncommercial  educational  operation,  who  are  not  schools,  colleges  or  universities,  are  required  to  have  officers,  directors,  and 


 63  See  Univision  Reply  Comments  at  28. 
 64  We  clarify  that  our  decision  does  not  reply  on  Telemundos  conclusion  that  KPHZ  is  not  viable  for  its  specific 
 business  objective  of  serving  Phoenixs  Hispanic  population.  See  Joint  Petition  at  9.  65 
 See  Univision  Comments  at  12.  66 
 See  Joint  Petition  at  37-  38;  and  Joint  Comments  at  13  and  30.  67 
 See  Univision  Comments  at  3  and  11-  12.  68 
 See  Amendment  of  Section  73.  606(  b),  Boca  Raton  and  Lake  Worth,  Florida,  10  FCC  Rcd  9254  (channel  exchange  permitted  despite  the  new  reduction  in  noncommercial  service). 


 69  Council  Tree  argues  that  a  decision  on  the  Joint  Petition  should  be  deferred  until  the  Commission  lifts  its  freeze 
 on  changes  to  existing  DTV  and  analog  TV  service  areas  and  channels.  See  Council  Tree  Comments  at  2-  3.  Because  the  Joint  Petition  does  not  involve  changes  in  the  technical  parameters  of  any  station  but  only  involves  a 


 change  in  the  reservation  status  of  channels,  there  will  be  no  impact  on  other  analog  or  DTV  stations,  allotments  or  applications  and  deferral  is  not  necessary.  We  also  are  unpersuaded  by  Council  Trees  argument  that  the  proposal 
 should  be  denied  because  it  would  increase  ownership  concentration  and  harm  localism.  See  supra,  14.  For  the  reasons  discussed  above,  we  find  that  grant  of  the  proposal  serves  our  goal  of  localism,  and  the  fact  that 
 Telemundos  proposal  will  not  increase  ownership  diversity  does  not  outweigh  its  public  interest  benefits. 
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 governing  board  members  who  are  broadly  representative  of  the  educational,  cultural,  and  civic  groups  in  the  community  of  license.  70  Although  CTE  is  qualified  to  operate  on  a  reserved  channel  in  Phoenix,  it  has 
 not  established  its  qualifications  to  operate  on  the  proposed  newly  reserved  channel  11  in  Holbrook.  CTE  has  committed  to  ensure  that,  upon  approval  of  the  Joint  Petition,  its  board  of  directors  will  be  broadly 
 representative  of  the  Holbrook  community.  71  Thus,  our  approval  of  the  proposed  channel  exchange  will  be  conditioned  on  CTE  establishing  its  qualifications  to  operate  on  a  noncommercial  channel  in  Holbrook 
 and  receiving  the  approval  of  the  Media  Bureaus  staff  before  the  joint  petitioners  may  consummate  these  transactions. 


 V.  CONCLUSION 
 29.  Based  upon  our  review  of  the  record  before  us,  we  conclude  that  the  public  interest  would  be  served  by  removing  the  noncommercial  reservation  from  Channel  *39  in  Phoenix,  and  instead 
 reserving  Channel  11  in  Holbrook.  Accordingly,  IT  IS  ORDERED,  That,  the  Joint  Petition  to  Amend  the  Television  Table  of  Allotments  filed  by  NBC  Telemundo  Phoenix,  Inc.  and  Community  Television 
 Educators,  Inc.  IS  GRANTED. 
 30.  IT  IS  FURTHER  ORDERED,  That,  effective  November  28,  2005,  Section  73.  606  of  the  rules  is  amended  as  follows: 


 Community  Channel  No.  Phoenix,  Arizona  3+,  5-,  8*+,  10-,  15-,  21,  33,  39,  45,  61 
 Holbrook,  Arizona  11*+,  18*+ 
 31.  IT  IS  FURTHER  ORDERED,  That  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  shall  send  by  Certified  Mail,  Return  Receipt  Requested,  a 
 copy  of  this  Report  and  Order  to  the  following: 
 F.  William  LeBeau,  Esq.  NBC  Telemundo  License  Co. 
 1200  Pennsylvania  Avenue,  N.  W.  Washington,  DC  20004 
 Counsel  for  NBC  Telemundo  Phoenix,  Inc. 
 Margaret  L.  Tobey,  Esq.  Morrison  and  Forester,  LLP 
 2000  Pennsylvania  Avenue,  N.  W.  Suite  5500 
 Washington,  DC  20006  Counsel  for  NBC  Telemundo  Phoenix,  Inc. 


 John  E.  Fiorini,  III,  Esq.  Wiley,  Rein  &  Fielding,  LLP 
 1776  K  Street,  N.  W.  Washington,  DC  20006 
 Counsel  for  Community  Television  Educators,  Inc. 


 70  See  WQED  Pittsburgh,  supra. 
 71  See  Joint  Comments  at  27-  28. 
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 Robert  L.  Olender,  Esq.  Koerner  &  Olender,  PC 
 5809  Nicholson  Lane  Suite  124 
 Bethesda,  MD  20852  Counsel  for  Community  Television  Educators,  Inc. 


 32.  IT  IS  FURTHER  ORDERED,  That  pursuant  to  Section  316(  a)  of  the  Communications  Act  of  1934,  as  amended,  the  authorization  of  Telemundo  for  KPHZ(  TV),  Holbrook,  Arizona,  IS 
 MODIFIED  to  specify  Phoenix,  Arizona  as  the  stations  community  of  license  and  operation  on  channel  39  in  lieu  of  channel  11. 


 33.  IT  IS  FURTHER  ORDERED,  That  within  45  days  of  the  effective  date  of  this  Order,  Telemundo  shall  submit  to  the  Commission  a  minor  change  application  for  a  construction 
 permit  (FCC  Form  301)  specifying  channel  39  in  lieu  of  channel  11  for  station  KPHZ(  TV)  and  Phoenix,  Arizona  as  the  stations  community  of  license. 


 34.  IT  IS  FURTHER  ORDERED,  That  pursuant  to  Section  316(  a)  of  the  Communications  Act  of  1934,  as  amended,  the  authorization  of  CTE  for  KDTP(  TV),  Phoenix,  Arizona  IS  MODIFIED  to 
 specify  Holbrook,  Arizona  as  the  stations  community  of  license  and  operation  on  channel  11*  in  lieu  of  channel  39*,  conditioned  on  submission  and  approval  of  a  showing  that  CTE  is  qualified  to  operate  on  a 
 reserved  channel  in  Holbrook,  Arizona. 
 35.  IT  IS  FURTHER  ORDERED,  That  within  45  days  of  the  approval  of  its  qualifications  pursuant  to  paragraph  26  above,  CTE  shall  submit  to  the  Commission  a  minor  change 
 application  for  a  construction  permit  (FCC  Form  340)  specifying  Channel  11*  in  lieu  of  Channel  39*  for  station  KDTP(  TV)  and  Holbrook,  Arizona  as  the  stations  community  of  license. 


 36.  IT  IS  FURTHER  ORDERED,  That  the  Commission  will  send  a  copy  of  this  Order  in  a  report  to  be  sent  to  Congress  and  the  Government  Accountability  Office  (GAO)  pursuant  to 
 the  Congressional  Review  Act.  72 
 37.  IT  IS  FURTHER  ORDERED,  That  this  proceeding  is  terminated. 
 38.  The  Commission  has  determined  that  the  relevant  provisions  of  the  Regulatory  Flexibility  Act  of  1980  do  not  apply  to  rule  making  proceedings  to  amend  the  TV  Table  of  Allotments,  Section 
 73.606.  73 
 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 


 72  See  47  U.  S.  C.    801(  a)(  1)(  A). 
 73  See  Certifications  that  Section  603  and  604  of  the  Regulatory  Flexibility  Act  Do  Not  Apply  to  Rule  Making  To 
 Amend  Sections  72.  202(  b),  73.504,  and  73.  606(  b)  of  the  Commissions  Rules,  46  FR  11549  (February  9,  1981). 
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 CONCURRING  STATEMENT  OF  COMMISIONER  MICHAEL  J.  COPPS 
 Re:  Amendment  of  the  Television  Table  of  Allotments  to  Delete  Noncommercial  Reservation  of  Channel  *39,  620-  626  MHz,  Phoenix,  Arizona,  and  to  Add  Noncommercial  Reservation  on 
 Channel  11,  198-  204  MHz,  Holbrook,  Arizona 
 Dereserving  a  noncommercial  station  in  a  community  should  only  be  permitted  in  those  rare  circumstances  where  there  is  an  extraordinary  public  interest  showing  that  it  would  serve  the  local 
 community.  Based  on  the  unique  circumstances  of  this  case,  I  concur  in  finding  that  the  petitioners  have  met  this  high  standard.  Over  the  past  few  years,  we  have  seen  consolidation  in  Spanish-  language  media 
 taken  to  new  and  threatening  heights.  Todays  decision  should  promote  at  least  somewhat  greater  diversity  and  competition  for  those  who  receive  their  news  and  entertainment  in  Spanish  in  one  of  the 
 largest  Hispanic  markets  in  the  country. 
14