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Voice of America: Station Modernization Projects Need to Be Justified
(Letter Report, 01/24/94, GAO/NSIAD-94-69).

The end of the Cold War, technological advances, and organizational
changes in U.S. foreign broadcasting programs may render some of the
Voice of America's (VOA) shortwave modernization projects obsolete
before they are finished.  Democracy is spreading in many parts of the
world, host country media have become more reliable broadcast sources,
and VOA and Radio Free Europe/Radio Liberty audiences have shrunk.  By
the turn of the century, direct satellite broadcasts involving
high-quality signals may be available.  Despite these trends, VOA plans
to continue to build new shortwave stations and modernize existing ones.
More than half of the $900 million VOA plans to spend on modernization
through 2003 is for shortwave projects that have not yet begun.  The
planned shortwave modernization projects are not supported by
cost-benefit analyses.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-94-69
     TITLE:  Voice of America: Station Modernization Projects Need to Be 
             Justified
      DATE:  01/24/94
   SUBJECT:  Radio broadcasting
             Cost effectiveness analysis
             Construction costs
             International relations
             Cultural exchange programs
             Information dissemination operations
             Interagency relations
             Federal agency reorganization
             Public diplomacy
             Microwave radio broadcasting
IDENTIFIER:  Sri Lanka
             Tinian
             Europe
             Commonwealth of Independent States
             Latin America
             Thailand
             Africa
             Persian Gulf War
             Bahrain
             Liberia
             Morocco
             
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Cover
================================================================ COVER

Report to Congressional Requesters

January 1994

VOICE OF AMERICA - STATION
MODERNIZATION PROJECTS NEED TO BE
JUSTIFIED

GAO/NSIAD-94-69

Voice of America

Abbreviations
=============================================================== ABBREV

  NASA - National Aeronautics and Space Administration
  RFE/RL - Radio Free Europe/Radio Liberty
  USIA - U.S.  Information Agency
  VOA - Voice of America

Letter
=============================================================== LETTER

B-255840

January 24, 1994

The Honorable Lee H.  Hamilton
Chairman, Committee on Foreign Affairs
House of Representatives

The Honorable Neal Smith
Chairman, Subcommittee on Commerce,
 Justice, State, the Judiciary, and
 Related Agencies
Committee on Appropriations
House of Representatives

Because of your continuing interest in the Voice of America's (VOA)
radio construction program, we are sending you this report on the
need for VOA to justify its modernization plan.  Shortly after the
President's February 1993 announcement of his intentions to
consolidate U.S.  international broadcasting activities, we began a
review of the costs and issues associated with consolidating Radio
Free Europe/Radio Liberty (RFE/RL) and VOA within the U.S. 
Information Agency's (USIA) Bureau of Broadcasting.  Our objectives
were to determine whether VOA had (1) adequately considered changing
world conditions and new technology in its plans to build new
stations and modernize existing ones and (2) supported its
modernization projects with fully documented cost-benefit analyses. 

   BACKGROUND
------------------------------------------------------------ Letter :1

VOA's broadcasts originate in Washington, D.C., and are sent to 29
leased and owned relay stations worldwide via satellite channels. 
These stations rebroadcast the VOA programs in shortwave and medium
wave.  Shortwave is the primary signal used in international
broadcasting because it can be transmitted thousands of miles and is
the only way to reach certain VOA audiences.  The key drawback to
shortwave broadcasts is the variable signal, which can at times
result in poor sound quality or an inaudible broadcast. 

In 1982, VOA embarked on an estimated $1.3 billion network
modernization program.  The modernization program was intended to
increase the reliability and strength of the broadcast signal into
areas of political importance and defeat the jamming of VOA's
shortwave broadcasts.  In 1983, VOA developed a plan to achieve this
goal by refurbishing existing relay stations and constructing new
ones.  This plan has been changed and delayed often in response to
changing circumstances, and much of the modernization program has not
yet begun. 

In 1992, we reported on VOA--specifically, its station modernization
efforts, audience research, foreign language broadcasts, and the
changing world environment.\1 In that report, we noted that as
technology improves and local broadcast media become more reliable,
the incentive for people to tune to shortwave broadcasts declines. 

--------------------
\1 Voice of America:  Management Actions Needed to Adjust to a
Changing Environment (GAO/NSIAD-92-150, July 24, 1992). 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

Major political changes, advances in communications technology, and
organizational changes in U.S.  government international broadcasting
may render some of VOA's planned shortwave modernization projects
obsolete before they are finished.  Democracy is spreading in many
parts of the world; host country media have become more reliable
broadcast sources; and VOA and RFE/RL audiences have declined.  In
response to the President's plan to consolidate broadcasting, VOA and
RFE/RL cut back their direct broadcast hours and are planning to
eliminate redundant language broadcasts.  In several locations, they
are using alternatives (such as providing programs to local stations
for rebroadcast) to supplement or replace direct broadcasts.  By the
turn of the century, direct broadcasts from satellites delivering
high-quality signals may be available.  Despite these changes and the
fact that fewer people in target audiences are listening to shortwave
broadcasts, VOA plans to continue to construct new shortwave stations
and modernize existing ones.  Over half of the $900 million VOA plans
to spend on modernization between 1994 and 2003 is for shortwave
projects that have not yet begun. 

The planned shortwave modernization projects are not supported by
cost-benefit analyses.  In 1992, we recommended that VOA analyze the
costs and benefits of its new construction projects.  Although VOA
agreed to do so for new projects, it did not make this analysis for
the existing shortwave modernization projects, asserting that they
were previously approved and justified in other planning documents. 
However, the proposed consolidation of VOA and RFE/RL and the
changing political and technological environment present different
circumstances than when earlier approvals were granted. 

   IMPACT OF POLITICAL,
   TECHNOLOGICAL, AND
   ORGANIZATIONAL CHANGES ON VOA'S
   MODERNIZATION PLANS
------------------------------------------------------------ Letter :3

VOA continues to implement a plan to modernize existing facilities
and build new shortwave broadcasting facilities.  VOA's plan has been
delayed and changed since 1983 due to budget restrictions and delays
in negotiating operating agreements with foreign governments for new
stations.  Therefore, many of these modernization efforts are taking
longer to complete.  For example, VOA's plan to expand facilities in
Sri Lanka was approved in December 1983.  However, reduced funding
delayed its construction.  The new station, which has been redesigned
in response to changing circumstances and moved to a different
location, is now scheduled for completion in June 1995. 

Construction has not started on a proposed station in Tinian, and the
station will not be ready for broadcasting until 1997.  Planned
modernization has not begun at many existing stations.  In the
meantime, political changes, advances in communications technology,
and impending organizational changes have created a dramatically
different environment for U.S.  government international
broadcasting.  What follows are descriptions of these changes. 

      POLITICAL CHANGES
---------------------------------------------------------- Letter :3.1

Countries that VOA has broadcast to have changed politically and are
now open to a freer flow of information.  Both RFE/RL and VOA are
providing more programs to local broadcasters for rebroadcast in
Eastern Europe and the Commonwealth of Independent States and
reducing the number of direct shortwave broadcasts.  Although VOA now
broadcasts in two more languages than in 1991, its direct broadcasts
have decreased by about
10 percent (113 hours a week), due primarily to placement of its
programs.  VOA has allocated increased resources to place its
programs on local stations and networks and established new offices
to implement the placement program. 

In the past 2 years, VOA has placed its programming on more national
networks and local stations than ever before.  For example, in the
17 Spanish speaking countries of Latin America, hundreds of local
commercial stations and networks broadcast segments of VOA's 20
weekly hours of Spanish programming.  In Thailand, VOA sends
programming segments each week to scores of networks and local
stations.  Some VOA programming is broadcast on a majority of African
countries' official networks and on several large regional stations. 
Similar examples exist in other regions of the world. 

According to a VOA report, the trend in Eastern Europe and some parts
of the Commonwealth of Independent States is toward Western listening
and viewing habits--direct international radio listening drops off to
single digit percentages when there are more than six choices of
local programs available.  However, in countries where the pace of
democratic change is measured or uncertain, VOA believes that the
retention of its crisis shortwave broadcast capability is vital to
U.S.  national interests.  It is important to note, however, that
there are other, less expensive alternatives to building or
maintaining large shortwave stations to respond to crisis situations. 
For example, after its Liberia station was taken over by rebels, VOA
built a mobile shortwave facility.  In response to the Persian Gulf
crisis, VOA established a new broadcast capability within 4 months of
its agreement with Bahrain. 

      ADVANCES IN TECHNOLOGY
---------------------------------------------------------- Letter :3.2

According to a VOA study, direct broadcasts via satellite will emerge
for limited application before the end of the decade and will
ultimately revolutionize radio program delivery.  Satellite radio is
the most promising emerging technology for international radio
broadcasting. 

As currently envisioned, VOA would lease satellite channels from
system operators.  As time goes on, VOA might augment its shortwave
and medium wave delivery in certain parts of the world with satellite
radio transmissions.  The pace of availability will differ among
various regions of the world.  In some places, these transmissions
may eventually replace traditional shortwave broadcasting methods,
depending on characteristics, such as the availability of inexpensive
receivers. 

In 1992, delegates at a world conference allocated frequencies for
satellite radio and, as a delegate, VOA favored this action.  A VOA
report states that VOA may want to lease a few experimental circuits
as early as 1995.  However, VOA does not believe full-scale use of
satellite radio by international broadcasters will occur any earlier
than near the end of the decade. 

VOA has been working with the National Aeronautics and Space
Administration (NASA) to develop a prototype satellite radio
receiver.  It hopes to give designs for the prototype to industry to
encourage companies to manufacture the radios.  In June 1993, using a
prototype indoor radio, VOA successfully demonstrated reception of a
stereo quality signal from a NASA satellite.  According to a VOA
report, in some parts of the world, by 1995, digital radio receivers
compatible with satellite broadcasts are expected to be available for
sale.  Therefore, according to a VOA plan, there could be an
incentive to lease a few experimental satellite circuits as early as
1995.  The widespread use of satellites to beam radio and television
across national borders directly into homes is expected near the end
of the decade. 

According to a USIA research report, inexpensive transistorized
electronics and the widespread use of communications satellites have
given much of the world access to more and more broadcast
programming.  Much of it is televised to the world's 1 billion plus
television sets.  Most USIA surveys show that, where it is available,
television has become the primary source of news. 

      ORGANIZATIONAL CHANGES
---------------------------------------------------------- Letter :3.3

The President's proposed consolidation of RFE/RL and VOA includes the
merger of 35 owned and leased relay stations worldwide.  According to
a VOA consolidation study, elimination of all head-to-head
competition, updated assessments of audience needs, and overall
budget constraints dictate that the combined radios broadcast fewer
total hours than the sum of today's schedules. 

VOA and RFE/RL are already cooperating in the delivery of their
programs.  For example, facilities are jointly leased to supplement
the coverage provided by owned and operated stations.  As a result,
RFE/RL has allowed VOA to lease excess capacity on its owned
shortwave transmitters at one of its six European relay stations. 

In February 1993, the U.S.  Advisory Commission on Public Diplomacy
reported the potential benefits of consolidation,\2 including
efficiencies in the use of transmitters, broadcast frequencies,
staff, and facilities.  The Commission noted that the United States
does not need two government-funded radio stations competing for the
same audiences, placement opportunities, frequencies, and scarce
resources. 

--------------------
\2 The U.S.  Advisory Commission on Public Diplomacy, a bipartisan
commission created by the Congress, oversees international
broadcasting, public affairs, and educational exchange activities. 

   VOA HAS NOT CONDUCTED NEEDED
   COST-BENEFIT ANALYSES
------------------------------------------------------------ Letter :4

Our 1992 report recommended that USIA require fully documented
cost-benefit analyses before approving any future VOA modernization
project proposals.  We recommended that these analyses consider (1)
project alternatives, including no action, refurbishment,
replacement, expansion, and new construction; (2) the potential
audience improvement that could be achieved by each project
alternative based on audience research data; and (3) the risks to
project completion, such as political unrest and future funding
shortfalls. 

In response to our recommendation, VOA developed what it referred to
as a project alternatives assessment process to be used in the
development of any new project.  This process included analyses of
(1) broadcast requirements, (2) audience data, (3) existing
facilities, (4) the threats to potential new locations, and (5)
project costs and alternatives.  The intent was to ensure that VOA
use the most cost-effective method of fulfilling its mission.  VOA
has not applied this analytical technique to any of its existing
construction projects, asserting that they were approved and
justified before the technique was developed and reviewed in annual
planning reports.  However, five shortwave modernization projects
planned between 1994 and 2003 and costing about $500 million have not
yet begun.\3

Although earlier approvals had been granted, cost benefit analyses
could now produce different plans considering the proposed
consolidation of VOA and RFE/RL and other changes. 

A VOA official told us of his concerns about the cost of doing needed
audience research in support of the assessment process.  We recognize
that research will add to VOA's costs.  However, audience research
costs little (about $650,000 in fiscal year 1993) relative to the
construction of new stations.  For example, VOA's new Morocco station
cost over $200 million.  Other international broadcasters spend
between 1 percent and 2 percent of their total budget on audience
research.  A July 1993 VOA report suggests that it should have a
budget of $2 million a year for audience research. 

--------------------
\3 VOA had planned to build a $144-million station in Kuwait.  This
station has been withdrawn from the executive branch's budget. 
However, VOA believes another station will be needed to satisfy this
shortwave broadcasting requirement. 

   RECOMMENDATIONS
------------------------------------------------------------ Letter :5

In light of the changes in world conditions, technology, and the
organization of U.S.  government broadcasting, we recommend that the
Director of USIA direct the Associate Director, Bureau of
Broadcasting, to require fully documented cost-benefit analyses for
all VOA shortwave modernization projects where construction has not
yet begun.  We further recommend that USIA use the project
alternatives assessment process developed in response to our 1992
report. 

   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :6

USIA provided written comments on a draft of this report and
generally agreed with its contents (see app.  I).  However, detailed
comments suggested that we recommend that VOA perform cost analyses
of their modernization projects rather than cost-benefit analyses. 
We did not make this change and believe that cost-benefit analyses
are needed.  Without such analyses, VOA lacks any reasonable
assurance that (1) after spending millions of dollars on new and
upgraded facilities its audience will increase or (2) given the
variety of methods VOA uses to deliver programs to target audiences,
such as program placement, that the planned modernization is the
best, most effective, and efficient way to achieve its objectives. 

   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :7

We performed our work at VOA and the Bureau for International
Broadcasting headquarters in Washington, D.C., and at overseas
facilities.  We interviewed officials at VOA, USIA, and USIA's Office
of the Inspector General and reviewed VOA plans, reports, and
studies.  We interviewed officials and reviewed documents at VOA's
relay station in Ismaning, Germany, and its Marketing Office in
Munich, Germany.  We interviewed officials and obtained documents
from RFE/RL in Munich, Germany, and from relay stations in Biblis,
Lampertheim, and Holzkirchen, Germany. 

We performed our work between April and November 1993 in accordance
with generally accepted government auditing standards. 

---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Director, U.S. 
Information Agency; the Director, Office of Management and Budget;
and other interested congressional committees.  Copies will also be
made available to others upon request. 

Please contact me on (202) 512-4128 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix II. 

Joseph E.  Kelley
Director in Charge
International Affairs Issues

(See figure in printed edition.)Appendix I
COMMENTS FROM THE U.S. 
INFORMATION AGENCY
============================================================== Letter 

(See figure in printed edition.)

(See figure in printed edition.)

   GAO COMMENTS
------------------------------------------------------------ Letter :8

1.  We have not reprinted USIA's line-by-line changes and
clarifications.  However, we have made suggested editorial changes
and clarifications throughout the report, as appropriate. 

2.  USIA's line-by-line comments suggested deleting the word
"benefit" from our recommendation and the discussion here refers only
to cost analyses.  As discussed in this report, we believe
cost-benefit analyses are needed.  The project alternatives
assessment process developed in response to our 1992 recommendation
provides for the analysis of audience data as a measure of the
potential benefits of modernization projects. 

3.  Our report does not address VOA's upgrade of its medium wave
stations.  However, USIA research indicates that listeners prefer
medium wave over shortwave broadcasts. 

MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II

   NATIONAL SECURITY AND
   INTERNATIONAL AFFAIRS DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

Charles A.  Schuler, Assistant Director
John A.  Butcher, Evaluator in Charge
Joan Slowitsky, Adviser
Jean Fox, Evaluator
Julie Hirshen, Evaluator

   EUROPEAN OFFICE
-------------------------------------------------------- Appendix II:2

Cherie Starck, Evaluator
Jose Pena, Evaluator

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