14006 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations

1Notice of Inquiry in MM Docket No. 87–268, 2

FCC Rcd 5127 (1987) (‘‘First Inquiry’’). See also

Tentative Decision and Further Notice of Inquiry in

MM Docket No. 87–268, 3 FCC Rcd 6520 (1988)

(‘‘Second Inquiry’’); First Report and Order in MM

Docket No. 87–268, 5 FCC Rcd 5627 (1990)(‘‘First

Order’’); Notice of Proposed Rule Making in MM

Docket No. 87–268, 6 FCC Rcd 7024 (1991)

(‘‘Notice’’); Second Report and Order/Further

Notice of Proposed Rule Making in MM Docket No.

87–268, 7 FCC Rcd 3340 (1992) (‘‘Second Report/

Further Notice’’); Second Further Notice of

Proposed Rule Making in MM Docket No. 87–268,

7 FCC Rcd 5376 (1992) (‘‘Second Further Notice’’);

Memorandum Opinion and Order/Third Report and

Order/Third Further Notice of Proposed Rule

Making in MM Docket 87–268, 7 FCC Rcd 6924

(1992)(‘‘Third Report/Further Notice’’); Fourth

Further Notice of Proposed Rule Making in MM

Docket No. 87–268, 10 FCC Rcd 10540 (1995)

(‘‘Fourth Further Notice’’); Fifth Further Notice,

supra; Sixth Further Notice of Proposed Rule

Making in MM Docket No. 87–268, 11 FCC Rcd

10968 (1996)(‘‘Sixth Further Notice’’).

FOR FURTHER INFORMATION CONTACT: Pam

Blumenthal, Mass Media Bureau, (202)

418–2180.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s Report

and Order, MM Docket No. 96–167,

adopted March 12, 1997, and released

March 21, 1997. The full text of this

Commission decision is available for

inspection and copying during normal

business hours in the FCC Reference

Center (Room 239), 1919 M Street, NW,

Washington, DC. The complete text of

this decision may also be purchased

from the Commission’s copy contractor,

ITS, Inc., (202) 857–3800, 2100 M

Street, NW, Suite 140, Washington, DC

20037.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Part 73 of title 47 of the Code of

Federal Regulations is amended as

follows:

47 CFR PART 73—[AMENDED]

1. The authority citation for Part 73

continues to read as follows:

Authority: Secs. 303, 48 Stat., as amended,

1082; 47 U.S.C. 154, as amended.

§ 73.202 [Amended]

2. Section 73.202(b), the Table of FM

Allotments under Virginia, is amended

by adding Goochland, Channel 263A.

Federal Communications Commission.

John A. Karousos,

Chief, Allocations Branch, Policy and Rules

Division, Mass Media Bureau.

[FR Doc. 97–7442 Filed 3–24–97; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 73

[MM Docket No. 87–268, FCC 96–493]

Broadcast Services; Television

Broadcast Stations; TV Transmission

Standards

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: This document amends the

Commission’s Rules by adding a

transmission standard for digital

broadcast television signals. This action

is necessary to ensure that the benefits

of digital technology are available to

terrestrial television broadcasting and to

the American public. The intended

effect of this action is to provide the

certainty that many broadcasters,

equipment manufacturers and

consumers need to invest in new

technology.

EFFECTIVE DATE: This regulation is

effective May 27, 1997. The

incorporation by reference of certain

publications listed in the regulations is

approved by the Director of the Federal

Register as of May 27, 1997.

FOR FURTHER INFORMATION CONTACT: Saul

Shapiro, Mass Media Bureau, (202) 418–

2600; Roger Holberg, Mass Media

Bureau, Policy and Rules Division,

Legal Branch, (202) 418–2130; Dan

Bring, Mass Media Bureau, Policy and

Rules Division, Policy Analysis Branch,

(202) 418–2170; or Gordon Godfrey,

Mass Media Bureau, Policy and Rules

Division, Engineering Policy, (202) 418–

2190.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Fourth Report and Order

in MM Docket No. 87–268, FCC 96–493,

adopted December 24, 1996, and

released December 27, 1996. The

complete text of the Fourth Report and

Order can be found on the internet at

www.fcc.gov. It is available for

inspection and copying during normal

business hours in the FCC Reference

Center (Room 239), 1919 M Street, NW.,

Washington, DC, and also may be

purchased from the Commission’s copy

contractor, International Transcription

Service, at (202) 857–3800, 2100 M

Street, NW., Suite 140, Washington, DC

20037.

Synopsis of Fourth Report and Order

I. Introduction

1. In the Fourth Report and Order of

the Commission’s digital television

(‘‘DTV’’) proceeding, the Commission

adopts a transmission standard for

digital broadcast television signals. This

standard is a modification of the

Advanced Television System Committee

Digital Television Standard (‘‘ATSC

DTV Standard’’) proposed in the Fifth

Further Notice of Proposed Rule Making

and is consistent with a consensus

agreement voluntarily developed by a

broad cross-section of parties, including

the broadcasting, consumer equipment

manufacturing and computer industries.

Specifically, the Commission requires

the use of all layers of the ATSC DTV

Standard, except the video format layer,

which will remain optional. The

adopted transmission standard (‘‘DTV

Standard’’) is intended to provide the

certainty that many broadcasters,

equipment manufacturers and

consumers need to invest in new

technology.

II. Background

2. The Commission issued a series of

Notices and made a number of decisions

since the proceeding began in 1987. 1

The Commission established the

Advisory Committee on Advanced

Television Service to provide

recommendations concerning technical,

economic and public policy issues

associated with the introduction of

advanced television service. As alldigital television systems were

developed, advanced television became

digital television. In February of 1993,

the Advisory Committee reported that

four competing digital systems would

benefit from further development. In

May of 1993, seven companies and

institutions that had been proponents of

the four digital systems, joined together

in a ‘‘Grand Alliance’’ and developed

the digital system documented in the

ATSC DTV Standard. On November 28,

1995, the Advisory Committee voted to

recommend the Commission’s adoption

of the ATSC DTV Standard.

3. The ATSC DTV Standard includes

discrete subsystem descriptions, or

‘‘layers,’’ for video source coding and

compression, audio source coding and

compression, service multiplex and

transport, and RF/transmission. In

addition to being able to broadcast one,

and under some circumstances two,

high definition television programs, the

Standard allows for multiple streams of

standard definition television

programming at a visual quality better

than the current analog signal. The

Standard also allows for broadcast of

dozens of CD-quality audio signals and

permits rapid delivery of large amounts

of data.

4. On May 9, 1996, the Commission

adopted the Fifth Further Notice of

Proposed Rule Making, 61 FR 26864

(May 29, 1996), recommending adoption

of the ATSC DTV Standard. The

Commission also requested comment on

alternative approaches to requiring a

standard including: authorizing use of a
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations 14007

2 In television broadcast systems, one user’s

adoption of DTV provides no direct benefit to other

users, but may yield lagged, indirect benefits

through the provision of new or improved

programming. See comments of National Cable

Television Association, ‘‘Declaration of Bruce M.

Owen in Response to the Fifth Further Notice of

Proposed Rule Making,’’ at 4–11; comments of

Broadcasters at 16; reply comments of Strategic

Policy Research (on behalf of Cap Cities/ABC Inc.,

CBS Inc., Fox Television Stations, Inc., Association

for Maximum Service Television (‘‘MSTV’’),

National Association of Broadcasters (‘‘NAB’’), and

the National Broadcasting Co., Inc.) at 4–8; and

comments of the Computer Industry Coalition on

Advanced Television, Volume 2, Exhibit D, at 3–4.

For a discussion of network effects in broadcast

television see Bruce M. Owen and Steven S.

Wildman, Video Economics (Harvard University

Press, 1992): 260–313.

3See, comments of Broadcasters at 15–23, reply

comments of Strategic Policy Research at 2–8, reply

comments of National Cable Television Association

at 10–17, and reply comments of Computer Industry

Coalition on Advanced Television Service at 5–11.

4Startup is also referred to as the ‘‘chicken and

egg problem’’ or ‘‘wait and see behavior.’’

5See, e.g., comments of Mitsubishi Consumer

Electronics America, Inc., (‘‘MCEA’’) at 2–3; Philips

Electronics North America Corporation (‘‘Philips’’)

at 4–8; comments of Broadcasters at 15–24.

6See, e.g., comments of Tele-Communications,

Inc. (‘‘TCI’’) at 6–8; comments of Compaq Computer

Corporation at 6–14.

7See reply comments of Strategic Policy Research

at 6.

8 Id. at 14.

9See reply comments of National Cable

Television Association, Inc., at 10–17.

10See, e.g., comments of Broadcasters at 34;

comments of ATSC at 9; comments of Zenith at 7;

comments of Sony at 12; comments of Thomson

Consumer Electronics (‘‘Thomson’’) at 6; comments

of Grand Alliance at 9.

11See, e.g., comments of Broadcasters at 18–19

and 34; comments of ATSC at 3, 6; Sony Electronics

Inc. (‘‘Sony’’) at 8.

12Comments of HDTV Grand Alliance at 17–18.

See also comments of ATSC at 3, and EIA at 9.

13Comments of CICATS at 31–37.7

14Reply comment of NTIA at 2.

15Motion Picture Association of America, Inc.

(‘‘MPAA’’) is a trade association representing seven

of the largest U.S. producers, distributors, and

exporters of theatrical motion pictures, television

programming, and home video entertainment.

16See, e.g., Comments of Robert Primes, ASC, at

2 and 13; comments of the Coalition of Film Makers

(‘‘Film Makers’’) at 2, 5–9, and 11; comments of

Harold Becker.

17Comments of MPAA at 2–8.

18Comments of NCTA at 2.

19Reply Comments of NCTA at 6–7.

standard and prohibiting interference to

it, but not requiring the use of that

standard; and adopting a standard for

allocation and assignment purposes

only. In addition, the Commission

sought comment on requiring use of

some layers of the ATSC DTV Standard

but making others optional.

5. Several commenters, including

representatives of the computer industry

and film makers, objected to adoption of

the ATSC DTV Standard. After several

efforts to reach consensus among the

industry groups failed, the groups came

together again. On November 25, 1996,

representatives of a broad cross section

of the broadcast, computer and receiver

manufacturing industries reached an

agreement that the FCC should adopt

the ATSC DTV Standard, except for the

video format layer. On November 27,

1996, the Commission released a Public

Notice soliciting comment on the

agreement.

III. Comments

6. Technical Standards for DTV.

There is widespread agreement among

commenters that selection of a DTV

standard should be analyzed in terms of

network effects, that is the indirect

benefits that accrue to other DTV users

when any particular user adopts DTV.2

Broadcasters, computer interests and

cable interests agree that broadcasting is

a network product; that issues

surrounding selection of a DTV standard

are influenced by network effects; and

that in order to evaluate the various

alternatives, it is important to

understand how network effects will

operate. However, they disagreed on the

relative severity of the startup,

coordination and potential splintering

problems facing digital broadcast

television.3 Startup refers to the

situation where everyone would be

better off adopting DTV technology but

no one has the incentive to move first.4

Coordination is the collaborative effort

by broadcasters, consumer equipment

manufacturers, and program producers

that is necessary to introduce DTV.

Splintering refers to the breakdown of

the consensus or agreement to use the

DTV Standard.

7. Commenters also disagreed on the

availability and effectiveness of marketbased mechanisms to solve these

problems and to facilitate the goals and

objectives established in this

proceeding. Broadcasters, equipment

manufacturers and some consumer

groups contend that DTV has startup,

coordination and splintering problems

that are more severe than those of other

network industries and that a DTV

standard adopted by the Commission is

needed to overcome these problems.5 In

contrast, cable and computer interests

contend that all sectors of the broadcast

industry have significant incentives to

reach a consensus on transmission and

reception standards without a

government mandate.6

8. Broadcasters warn that a marketdriven selection of a standard would

result in barriers to the introduction of

DTV if different incompatible systems

develop.7 They maintain that a

government-mandated standard is

essential to ensure a universally

available, advertiser-supported over-theair digital broadcast service in the

future.8 In contrast, cable interests do

not agree that there are unique

characteristics or public policy goals

attendant to broadcast DTV, or that

there would be a market failure unless

a mandatory transmission standard is

adopted.9

9. There is likewise a range of opinion

on the merits of the ATSC DTV

Standard. Broadcasters, equipment

manufacturers, the Grand Alliance, and

ATSC urge the Commission to adopt the

complete ATSC DTV Standard.10 They

contend that only a Commissionadopted standard will supply the

certainty needed by all parties to

undertake the transition, the ATSC DTV

Standard is the best DTV standard in the

world,11 and it has ‘‘unprecedented and

unmatched interoperability with

computers and telecommunications.’’ 12

(Footnotes added.)

10. Computer interests, lead by

Computer Industry Coalition on

Advanced Television Service

(‘‘CICATS’’), urge us not to adopt a DTV

standard but state that if we decide to

the contrary we should only mandate a

minimum base-line standard based

exclusively on progressive scanning

technology.13 The National

Telecommunications and Information

Administration (‘‘NTIA’’) stresses the

need for a single mandatory DTV

standard, recommends limiting a

standard to only those elements

necessary to provide certainty,

encourage adoption, ensure the

opportunity for technological

developments, and concludes that the

best solution would be for interested

parties to reach a consensus on disputed

issues.14

11. While favoring a mandatory DTV

standard, most commenting

cinematographic and imaging interests

(with the significant exception of the

Motion Picture Association of America,

Inc.15) oppose adoption of the ATSC

DTV Standard in its current form

because of its inclusion of interlaced

scanning and other perceived

deficiencies, particularly in its video

and audio specifications.16 MPAA,

however, supports all aspects of the

Standard including its use of both

interlaced and progressive scanning and

its 16:9 aspect ratio.17 The National

Cable Television Association (‘‘NCTA’’)

is not critical of the specific ATSC DTV

Standard, but questions whether any

standard should be dictated by

government.18 Nevertheless, it

recognizes the need for performance

standards for controlling interference.19

12. Public interest groups generally

favor adoption of a single mandatory

standard although they differ on what
14008 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations

20Citizens for HDTV Coalition and the National

Consumers League urge adoption of the ATSC DTV

Standard while the Benton Foundation (‘‘Benton’’),

Consumer Federation of America and Media Access

Project (‘‘CFA/ MAP’’) recommend adoption of the

CICATS standard. However, CFA/MAP contend

that the public interest would be served by

encouraging ATSC and CICATS to work out their

technological differences.

21Comments of CFA/MAP at 1.

22Reply comment of Harris Corporation at 5.

23Comments of Benton Foundation at 3.

24Reply Comments of NCTA at 6–7.

25Comments of ATTC at 4.

26Comments of Zenith Electronics Corp.

(’’Zenith’’) at 7.

27Comments of the Grand Alliance at 2–3;

comments of ATSC at 3–4; comments of ATTC at

5–7; comments of Philips at 14–15; reply comments

of Grand Alliance at 15–33; reply comments of

ATSC at 15–32.

28 ‘‘Aspect ratio’’ is the ratio of picture width to

picture height.

29 ‘‘Letterboxing’’ is a technique in which the

aspect ratio of a film is preserved by blacking out

portions of the screen, typically at the top and

bottom. Material, however, is not cut from the

frame. This is different than, so-called, ‘‘pan-andscan’’ translation of widescreen movies to television

in which moves and cuts never intended in the

original are introduced to help make the action

visible in a narrower frame. In pan-and-scan, less

than the complete frame is transmitted and portions

of the picture are left out.

30See, e.g., comments of CICATS, Coalition of

Film Makers, and Consumer Federation of America/

Media Access Project. While several film makers

object to the Standard, the Motion Picture

Association of America supports its adoption by the

Commission.

31This is the number of frames transmitted per

second.

32Comments of CFA/MAP at 1, 5 and 6.

33Comments of Film Makers Coalition at 5–7.

that standard should be.20 For example,

Consumer Federation of America/Media

Access Project (‘‘CFA/MAP’’) believes

that the public interest will be served if

the Commission adopts a digital

television standard that 1) reduces the

cost of digital receivers and converters

and (2) permits the convergence of

video and computer technologies.21 In

contrast, National Consumers League

urges adoption because it believes that

in the absence of a standard, consumers

will be confused, demand for DTV

equipment will be reduced, and the

price drops normally associated with

consumer electronic equipment will not

materialize.

13. Alternatives to Standards. Little

comment was received concerning the

two alternative approaches to standards

specifically mentioned in the Fifth

Further Notice: that we authorize use of

and prohibit interference to users of the

ATSC DTV Standard, or adopt the ATSC

DTV Standard for allocation and

assignment purposes only. Equipment

manufacturer Harris argues for

mandating at least the RF/transmission

layer and basing allotment and

assignment principles on it in order to

provide protection from objectionable

interference.22 Some, such as the Benton

Foundation, urge the Commission to

adopt no more than the minimal rules

needed to protect spectrum users from

interference.23 Also, NCTA opposes

adoption of a design standard and

suggests that we use performance

standards to control interference.24 The

many parties that support adoption of

the complete standard generally believe

that these less inclusive options would

not provide the certainty necessary for

the successful launch of DTV and would

not provide an adequate basis for either

the design or the purchase of DTV

receivers. In addition, the Advanced

Television Technology Center (‘‘ATTC’’)

asserts that a DTV table of allotments

necessarily will depend on the extent to

which DTV causes interference to itself

and other signals and resists

interference from other signals.

Therefore, ATTC contends it is more

realistic to mandate the Standard for

actual operation than to attempt to

predict the impact of hypothetical

alternatives.25 Zenith and others suggest

that using the Standard only for

allotment and assignment purposes

would fail even to guarantee

interference protection.26

14. The ATSC DTV Standard.

Substantial comment was received

concerning the merits of, and objections

to, the ATSC DTV Standard.

Broadcasters, equipment manufacturers,

the Grand Alliance, ATSC, and the

ATTC praise the Standard as

representing the best digital television

system in the world and one that is

unmatched in terms of flexibility,

extendibility, interoperability and

headroom for growth.27 They note it

uses primarily progressive scan and

square pixels, making it the most

computer-compatible digital television

system in the world. They argue that the

Standard’s inclusion of four interlaced

formats will benefit broadcasters by

allowing for the use of interlaced scan

where broadcasters determine it

desirable to do so, such as when

broadcasting archived material that was

filmed in interlaced scan or where

interlaced scan may be superior, such as

in low-light conditions often

accompanying electronic news

gathering (‘‘ENG’’). Additionally, they

assert that the 16:9 wide-screen aspect

ratio 28 is internationally recognized and

accepted and with ‘‘letterboxing’’ 29 will

allow the display of motion pictures in

their original aspect ratio far better than

is permitted by the current 4:3 aspect

ratio.

15. Commenters representing

computer interests, cinematographers,

and some public interest groups

generally oppose the standard.30

Computer interests object to discrete

features of the Standard, including the

presence of interlaced scanning and the

use of non-square pixels in some

formats, as well as the maximum frame

(or ‘‘refresh’’) rate of 60 Hz.31 These

features, when taken together, assertedly

hinder the compatibility of the system

with computer applications, drive up

the cost of receiving equipment, and

delay the convergence of computer and

television technologies. CICATS

recommends that the Commission adopt

a standard consisting of a single video

format with 480 lines of progressive

scanning, a broadcaster determined

picture aspect ratio, and the utilization

of only square pixel spacing. Such a

standard would allow for an

enhancement layer that would permit,

but not require, the transmission of high

definition television by stations

equipped to do so. This approach, it

contends, would enable all consumers

to receive, at a minimum, an SDTV

picture on their digital equipment, at

equal or better quality and significantly

lower costs than under the ATSC DTV

Standard. As mentioned above, most

cinematographic and imaging interests

oppose the inclusion of interlaced

scanning as well because of its

perceived deficiencies. Public interest

groups such as CFA and MAP believe

that the ATSC DTV Standard uses too

many formats and that the baseline

CICATS system will be cheaper,

promoting both a more rapid and

orderly transition to DTV (and the

return of spectrum) and convergence of

computer and television technologies.32

Film interests maintain that the

Standard’s specification of only two

aspect ratios (4:3 and 16:9) will lead to

‘‘pan and scan’’ of wide screen films,

cropping significant portions of the

original image and damaging the film

makers’ artistic vision.33

16. Supporters of the Standard

respond that it is far more computer

friendly than any other digital television

system in use anywhere in the world,

that current technology prohibits the

use of progressive scanning for images

of more than 1000 lines in the 6 MHz

channel, and that convergence will not

be hampered because the Standard

enables consumers to choose the display

formats they prefer, as interlaced

programs may be displayed on

progressive receivers (and vice versa).

They contend that there are already PC/

TV products on the market using analog

NTSC technology, which relies on

interlace scanning, thus proving that
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations 14009

34 Id.

35Reply comments of the Grand Alliance at 57;

reply comments of ATSC at 55.

36Reply comments of the Grand Alliance at 59;

reply comments of ATSC at 57–58.

37See, e.g., comments of Broadcasters at 24;

comments of Sony at 36.

38See, e.g., comments of Broadcasters at 24;

comments of Sony at 36; comments of MCEA at 4.

39Comments of Sony at 37 (‘‘[T]he Commission

could name an industry Advisory Committee

comprised of the experts of that day who would

examine the standard in light of the real

imperatives of the future and, after thoughtful

deliberation of the perceived need, recommend

changes which would again be subject to public

discourse and review.’’) and Schreiber, Part II at 8

(‘‘A small panel, appointed by the Commission, and

composed exclusively of persons with no financial

interest in the outcome, would seem appropriate.’’).

40Comments of NTIA at 2–3.

41See comments of DTS at 6.

42See reply comments of Dolby at 3.

43 Id. at 5.

44See, e.g., comments of Grand Alliance at 29,

Dolby at 4, Zenith at 15, Thomson at 16.

45See, e.g., comments of ATSC at 29.

46See, e.g., comments of Grand Alliance at 31,

ATSC at 32, Zenith at 17.

47Further Comments of the Digital HDTV Grand

Alliance at 2; Further Comments of the Advanced

Television Systems Committee at 2.

48Further Comments of the Digital HDTV Grand

Alliance at 2.

49Comments of the Association for Maximum

Service Television, Inc. on the Digital Television

Standard Agreement at 2.

50While not pointing to any specific prejudice it

suffered, IBN contends that approval of a Standard

during 1996, in accordance with the terms of the

Agreement, could prejudice the outcome of issues

raised in our Sixth Further Notice, reply comments

on which are not due until January 10, 1997.

interlaced scanning is not incompatible

with computers.34

17. Proponents of the Standard

challenge as greatly overstated the cost

estimates put forward by computer

interests. With respect to opponents’

complaints regarding the Standard’s

maximum frame rate, the Grand

Alliance asserts that if the frame rate is

increased to 72 Hz, as proposed by

CICATS, trade-offs in picture quality

would result.35 Proponents also argue

that the specified aspect ratios are

appropriate because 16:9 is already

accepted worldwide, and 80% of

motion pictures are shot at 1.85:1,

which readily fits a 16:9 screen with

negligible use of letterboxing. Even the

widest films can be accommodated by

letterboxing only on the order of 25% of

the screen height.36 Adopting the film

makers’ proposed 2:1 aspect ratio would

still require letterboxing for films made

in aspect ratios different than 2:1, which

today includes most films, and would

result in displays, for a given picture

height, 12.5% larger in picture area, 30–

50% heavier and correspondingly more

expensive for consumers. Use of the

CICATS proposal, which emphasizes

SDTV, would further diminish a film

maker’s product by foregoing consumer

access to resolution comparable to that

found in a theater.

18. Review or Sunset of Standard.

Most commenters addressing the issue

advocate either proceeding under our

current processes for regulatory change

or reviewing the Standard at some

definite future time and oppose

establishment of a specific review date

or a sunset.37 They argue that doing so

would inject an element of uncertainty

into the transition process, discourage

consumers, broadcasters and

manufacturers from making

investments, and be arbitrary because

the transition timetable, the timing of

production of DTV sets, and the timing

of consumer acceptance of DTV sets is

unknown at the present time.38 Sony

and Schreiber propose that the

Commission name an Advisory

Committee, consisting of experts, who

would examine the Standard and

recommend changes in accordance with

the Commission’s existing procedures.39

NTIA urges us to ensure that the

industries involved develop a clearly

defined plan to promote speedy

migration to an all-progressive scan

system that moves expeditiously and

includes a target date for full

transition 40 and suggests that we

periodically review the migration to an

all progressive system.

19. Incorporation of Standard into

Commission’s Rules. Little in the way of

comment was submitted on this issue.

The Grand Alliance believes that the

Commission should incorporate the

Standard by reference, as it did in 1995

with an ATSC standard for ghost

canceling in NTSC. It asks that the

Commission incorporate by reference

ATSC Doc. A/53 (‘‘ATSC Digital

Television Standard, 16 Sep 95’’) and

ATSC Doc. A/52 (‘‘ATSC Digital Audio

Compression Standard (AC–3), 20 Dec.

95’’) but only mention and not

incorporate ATSC Doc. A/54 (‘‘Guide to

the Use of the ATSC Digital Television

Standard, 4 Oct 95’’).

20. Audio Standard. Audio system

proponents Digital Theater Systems

(‘‘DTS’’) and Dolby Laboratories sharply

differ on which is the superior

technology and whether the standard

we adopt should specify an audio

format. DTS argues that its audio system

is superior to the Dolby system

embodied in the ATSC DTV Standard

and that the standard we adopt should

exclude audio formats.41 Dolby

responds that DTS has not demonstrated

that its system is superior to the Dolby

AC–3 system.42 Dolby points out that its

system has been widely tested,

evaluated and accepted by numerous

standards setting organizations and for

numerous consumer electronics

products. Dolby argues that the multiple

audio decoding system proposed by

DTS would burden products with

unnecessary cost and complexity and

that, while creating the ATSC DTV

Standard document, the ATSC

Specialist Group on Digital Services

(T3/S3) discussed and rejected the

approach suggested by DTS.43

21. Licensing Technology. Generally,

commenting parties that addressed this

issue agree to the reasonable licensing of

their relevant patents, including

pending patents and intellectual

property necessary for the successful

construction of DTV equipment.44 ATSC

indicates that it sought and obtained

from each member of the Grand

Alliance and from Dolby a written

commitment to abide by this

requirement.45 ATSC and the other

commenting parties suggest that no

further Commission action is required.

22. Closed Captioning. Comments that

addressed this issue, such as those of

the Grand Alliance, ATSC and Zenith,

indicate that they have worked closely

with the affected communities to

provide for closed captioning in the

ATSC DTV Standard. They each suggest

that the ATSC DTV Standard provides

all the capability necessary for

broadcasters and receiver manufacturers

to provide closed captioning.46

23. November 26, 1996, Agreement.

Some of the commenters have altered

their positions since the initial round of

comments. The parties to the November

26, 1996, Agreement urge us to adopt

the modified standard we are calling the

DTV Standard. The Grand Alliance and

ATSC view it as a way to resolve the

controversy that has delayed adoption

of a DTV standard.47 They believe that

reliance on voluntary industry

standards for the formats to be used for

digital television is preferable to the cost

of the further delay that would result if

we fail to act while the parties remain

at an impasse.48 Full service

broadcasters endorse the Agreement for

similar reasons. The Association for

Maximum Service Television, Inc.,

(‘‘MSTV’’) believes the Agreement is a

‘‘workable compromise’’ that will

permit the compatible development of

progressive technologies.49 One low

power television broadcaster,

International Broadcasting Network,

objects to the process that resulted in

the Agreement and contends that low

power television broadcasters were

excluded.50

24. Equipment manufacturers endorse

the Agreement as ‘‘an important step

toward reducing reliance on
14010 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations

51Comment on the Agreement of General

Instrument at 1; see also comments on the

Agreement of EIA, Matsushita, Philips, Thomson

and Zenith, all of which endorse the agreement.

52Comments on the Agreement of Philips

Electronics North America Corporation and

Thomson Consumer Electronics, Inc., at 2.

53Comments of the Coalition of Film Makers (in

response to the Public Notice) at 4–6.

54See, e.g., Comments on the Agreement of

Zenith Electronics Corporation, Electronics

Industries Association, CBS, Inc., and the

Broadcasters Caucus’ ‘‘Response to

Cinematographers’ November 26 Fax to Vice

President Gore Concerning DTV Standard.’’

55Comments of DemoGraFX in Response to the

Commission Seeking Comments on Digital TV

Standards Agreement Released 27 November 1996

at 2–7.

56 Venture Technologies Group’s Comments on

the Digital Television Standards Agreement at 3.

57 Digital Imaging General, DIMAGE Inc,

Comments on Fifth Notice of Proposed Rule Making

(NPRM) and on Public Notice FCC 96–465 at 2.

58See generally Comments on the Agreement of

Dolby Laboratories, The Academy for the

Advancement of High End Audio, and Widescreen

Review.

59Comments of Benton Foundation in response to

the Public Notice.

60Comments of the American Foundation for the

Blind—December 6, 1996 at 1.

Government-mandated standards,’’ that

makes it likely that ‘‘the industry

standard becom[es] the vehicle around

which the marketplace organizes.’’ 51

They believe that the Agreement will

provide sufficient certainty and that the

video formats, although not mandated

by the Commission, will remain viable

nevertheless because there is a

voluntary industry standard in place.52

25. Coalition of Film Makers objects

to the Agreement for the same reasons

it objected to the ATSC DTV Standard

in its initial comments.53 Most other

commenters on this issue, except

DemoGraFX and Venture, see the

Agreement as addressing Film Maker’s

objections by dropping any constraints

on formats.54 Beyond that, they believe

that the question of how a film is

broadcast is not appropriately part of

this proceeding, is a contractual matter,

and should be left to film owners and

broadcasters, bargaining at arm’s length.

DemoGraFX, while stating that it is

pleased with some aspects of the

Agreement, urges that the Standard

require transmission of films in their

original aspect ratio and objects to

interlaced formats remaining in Table 3

of the ATSC DTV Standard. DemoGraFX

urges measures to require receivers to

display films in their original aspect

ratios.55 Venture Technologies Group

wants the DemoGraFX system

incorporated into the Standard 56 and

Digital Imaging General opposes the

Agreement which it contends was

without the full participation and

knowledge of the public.57 Audio

interests remain divided, as they were

prior to the Agreement, for essentially

the same reasons.58

26. William Schreiber opposes the

Agreement on the ground that the

process resulting in it may have violated

the Federal Advisory Committee Act. He

also believes that without mandated

formats prospective purchasers will not

know what they are buying and that the

penetration of digital receivers will be

slowed. In the public interest

community, Benton Foundation urges

quick adoption of the Agreement so that

the Commission can turn to public

interest standards 59 while the American

Foundation for the Blind objects that the

ATSC DTV Standard does not designate

audio bandwidth capacity for delivering

video descriptions, thereby depriving

the blind of equal access to video

programming.60

IV. The Digital Television Standard.

27. In the Fourth Report and Order,

the Commission concludes that

requiring the use of the ATSC DTV

Standard, as modified, will fulfill four

objectives listed in the Fifth Further

Notice of Proposed Rule Making: (1) To

ensure that all affected parties have

sufficient confidence and certainty in

order to promote the smooth

introduction of a free and universally

available digital broadcast television

service; (2) to increase the availability of

new products and services to consumers

through the introduction of digital

broadcasting; (3) to ensure that our rules

encourage technological innovation and

competition; and (4) to minimize

regulation and assure that any

regulations we do adopt remain in effect

no longer than necessary.

28. The Commission is concerned that

market solutions to transmission

standards may result in more than one

sustainable transmission standard. Such

an outcome might result in

compatibility problems and make it

more difficult to preserve a universally

available broadcast television service;

could slow investment during the early

stages of the transition to DTV and,

thereby, slow the transition to DTV; and

would make it more difficult to facilitate

an efficient allotment of broadcast

channels and protect against

interference, which could complicate

moving some licensees to new channels

following the conversion to DTV and

decrease the amount of spectrum

recovered. Simply protecting a standard,

or using a standard for allocation

purposes would not address the

Commission’s concerns with ‘‘wait-andsee’’ behavior and preserving a

universally available broadcast

television service. The Commission also

rejects the argument that the adopted

transmission standard is too restrictive

and still includes too many mandatory

aspects of the ATSC DTV Standard. The

Commission believes that the entire

adopted standard is needed to achieve

its goals.

29. The Commission concludes that

adopting the DTV Standard will

increase the availability of new products

and services for consumers. The DTV

Standard is flexible and extensible and

permits data broadcasting as well as

new services.

30. The Commission concludes that

incorporating the DTV Standard into its

Rules will encourage technological

innovation and competition. The DTV

Standard provides ‘‘headroom’’ for

further development without requiring

changes to the DTV Standard. In

addition, the decision not to specify

video formats will allow computer

equipment and software firms more

opportunity to compete by promoting

interoperability.

31. Finally, the Commission

concludes that adopting the DTV

Standard provides for the minimum of

regulation needed to provide for a

smooth transition. A key point of

contention throughout this proceeding

has been the desirability of allowing

both interlaced and progressive

scanning. Adoption of the DTV

Standard will allow video formats to be

tested and decided by the market.

32. Support for the DTV Standard was

not unanimous. In response to the

Coalition of Film Maker’s opposition to

the DTV Standard because it does not

require the display of films in the films’

original aspect ratios, the Commission

notes that the DTV Standard does not

impose any impediment to the display

of films in their original aspect ratios.

33. The Commission is not persuaded

by those who contend that not

specifying video formats in the DTV

Standard will inject uncertainty into the

transition process and delay

implementation of digital television.

The Commission believes that by

adopting a transmission standard, it is

providing the appropriate level of

certainty that the digital television

market will need to move forward. The

Commission’s belief is supported by the

fact that the major industries affected by

this decision have reached an agreement

that video formats need not be part of

the DTV Standard.

34. Placing the ATSC DTV Standard

in the Commission’s Rules. In the Fifth

Further Notice of Proposed Rule

Making, the Commission sought

comment on whether it should place a

digital broadcast television transmission

standard into the Commission’s Rules in
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations 14011

61Subtitle II of CWAAA is The Small Business

Regulatory Enforcement Fairness Act of 1996

(SBREFA), codified at 5 U.S.C. § 601 et seq.

its entirety, incorporate it by reference,

or publish it as an OET technical

bulletin. In the Fourth Report and

Order, the Commission decides to

incorporate the DTV Standard into the

Commission’s Rules, by reference.

Incorporation by reference has been

done before and is warranted given the

194-page length of the Standard and its

easy availability.

35. Review. In the Fifth Further Notice

of Proposed Rule Making, the

Commission set forth three options to

encourage innovation: (1) To proceed

under current Commission processes

which include consideration of requests

from parties to amend the Commission’s

Rules or review of the Rules on the

Commission’s own initiative; (2)

commit the Commission to conduct a

proceeding to review the Standard at

some future time; and (3) to establish a

period of time after which the Standard

no longer would be required or

exclusive (i.e., ‘‘sunsetting’’ it). In the

Fourth Report and Order, the

Commission believes a sunset is not

necessary. The Advanced Television

System Committee has committed to

continue to review the ATSC DTV

Standard and the Commission has

adopted a schedule of periodic reviews

to monitor the progress of DTV.

36. Audio Standard. The Commission

is adopting the audio portion of ATSC

DTV Standard. In comments, some

parties suggested that the audio

standard should not be adopted as a

required audio standard. An alternative

standard was suggested but it did not go

through extensive testing and

evaluation. The Commission also notes

that the suggested changes could delay

implementation.

37. Licensing Technology. In earlier

phases of this proceeding, the

Commission indicated that patents on

the technology would have to be

licensed to other manufacturing

companies on reasonable and

nondiscriminatory terms. Those holding

patents on the DTV Standard have

submitted statements that they would

comply with the American National

Standards Institute patent policies. In

the Fifth Further Notice of Proposed

Rule Making, the Commission sought

additional comment on whether more

detailed information on the specific

terms of patent licensing should be

considered. It appears that licensing of

the patents for DTV technology will not

be an impediment to the development

and deployment of DTV products for

broadcasters and consumers.

38. Closed Captioning. In the Fifth

Further Notice of Proposed Rule

Making, the Commission noted that the

ATSC DTV Standard reserves a fixed

9600 bits per second data rate for closed

captioning. No comments suggested that

this would be insufficient. In the Fourth

Report and Order, the Commission

concludes that adequate provision has

been made to allow closed captioning

information to be carried by DTV

stations.

V. Administrative Matters

Final Regulatory Flexibility Analysis

39. As required by Section 603 of the

Regulatory Flexibility Act, 5 U.S.C.

§ 603 (RFA), an Initial Regulatory

Flexibility Analysis (‘‘IRFA’’) was

incorporated in the Fifth Further Notice

of Proposed Rule Making in this

proceeding. The Commission sought

written public comments on the

proposals in the Fifth Further Notice,

including on the IRFA. The

Commission’s Final Regulatory

Flexibility Analysis (‘‘FRFA’’) in this

Fourth Report and Order conforms to

the RFA, as amended by the Contract

With America Advancement Act of

1996, Pub. L. No. 104–121, 110 Stat. 847

(1996) (‘‘CWAAA’’).61

I. Need for and Objectives of Action

40. The Fourth Report and Order

adopts, in modified form, the Advanced

Television Systems Committee

(‘‘ATSC’’) digital television (‘‘DTV’’)

standard. Our ratification of this

industry-developed standard is

intended to provide the certainty that

some parties seek in order to undertake

the wholesale replacement of our analog

system of terrestrial broadcast television

with DTV. At the same time, we seek to

ensure that governmental involvement

is neither more extensive than necessary

nor inhibitory to innovation,

experimentation, and entrepreneurship.

In the Fifth Further Notice in this

proceeding, we listed four objectives

regarding the authorization and

implementation of a DTV standard: (1)

To ensure that all affected parties have

sufficient confidence and certainty in

order to promote the smooth

introduction of a free and universally

available digital broadcast television

service; (2) to increase the availability of

new products and services to consumers

through the introduction of digital

broadcasting; (3) to ensure that our rules

encourage technological innovation and

competition; and (4) to minimize

regulation and assure that any

regulations we do adopt remain in effect

no longer than necessary. In addition to

these objectives, we considered how

adoption of the standard would affect

other goals enumerated in this

proceeding, including a rapid transition

to DTV, ceasing broadcasting in NTSC,

and recovering spectrum. The Fourth

Report and Order adopts the standard,

except for certain aspects as discussed

in paragraphs 30–49, supra, based on a

careful weighing and balancing of these

various goals.

II. Significant Issues Raised by the

Public in Response to the Initial

Analysis

41. No comments were received

specifically in response to the IRFA

contained in the Fifth Further Notice.

Further, while no comments were

addressed specifically to small business

issues, according to several Low Power

Television (‘‘LPTV’’) commenters,

including Third Coast Broadcasting, Inc.

and Island Broadcasting Company, the

Commission should minimize the

impact on LPTV to prevent LPTV from

being forced off the air by the transition

to the new digital technology. Third

Coast and Roger E. Harders contend that

LPTV serves niches not covered by

larger regional stations and should be

able to provide this important service on

digital channels in the future. Further,

Blue Mountain Translator District

argues that translators must be able to

receive interactive signals to be full

partners in DTV systems. In addition,

not-for-profit and commercial

translators must be treated equally. As

discussed in Section V of this FRFA, we

have considered these concerns.

However, adoption of a standard for

DTV will not implicate the concerns

raised by LPTV and translator stations.

The role of LPTV and translator stations

in the transition to digital will be

considered separately.

III. Description and Number of Small

Entities to Which the Rule Will Apply

42. Definition of a ‘‘Small Business’’.

Under the RFA, small entities may

include small organizations, small

businesses, and small governmental

jurisdictions. 5 U.S.C. § 601(6). The

RFA, 5 U.S.C. § 601(3), generally defines

the term ‘‘small business’’ as having the

same meaning as the term ‘‘small

business concern’’ under the Small

Business Act, 15 U.S.C. § 632. A small

business concern is one which: (1) Is

independently owned and operated; (2)

is not dominant in its field of operation;

and (3) satisfies any additional criteria

established by the Small Business

Administration (‘‘SBA’’). According to

the SBA’s regulations, entities engaged

in television broadcasting Standard

Industrial Classification (‘‘SIC’’) Code

4833—Television Broadcasting Stations,

may have a maximum of $10.5 million
14012 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations

62We have pending proceedings seeking

comment on the definition of and data relating to

small businesses. In our Notice of Inquiry in GN

Docket No. 96–113 (In the Matter of Section 257

Proceeding to Identify and Eliminate Market Entry

Barriers for Small Businesses), FCC 96–216,

released May 21, 1996, we requested commenters

to provide profile data about small

telecommunications businesses in particular

services, including television, and the market entry

barriers they encounter, and we also sought

comment as to how to define small businesses for

purposes of implementing Section 257 of the

Telecommunications Act of 1996, which requires us

to identify market entry barriers and to prescribe

regulations to eliminate those barriers.

Additionally, in our Order and Notice of Proposed

Rule Making in MM Docket No. 96–16 (In the

Matter of Streamlining Broadcast EEO Rule and

Policies, Vacating the EEO Forfeiture Policy

Statement and Amending Section 1.80 of the

Commission’s Rules to Include EEO Forfeiture

Guidelines), 11 FCC Rcd 5154 (1996), we invited

comment as to whether relief should be afforded to

stations: (1) based on small staff and what size staff

would be considered sufficient for relief, e.g., 10 or

fewer full-time employees; (2) based on operation

in a small market; or (3) based on operation in a

market with a small minority work force. We have

not concluded the foregoing rule makings.

63 13 C.F.R. § 121.201, Standard Industrial Code

(SIC) 4833 (1996).

64Economics and Statistics Administration,

Bureau of Census, U.S. Department of Commerce,

1992 Census of Transportation, Communications

and Utilities, Establishment and Firm Size, Series

UC92–S–1, Appendix A–9 (1995).

65 Id. See Executive Office of the President, Office

of Management and Budget, Standard Industrial

Classification Manual (1987), at 283, which

describes ‘‘Television Broadcasting Stations (SIC

Code 4833) as:

Establishments primarily engaged in broadcasting

visual programs by television to the public, except

cable and other pay television services. Included in

this industry are commercial, religious, educational

and other television stations. Also included here are

establishments primarily engaged in television

broadcasting and which produce taped television

program materials.

66Economics and Statistics Administration,

Bureau of Census, U.S. Department of Commerce,

1992 Census of Transportation, Communications

and Utilities, Establishment and Firm Size, Series

UC92–S–1, Appendix A–9 (1995).

67 Id.; SIC 7812 (Motion Picture and Video Tape

Production); SIC 7922 (Theatrical Producers and

Miscellaneous Theatrical Services (producers of

live radio and television programs).

68FCC News Release No. 31327, Jan. 13, 1993;

Economics and Statistics Administration, Bureau of

Census, U.S. Department of Commerce, supra note

4, Appendix A–9.

in annual receipts in order to qualify as

a small business concern. This standard

also applies in determining whether an

entity is a small business for purposes

of the RFA.

43. Pursuant to 5 U.S.C. § 601(3), the

statutory definition of a small business

applies ‘‘unless an agency after

consultation with the Office of

Advocacy of the SBA and after

opportunity for public comment,

establishes one or more definitions of

such term which are appropriate to the

activities of the agency and publishes

such definition(s) in the Federal

Register.’’ While we tentatively believe

that the foregoing definition of ‘‘small

business’’ greatly overstates the number

of television broadcast stations that are

small businesses and is not suitable for

purposes of determining the impact of

the new rules on small television

stations, we did not propose an

alternative definition in the IRFA. 62

Accordingly, for purposes of this Fourth

Report and Order, we utilize the SBA’s

definition in determining the number of

small businesses to which the rules

apply, but we reserve the right to adopt

a more suitable definition of ‘‘small

business’’ as applied to television

broadcast stations and to consider

further the issue of the number of small

entities that are television broadcasters

in the future. Further, in this FRFA, we

will identify the different classes of

small television stations that may be

impacted by the rules adopted in this

Fourth Report and Order.

44. Issues in Applying the Definition

of a ‘‘Small Business’’. As discussed

below, we could not precisely apply the

foregoing definition of ‘‘small business’’

in developing our estimates of the

number of small entities to which the

rules will apply. Our estimates reflect

our best judgments based on the data

available to us.

45. An element of the definition of

‘‘small business’’ is that the entity not

be dominant in its field of operation. We

were unable at this time to define or

quantify the criteria that would

establish whether a specific television

station is dominant in its field of

operation. Accordingly, the following

estimates of small businesses to which

the new rules will apply do not exclude

any television station from the

definition of a small business on this

basis and are therefore overinclusive to

that extent. An additional element of the

definition of ‘‘small business’’ is that the

entity must be independently owned

and operated. As discussed further

below, we could not fully apply this

criterion, and our estimates of small

businesses to which the rules may apply

may be overinclusive to this extent. The

SBA’s general size standards are

developed taking into account these two

statutory criteria. This does not

preclude us from taking these factors

into account in making our estimates of

the numbers of small entities.

46. With respect to applying the

revenue cap, the SBA has defined

‘‘annual receipts’’ specifically in 13

C.F.R 121.104, and its calculations

include an averaging process. We do not

currently require submission of

financial data from licensees that we

could use in applying the SBA’s

definition of a small business. Thus, for

purposes of estimating the number of

small entities to which the rules apply,

we are limited to considering the

revenue data that are publicly available,

and the revenue data on which we rely

may not correspond completely with the

SBA definition of annual receipts.

47. Under SBA criteria for

determining annual receipts, if a

concern has acquired an affiliate or been

acquired as an affiliate during the

applicable averaging period for

determining annual receipts, the annual

receipts in determining size status

include the receipts of both firms. 13

C.F.R. 121.104(d)(1). The SBA defines

affiliation in 13 C.F.R. 121.103. In this

context, the SBA’s definition of affiliate

is analogous to our attribution rules.

Generally, under the SBA’s definition,

concerns are affiliates of each other

when one concern controls or has the

power to control the other, or a third

party or parties controls or has the

power to control both. 13 C.F.R.

121.103(a)(1). The SBA considers factors

such as ownership, management,

previous relationships with or ties to

another concern, and contractual

relationships, in determining whether

affiliation exists. 13 C.F.R. 121.103(a)(2).

Instead of making an independent

determination of whether television

stations were affiliated based on SBA’s

definitions, we relied on the data bases

available to us to provide us with that

information.

48. Television Station Estimates

Based on Census Data. The rules

amended by this Fourth Report and

Order will apply to full service

television stations and may have an

effect on TV translator facilities and low

power TV stations (‘‘LPTV’’). The Small

Business Administration defines a

television broadcasting station that has

no more than $10.5 million in annual

receipts as a small business.63

Television broadcasting stations consist

of establishments primarily engaged in

broadcasting visual programs by

television to the public, except cable

and other pay television services.64

Included in this industry are

commercial, religious, educational, and

other television stations.65 Also

included are establishments primarily

engaged in television broadcasting and

which produce taped television program

materials.66 Separate establishments

primarily engaged in producing taped

television program materials are

classified under another SIC number.67

49. There were 1,509 television

stations operating in the nation in

1992.68 That number has remained fairly

constant as indicated by the

approximately 1,550 operating

television broadcasting stations in the
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations 14013

69FCC News Release No. 64958, Sept. 6, 1996.

70Census for Communications’ establishments are

performed every five years ending with a ‘‘2’’ or

‘‘7’’. See Economics and Statistics Administration,

Bureau of Census, U.S. Department of Commerce,

supra note 4, III.

71The amount of $10 million was used to

estimate the number of small business

establishments because the relevant Census

categories stopped at $9,999,999 and began at

$10,000,000. No category for $10.5 million existed.

Thus, the number is as accurate as it is possible to

calculate with the available information.

72We use the 77 percent figure of TV stations

operating at less than $10 million for 1992 and

apply it to the 1996 total of 1550 TV stations to

arrive at 1,194 stations categorized as small

businesses.

73 Minority Commercial Broadcast Ownership in

the United States, U.S. Dep’t of Commerce, National

Telecommunications and Information

Administration, The Minority Telecommunications

Development Program (‘‘MTDP’’) (April 1996).

MTDP considers minority ownership as ownership

of more than 50% of a broadcast corporation’s

stock, voting control in a broadcast partnership, or

ownership of a broadcasting property as an

individual proprietor. Id. The minority groups

included in this report are Black, Hispanic, Asian,

and Native American.

74See Comments of American Women in Radio

and Television, Inc. in MM Docket No. 94–149 and

MM Docket No. 91–140, at 4 n.4 (filed May 17,

1995), citing 1987 Economic Censuses, WomenOwned Business, WB87–1, U.S. Dep’t of Commerce,

Bureau of the Census, August 1990 (based on 1987

Census). After the 1987 Census report, the Census

Bureau did not provide data by particular

communications services (four-digit Standard

Industrial Classification (SIC) Code), but rather by

the general two-digit SIC Code for communications

(#48). Consequently, since 1987, the U.S. Census

Bureau has not updated data on ownership of

broadcast facilities by women, nor does the FCC

collect such data. However, we sought comment on

whether the Annual Ownership Report Form 323

should be amended to include information on the

gender and race of broadcast license owners.

Policies and Rules Regarding Minority and Female

Ownership of Mass Media Facilities, Notice of

Proposed Rulemaking, 10 FCC Rcd 2788, 2797

(1995).

75 In this context, ‘‘affiliation’’ refers to any local

broadcast television station that has a contractual

arrangement with a programming network to carry

the network’s signal. This definition of affiliated

station includes both stations owned and operated

by a network and stations owned by other entities.

76Secondary affiliations are secondary to the

primary affiliation of the station and generally

afford the affiliate additional choice of

programming.

77FCC News Release, Broadcast Station Totals as

of August 31, 1996.

78The Commission’s definition of a small

broadcast station for purposes of applying its EEO

rule was adopted prior to the requirement of

approval by the Small Business Administration

pursuant to Section 3(a) of the Small Business Act,

15 U.S.C. § 632(a), as amended by Section 222 of

the Small Business Credit and Business

Opportunity Enhancement Act of 1992, Pub. L. No.

102–366, § 222(b)(1), 106 Stat. 999 (1992), as further

amended by the Small Business Administration

Reauthorization and Amendments Act of 1994, Pub.

L. No. 103–403, § 301, 108 Stat. 4187 (1994).

However, this definition was adopted after public

notice and an opportunity for comment. See Report

and Order in Docket No. 18244, 23 FCC 2d 430

(1970).

79See, e.g., 47 C.F.R. 73.3612 (Requirement to file

annual employment reports on Form 395–B applies

to licensees with five or more full-time employees);

First Report and Order in Docket No. 21474 (In the

Matter of Amendment of Broadcast Equal

Employment Opportunity Rules and FCC Form

395), 70 FCC 2d 1466 (1979). The Commission is

currently considering how to decrease the

administrative burdens imposed by the EEO rule on

small stations while maintaining the effectiveness

of our broadcast EEO enforcement. Order and

Notice of Proposed Rule Making in MM Docket No.

96–16 (In the Matter of Streamlining Broadcast EEO

Rule and Policies, Vacating the EEO Forfeiture

Policy Statement and Amending Section 1.80 of the

Commission’s Rules to Include EEO Forfeiture

Guidelines), 11 FCC Rcd 5154 (1996). One option

under consideration is whether to define a small

station for purposes of affording such relief as one

with ten or fewer full-time employees. Id. at ¶ 21.

80We base this estimate on a compilation of 1995

Broadcast Station Annual Employment Reports

(FCC Form 395–B), performed by staff of the Equal

Opportunity Employment Branch, Mass Media

Bureau, FCC.

81This category excludes establishments

primarily engaged in the manufacturing of

household audio and visual equipment which is

categorized as SIC 3651. See infra for SIC 3651 data.

82 13 C.F.R. 121.201, (SIC) Code 3663.

83U.S. Dept. of Commerce, 1992 Census of

Transportation, Communications and Utilities,

Table 1D (issued May 1995), SIC category 3663.

nation as of August, 1996.69 For 1992 70

the number of television stations that

produced less than $10.0 million in

revenue was 1,155 establishments.71

Thus, the proposed rules will affect

approximately 1,550 television stations;

approximately 1,194 of those stations

are considered small businesses.72

These estimates may overstate the

number of small entities since the

revenue figures on which they are based

do not include or aggregate revenues

from non-television affiliated

companies. We recognize that the

proposed rules may also impact

minority and women owned stations,

some of which may be small entities. In

1995, minorities owned and controlled

37 (3.0%) of 1,221 commercial

television stations in the United

States.73 According to the U.S. Bureau of

the Census, in 1987 women owned and

controlled 27 (1.9%) of 1,342

commercial and non-commercial

television stations in the United

States.74

50. It should also be noted that the

foregoing estimates do not distinguish

between network-affiliated 75 stations

and independent stations. As of April,

1996, the BIA Publications, Inc. Master

Access Television Analyzer Database

indicates that about 73 percent of all

commercial television stations were

affiliated with the ABC, CBS, NBC, Fox,

UPN, or WB networks. Moreover, seven

percent of those affiliates have

secondary affiliations.76

51. There are currently 4926 TV

translators, and 1,921 LPTV stations

which may be affected by the new rules,

if they decide to convert to digital

television.77 The FCC does not collect

financial information of any broadcast

facility and the Department of

Commerce does not collect financial

information on these broadcast

facilities. We will assume for present

purposes, however, that most, if not all,

LPTV stations and translator stations,

could be classified as small businesses,

if considered by themselves. We also

recognize that most, if not virtually all

translators are owned by a parent station

which is a full-service station. Thus,

translator stations generally can be

considered affiliates, as that term is

defined in the SBA regulations, with

full-service stations. Given this

situation, these stations would likely

have annual revenues that exceed the

SBA maximum to be designated as

small businesses.

52. Alternative Classification of Small

Television Stations. An alternative way

to classify small television stations is by

the number of employees. The

Commission currently applies a

standard based on the number of

employees in administering its Equal

Employment Opportunity (‘‘EEO’’) rule

for broadcasting.78 Thus, radio or

television stations with fewer than five

full-time employees are exempted from

certain EEO reporting and

recordkeeping requirements.79 We

estimate that the total number of

commercial television stations with 4 or

fewer employees is 132 and that the

total number of noncommercial

educational television stations with 4 or

fewer employees is 136.80

53. Other Industry Groups. Television

Equipment Manufacturers: The

Commission has not developed a

definition of small entities applicable to

manufacturers of television equipment.

Therefore, we will utilize the SBA

definition of manufacturers of Radio

and Television Broadcasting and

Communications Equipment.81

According to the SBA’s regulations, a

TV equipment manufacturer must have

750 or fewer employees in order to

qualify as a small business concern.82

Census Bureau data indicates that there

are 858 U.S. firms that manufacture

radio and television broadcasting and

communications equipment, and that

778 of these firms have fewer than 750

employees and would be classified as

small entities.83 The Census Bureau

category is very broad, and specific

figures are not available as to how many

of these firms are exclusive

manufacturers of television equipment

or how many are independently owned

and operated. We conclude that there

are approximately 778 small
14014 Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations

84 13 C.F.R. 121.201, (SIC) Code 3651.

85U.S. Small Business Administration 1995

Economic Census Industry and Enterprise Report,

Table 3, SIC Code 3651 (Bureau of the Census data

adapted by the Office of Advocacy of the U.S. Small

Business Administration).

86 13 CFR 121.201, (SIC) Code 3571.

87U.S. Small Business Administration 1995

Economic Census Industry and Enterprise Report,

Table 3, SIC Code 3571, (Bureau of the Census data

adapted by the Office of Advocacy of the U.S. Small

Business Administration).

manufacturers of radio and television

equipment.

54. Household/Consumer Television

Equipment: The Commission has not

developed a definition of small entities

applicable to manufacturers of

television equipment used by

consumers, as compared to industrial

use by television licensees and related

businesses. Therefore, we will utilize

the SBA definition applicable to

manufacturers of Household Audio and

Visual Equipment. According to the

SBA’s regulations, a household audio

and visual equipment manufacturer

must have 750 or fewer employees in

order to qualify as a small business

concern.84 Census Bureau data indicates

that there are 410 U.S. firms that

manufacture radio and television

broadcasting and communications

equipment, and that 386 of these firms

have fewer than 500 employees and

would be classified as small entities.85

The remaining 24 firms have 500 or

more employees; however, we are

unable to determine how many of those

have fewer than 750 employees and

therefore, also qualify as small entities

under the SBA definition. Furthermore,

the Census Bureau category is very

broad, and specific figures are not

available as to how many of these firms

are exclusive manufacturers of

television equipment for consumers or

how many are independently owned

and operated. We conclude that there

are approximately 386 small

manufacturers of television equipment

for consumer/household use.

55. Computer Manufacturers: The

Commission has not developed a

definition of small entities applicable to

computer manufacturers. Therefore, we

will utilize the SBA definition.

According to SBA regulations, a

computer manufacturer must have 1,000

or fewer employees in order to qualify

as a small entity.86 Census Bureau data

indicates that there are 716 firms that

manufacture electronic computers and

of those, 659 have fewer than 500

employees and qualify as small

entities.87 The remaining 57 firms have

500 or more employees; however, we

are unable to determine how many of

those have fewer than 1,000 employees

and therefore also qualify as small

entities under the SBA definition. We

conclude that there are approximately

659 small computer manufacturers.

IV. Projected Compliance Requirements

of the Rule

56. The Fourth Report and Order

adopts a rule incorporating by reference

the digital television broadcast standard

(‘‘Standard’’) recommended to the

Commission by its Advisory Committee

on Advanced Television Service

(‘‘ACATS’’), with the exception of the

video formats. The Fourth Report and

Order imposes no new reporting or

recordkeeping requirements.

V. Significant Alternatives Considered

Minimizing the Economic Impact on

Small Entities and Consistent With the

Stated Objectives

57. The Fourth Report and Order

adopts a rule that requires transmission

of DTV signals to comply with the

Standard adopted except for the video

format layer and incorporates that

Standard, except for the video format

layer, into the Commission’s rules. We

believe that adopting a standard is

essential to the goal of universal

television service and to facilitating the

conversion to digital television service.

Not requiring the use of the video

format layer advances the goals of

minimizing regulation and facilitating

technological innovation. The

alternatives considered, including

authorizing use of the Standard and

prohibiting interference to its users, and

adopting the Standard for allocation and

assignment purposes only, received no

express support in the Comments.

Moreover, careful evaluation of these

alternatives showed that each failed to

advance one or more of the important

goals of this proceeding. The

Commission determined that not

mandating video formats sufficiently

addressed its concerns with stifling

innovation so that neither a sunset of

the Standard nor formal periodic review

of the Standard would be required.

Instead, it indicated that its scheduled

reviews of the progress of DTV

implementation would be sufficient to

keep the Commission abreast of

technological developments and

marketplace conditions. No additional

action is taken on the issues of licensing

of patents for DTV technology or

provision for closed captioning

information to be carried by DTV

stations using the standard adopted.

58. Pursuant to the RFA, 5 U.S.C.

§ 603(c), we have considered whether

there is a significant economic impact

on a substantial number of small

entities. The action taken does not

impose additional burdens on small

entities. The Fourth Report and Order in

itself does not mandate a conversion to

digital television, only requiring that

digital television signals that are

transmitted conform to certain

standards. The details of requiring the

conversion will be taken up in a future

Report and Order, which will consider

alternatives to minimize the economic

impact of that conversion on small

entities.

VI. Report to Congress

59. The Commission shall send a copy

of this Final Regulatory Flexibility

Analysis along with this Fourth Report

and Order in a report to Congress

pursuant to the Small Business

Regulatory Enforcement Fairness Act of

1996, codified at 5 U.S.C. § 801(a)(1)(A).

A copy of this FRFA will also be

published in the Federal Register.

Paperwork Reduction Act. 60. No

impact.

Contract With America Advancement

Act. 61. Major rule.

Ordering Clauses. 62. Accordingly, it

is ordered that, pursuant to Sections 4(i)

& (j) and 303(r) of the Communications

Act of 1934 as amended, 47 U.S.C.

§§ 154(i), (j) 303(r), Part 73 of the

Commission’s Rules is amended as set

forth in ‘‘Rule Changes,’’ below.

63. It is further ordered that, pursuant

to the Contract with America

Advancement Act of 1996, the rule

amendments set forth in ‘‘Rule

Changes’’ shall be effective [either 60

days after publication in the Federal

Register or after the receipt by Congress

and the General Accounting Office of a

report] in compliance with the Contract

with America Advancement Act of

1996, Pub. L. No. 104–121, whichever is

later.

64. It is further ordered that the

Secretary shall send a copy of this

Fourth Report and Order, including the

Final Regulatory Flexibility Analysis, to

the Chief Counsel for Advocacy of the

Small Business Administration in

accordance with Section 603(a) of the

Regulatory Flexibility Act, Pub. L. No.

96–354, 94 Stat. 1164, 5 U.S.C. § 601 et.

seq.

List of Subjects in 47 CFR Part 73

Radio broadcast services.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 73 of Title 47 of the Code of

Federal Regulations is amended as

follows:
Federal Register / Vol. 62, No. 57 / Tuesday, March 25, 1997 / Rules and Regulations 14015

1See 47 CFR 101.29 (addressing amendments of

right).

PART 73—RADIO BROADCAST

SERVICES

1. The authority citation for Part 73

continues to read as follows:

Authority: Secs. 303, 48 Stat., as amended,

1082; 47 U.S.C. 154, as amended.

2. Section 73.682 is amended by

adding paragraph (d) as follows:

§ 73.682 TV transmission standards.

* * * * *

(d) Digital broadcast television

transmission standard. Transmission of

digital broadcast television (DTV)

signals shall comply with the standards

for such transmissions set forth in

Advanced Television Systems

Committee (ATSC) Doc. A/52 (‘‘ATSC

Standard Digital Audio Compression

(AC–3), 20 Dec 95’’) and ATSC Doc A/

53 (‘‘ATSC Digital Television Standard,

16 Sep 95’’), except for Section 5.1.2

(‘‘Compression format constraints’’) of

Annex A (‘‘Video Systems

Characteristics’’) and the phrase ‘‘see

Table 3’’ in Section 5.1.1 Table 2 and

Section 5.1.2 Table 4. Although not

incorporated herein by reference,

licensees may also consult ATSC Doc.

A/54 (‘‘Guide to the Use of the ATSC

Digital Television Standard, 4 Oct 95’’)

for guidance. This incorporation by

reference was approved by the Director

of the Federal Register in accordance

with 5 U.S.C. 552(a) and 1 CFR part 51.

Copies may be inspected at the Federal

Communications Commission, 1919 M

Street, NW., Washington, DC 20554 or at

the Office of the Federal Register, 800 N.

Capitol Street, NW., Washington, DC.

Copies of ATSC A/52, A/53, and A/54

can be obtained from the Commission’s

contract copier or from the Advanced

Television Systems Committee, 1750 K

Street, NW., Suite 800, Washington, DC

20006. They are also available in their

entirety on the Internet at http://

www.atsc.org.

[FR Doc. 97–7368 Filed 3–24–97; 8:45 am]

BILLING CODE 6712–01–P

47 CFR Part 101

[ET Docket No. 95–183; PP Docket No. 93–

253; FCC 96–486]

37.0–38.6 GHz and 38.6–40.0 GHz

Bands and Implementation of Section

309(j) of the Communications Act—

Competitive Bidding

AGENCY: Federal Communications

Commission.

ACTION: Final rule; petition for

reconsideration.

SUMMARY: Upon reconsideration, the

Commission has decided to lift the

processing freeze on amendments of

right filed on applications in the 38.6–

40.0 GHz band (‘‘the 39 GHz band’’)

before December 15, 1995.1 By this

action, all applications that were

amended to resolve mutual exclusivity

before this date will be processed,

provided that the original applications

had completed their 60-day public

notice period as of November 13, 1995.

In addition, the Commission clarifies

that applications to modify existing 39

GHz licenses and amendments thereto

will be processed regardless of when

filed, provided they neither enlarge the

service area nor change the assigned

frequency blocks (except to delete

them). In all other respects, previous

decisions regarding the filing and

processing of 39 GHz applications and

amendments are unaffected by this

Memorandum Opinion and Order.

EFFECTIVE DATE: January 17, 1997.

FOR FURTHER INFORMATION CONTACT:

Susan Magnotti, Private Wireless

Division, (202) 418–0871.

SUPPLEMENTARY INFORMATION: This is a

synopsis of the Commission’s

Memorandum Opinion and Order, FCC

96–486, adopted December 20, 1996 and

released January 17, 1997. The complete

text of this document is available for

inspection and copying during normal

business hours in the FCC Reference

Center (Room 239), 1919 M Street, NW.,

Washington, DC 20554, and may be

purchased from the Commission’s copy

contractor, International Transcription

Service, (202) 857–3800, 2100 M Street,

NW., Washington, DC 20037.

Summary of Order

1. By this action, the Commission

resolves and provides clarification on

the treatment it will afford pending

applications in the 38.6–40.0 GHz band

(‘‘the 39 GHz band’’). The 39 GHz band

is used to support fixed point-to-point

microwave communications.

2. On September 9, 1994, the Point-toPoint Microwave Section of the

Telecommunications Industry

Association (‘‘TIA’’) filed a Petition for

Rule Making concerning use of the 39

GHz band and the 37.0–38.6 GHz (‘‘37

GHz’’) band, for which there are

currently no licensing or service rules.

On November 13, 1995, the Wireless

Telecommunications Bureau (‘‘Bureau’’)

issued a Freeze Order, 61 FR 8062

(March 1, 1996) announcing that the

Commission would no longer accept for

filing applications for new 39 GHz

licenses in the Common Carrier or

Operational Fixed Point-to-Point

Microwave Radio Services, pending

Commission action on TIA’s Petition.

3. Thereafter, on December 15, 1995,

the Commission issued an NPRM and

Order, 61 FR 2452 (January 26, 1996)

which expanded upon the November

13, 1995 Freeze Order, primarily by

distinguishing between those pending

39 GHz applications that would be

processed and those that would be held

in abeyance pending the outcome of the

rulemaking proceeding. As a result of

the above Commission actions, several

parties filed petitions for

reconsideration of that portion of the

Commission’s December 15, 1995 NPRM

and Order which imposed an interim

processing freeze on certain 39 GHz

band license applications and

amendments. An Emergency Request for

Stay of the freeze was also filed. In this

Memorandum Opinion and Order, the

Commission grants these petitions in

part and denies them in part. In light of

the Commission’s decision regarding the

petitions for reconsideration, the

Emergency Request for Stay is moot.

4. The NPRM and Order provided that

pending applications would be

processed if (1) they were not mutually

exclusive with other applications at the

time of the Bureau’s November 13, 1995

Freeze Order, and (2) the 60-day period

for filing mutually exclusive

applications had expired prior to

November 13, 1995. The NPRM and

Order further provided that those

applications that were mutually

exclusive with others as of November

13, 1995, or within the 60-day period for

filing competing applications on or after

November 13, 1995, would be held in

abeyance. Amendments to these frozen

applications received on or after

November 13, 1995, would also be held

in abeyance. Moreover, applications for

modification of existing 39 GHz licenses

filed on or after November 13, 1995,

would be held in abeyance, as well as

amendments to these modification

applications filed on or after November

13, 1995. Finally, no new applications

to modify existing licenses, or

amendments to pending modification

applications, would be accepted for

filing on or after December 15, 1995.

The foregoing restrictions on

modification applications and

amendments thereto were not intended

to apply if the requested action would

neither enlarge the service area nor

change frequency blocks (except to

delete them).

5. This Memorandum Opinion and

Order gives some of the relief requested

by petitioners by lifting the processing

freeze on amendments of right filed

before December 15, 1995. Thus, all

applications that were amended to