I.   Funding Opportunity Description

1. PTFP Rules

   This section describes funding available under the Public Telecommunications Facilities Program, pursuant to Rules which were published on November 8, 1996 (61 FR 57966). Copies of the 1996 Rules (15 CFR Part 2301) are posted on the NTIA Internet site at www.ntia.doc.gov/otiahome/ptfp/Rules/1996rules.html and NTIA will make printed copies available to applicants upon request.




2. NTIA Areas of Interest for the FY 2004 Grant Round

This section is divided into four parts. The first part provides an overview of the projects eligible for PTFP funding. The remaining three parts provide specific information about NTIA's emphasis for funding opportunities during the FY 2004 grant cycle. The four parts in this section are:



     1.   Eligible Projects and Priorities
     2.   Radio Broadcasting, Expansion and Digital Conversion
     3.   Television Broadcasting and Digital Conversion
     4.   Nonbroadcast (Distance Learning) Projects


1. Eligible Projects and Priorities
   
   An applicant may file an application with the Agency for a planning or construction grant. Each application shall be identified as a broadcast or nonbroadcast project and must fall within at least one of the following categories which are summarized here and are fully described in §2301.4 of the PTFP Rules:
   
   
1. Special Applications (Nonbroadcast/Distance Learning). NTIA possesses the discretionary authority to recommend awarding grants to eligible nonbroadcast applicants whose proposals are unique or innovative and which address demonstrated and substantial community needs (e.g., service to the blind or deaf and nonbroadcast projects offering educational or instructional services).


2. Broadcast Applications. The Broadcast Priorities are set forth in order of priority for funding.



1. Priority 1 Provision of public telecommunications facilities for first radio and television signals to a geographic area. Within this category, NTIA establishes three subcategories:
   1. Priority 1A. Projects that include local origination capacity.
   2. Priority 1B. Projects that do not include local origination capacity.
   3. Priority 1C. Projects that provide first nationally distributed programming. This subcategory includes projects that provide satellite downlink facilities to noncommercial radio and television stations that would bring nationally distributed programming to a geographic area for the first time.
   
   
2. Priority 2 Replacement of basic equipment of existing essential broadcast stations. The term "essential stations" refers to existing broadcast stations that provide either the only public telecommunications signal or the only locally originated public telecommunications signal to a geographical area.
3. Priority 3 Establishment of a first local origination capacity in a geographical area. Projects in this category include the planning or construction of facilities to bring the first local origination capacity to an area already receiving public telecommunications services from distant sources through translators, repeaters, or cable systems.
4. Priority 4 Improvement of public broadcasting services: Projects eligible for consideration under this category are intended to improve the delivery of public broadcasting services to a geographic area. Within this category, NTIA establishes two subcategories:



1. Priority 4A. This subcategory includes the four following types of projects:



1. Applications to replace urgently needed equipment from public broadcasting stations that do not meet the Priority 2 criteria because they do not provide either the only public telecommunications signal or the only locally originated public telecommunications signal to a geographic area.
2. The establishment of public broadcasting facilities to serve a geographic area already receiving public telecommunications services.
3. The acquisition of satellite downlinks for public radio stations in areas already served by one or more full-service public radio stations.
4. The acquisition of the necessary items of equipment to bring the inventory of an already-operating station to the basic level of equipment requirements established by PTFP.


2. Priority 4B. The improvement and non-urgent replacement of equipment at any public broadcasting station.


5. Priority 5 Augmentation of Existing Broadcast Stations. Projects in this category would equip an existing station beyond a basic capacity to broadcast programming from distant sources and to originate local programming. Within this category, NTIA establishes two subcategories:



1. Priority 5A. Projects to equip auxiliary studios at remote locations, or to provide mobile origination facilities.


2. Priority 5B. Projects to augment production capacity beyond basic level in order to provide programming or related materials for other than local distribution.


6. Broadcast Other cases (Digital Conversion). NTIA possesses the discretionary authority to recommend awarding grants to eligible broadcast applicants whose proposals are so unique or innovative that they do not clearly fall within the five Priorities listed in this section. Innovative projects submitted under this category must address demonstrated and substantial community needs or must address issues related to the conversion of public broadcasting facilities to advanced digital technologies.

Please note that for the FY 2004 grant round, NTIA has established three subpriorities under the Broadcast Other category. These subpriorities are discussed in the sections on Radio Broadcasting and Television Broadcasting below.

2. Radio Broadcasting

NTIA will take great care to ensure that its funding of radio applications follows the directive of 47 U.S.C. §393(c) that "a substantial amount" of each year's PTFP funds should be awarded to public radio. For the FY 2004 grant round, the eligibility and priority of radio projects, eligibility of radio equipment, and the presumption of 50% funding for radio equipment replacement applications remain as they were in the FY 2003 grant round.

In response to recent changes in technology and in the Federal regulatory environment, NTIA is providing guidance on three issues of interest to potential radio applicants. Applicants proposing projects involving radio signal expansion, conversion to digital transmission, and Internet streaming should read the appropriate sections below.

1. Radio signal expansion

NTIA's highest priority is activation of public broadcasting facilities to provide a public broadcasting signal to unserved audiences. NTIA is prepared to fund new radio station projects as warranted by reviewers' evaluations and PTFP's financial resources. Activation of new radio stations has been delayed in recent years as the Federal Communications Commission (FCC) placed a "freeze" on new applications while it considers a large number of mutually exclusive applications for construction permits.

NTIA anticipates receiving many applications for station activation projects when the FCC begins to accept new applications, resolves mutually exclusive applications, or issues authorizations for non-mutually exclusive applications. In anticipation of increased interest in these types of applications, we are hereby providing the following guidance to potential applicants.

NTIA's first priority for radio projects remains activations to provide the first public radio signal to an area. These projects are divided into two subgroups, Priority 1A and Priority 1B.

First Signal Activations with Local Origination: Priority 1A. As in the past, Priority 1A status will be given to first public radio signal projects that will originate a local public radio service to a geographic area. A Priority 1A application must include local offices and studios which are fully staffed for station management and program production.

NTIA has long recognized that new fully-staffed Priority 1A projects are usually submitted by organizations that are beginning to build community support. Priority 1A projects usually also incur significant project costs which are ineligible for Federal support, such as studio building acquisition/renovation and start-up staff costs. Because these projects are NTIA's highest priority, PTFP will continue to fund Priority 1A applications with a presumption of a 75% Federal share, the maximum amount permitted by law.

First Signal Activations without Local Origination: Priority 1B. Priority 1B status will continue to be given to first public radio signal projects which are repeaters or translators of other public radio facilities. Projects that will serve significant additional listeners with a first public radio signal through increases in tower height and/or power upgrades may be classified as Priority 1B or Priority 2 (equipment replacement) and are discussed in the section on power increase projects, below.

In recent years, most applications for expansion of service have shifted from fully-staffed stations to requests for Priority 1B repeaters and translators. Given the limited availability of Federal funds and the increasing number of applications for new repeater/translator stations, PTFP will now evaluate Priority 1B applications to determine whether or not 75% Federal funding is justified.

In general, NTIA will continue its present presumption of 75% Federal funding for Priority 1B applications which construct the applicant's first broadcast facility in a community.

An application seeking to upgrade a translator to a repeater will normally be funded by NTIA at a 50% Federal share. These applicants should be able to draw on the financial resources of the community served by the applicant's existing program service. Since the broadcaster would be building upon existing infrastructure, it also would incur reduced ineligible start-up costs. Applicants for these types of Priority 1B projects may seek a higher Federal percentage by submitting justification for the increased amount, which will be evaluated by PTFP and the peer reviewers.

Power increase projects. Sometimes a project to replace a station's transmitter or antenna results in an increase in coverage to a new, but relatively small, unserved audience. PTFP usually treats these applications with incidental coverage increases as Priority 2 applications if the equipment replacement meets the Priority 2 criteria. If an applicant requests a Priority 1B consideration of such an application, the applicant should provide documentation of a significant increase in the population that will receive a first public radio signal. PTFP will evaluate the Priority of such requests on a case-by-case basis. Since the applicant already has a facility in the community, these projects, if accepted as Priority 1B, will normally be funded by NTIA at a 50% Federal share. Applicants for these types of Priority 1B projects may seek a higher Federal percentage by submitting justification for the increased amount, which will be evaluated by PTFP and the peer reviewers.

Second (additional) Station Activations: Priority 4A. An application to provide an additional public radio signal to an area already served by public radio will continue to be placed in Priority 4A. The project must demonstrate that it addresses underserved needs in a way that significantly differentiates its services from what is already available in the proposed coverage area (see §2301.4(b)(ii)(b) of the PTFP Final Rules).

In order to extend its resources to assist in signal expansion projects, NTIA will usually fund Priority 4A additional signal projects at no more than a 50% Federal share. This is due both to the lower priority and the reduced ineligible costs of Priority 4A repeater/translator projects which build upon existing infrastructure. Applicants for Priority 4A expansion projects, including those for new fully-staffed facilities, may seek a higher Federal percentage by submitting justification for the increased amount, which will be evaluated by PTFP and the peer reviewers.

If a project to construct a second station (or other additional stations in a community) results in coverage to a new, but relatively small, unserved audience and the applicant requests Priority 1B consideration of its application, the applicant should provide documentation of a significant increase in the population that will receive a first public radio signal. PTFP will evaluate the Priority of such requests on a case-by-case basis.

Important information for all station activation applicants:

1. Coverage Maps. An applicant proposing to construct a Priority 1A, 1B or Priority 4A station activation should provide documentation, including maps or tables, of the number and geographical location of persons who would receive a first public radio signal as well as the number and location of persons already covered by another public radio station who would receive added service as a result of the proposed project (see §2301.4(b)(1)(v) of the PTFP Final Rules).
2. Digital Transmission Equipment. An applicant proposing to construct a Priority 1A, 1B or Priority 4A station activation should address whether it requests funds to equip the new facility with digital broadcast capability. As noted below in the discussion regarding digital conversion, NTIA anticipates that it will fund digital-upgradable transmitters as the usual equipment for new facilities. Grant recipients will be able to add-at their own expense- in-band, on-channel (IBOC) exciters and additional power output modules as needed to PTFP-funded digital-upgradable transmitters.⁽¹⁾ Applicants requesting full IBOC digital transmitters as part of their activation project must include documentation of the station's digital plan demonstrating its programming readiness to begin digital broadcasting upon receipt of PTFP funding. An application for IBOC transmission equipment also must directly address in its technical exhibits the type of analog/digital signal combining proposed. The applicant should include its plans, if any, to utilize Program Associated Data or the Supplemental Audio Channel when authorized by the FCC. NTIA reminds potential applicants that licensing fees, including licensing fees related to the use of IBOC technology, are not eligible for PTFP funds.
3. Deferred Applications. NTIA will permit those applicants whose applications for activation projects were originally submitted in FY 2002 or FY 2003, and were negotiated by PTFP, but were deferred in FY 2002 and FY 2003 from funding because of the lack of FCC authorizations, to submit FY 2004 applications requesting the same Federal percentage as their initial applications.

2. Radio station conversion to digital transmission

NTIA encourages the use of digital technologies for public radio facilities. For several years, NTIA has funded projects for digital STLs and digital audio production equipment which will assist public radio stations as they prepare for conversion to digital technologies. These digital projects are funded as equipment replacement, improvement, or augmentation projects with the presumption of a 50% Federal share unless a showing of extraordinary need for a higher percentage has been made pursuant to §2301.6(b)(ii) of the PTFP Rules. NTIA will continue to support digital non-transmission equipment for radio equipment replacement projects.

Digital conversion projects. As noted, on October 10, 2002, the FCC approved digital transmission for radio stations, although it has not yet published regulations for such stations. Unlike the digital conversion of television stations, the FCC has not established a deadline for the conversion of radio stations. In addition, there is the question of when receivers will be generally available for purchase by the public. These factors raise the issue of whether projects whose primary purpose is to begin digital radio broadcasts present compelling urgency for funding in the FY 2004 grant round.

For FY 2004, NTIA will accept applications for digital transmission equipment for public radio facilities to convert to digital broadcasting. PTFP has included a list of eligible digital equipment on its Internet site and in its printed materials. This list includes transmission and STL equipment. Applicants for digital conversion projects must include documentation of the station's digital conversion plan demonstrating its programming readiness to begin digital broadcasting upon receipt of PTFP funding. The applicant should include its plans, if any, to utilize Program Associated Data or the Supplemental Audio Channel when authorized by the FCC. Digital conversion applications must directly address in their technical exhibits the type of analog/digital signal combining proposed.

PTFP will place radio applications requesting funds to convert to digital broadcasting in the Broadcast Other category. In order to process applications for digital conversion in an orderly manner and to provide guidance to potential applicants for the FY 2004 Grant Round, NTIA will divide the Broadcast Other category into three Subpriorities. Digital television projects will be placed into Subpriorities A and B because the FCC has mandated television's digital conversion and has established a series of deadlines that television stations must meet. Digital radio conversion projects will be placed in the new Subpriority C.

Subpriority C. Radio Digital Conversion. NTIA will assign the following applications for conversion of public broadcasting facilities to advanced digital technologies at the third subpriority level within the Broadcast Other category. These applications will receive equal consideration as subpriority C.

- An application to convert radio transmission facilities to digital technologies. In order to be highly competitive, an application must document its plans to utilize Program Associated Data or the Supplemental Audio Channel, when authorized by the FCC.

- An application to convert production equipment to digital technologies for a station already broadcasting in digital or a station proposing to broadcast in digital. In order to be highly competitive, an application must document its plans to utilize Program Associated Data or the Supplemental Audio Channel, when authorized by the FCC.

NTIA notes that in the past it has been able to fund applications each year in most if not all of the five traditional broadcast Priorities and anticipates that it will be able to fund applications in FY 2004 in most if not all of the Subpriorities in the Broadcast Other category. The presumption of funding for radio projects in the Broadcast Other category is a 50% Federal share. NTIA has not set aside a specific amount for funding radio digital conversion projects. Funding of radio digital conversion projects will depend on the quality of applications received and the availability of funds.

Digital replacement transmitters. Regarding FY 2004 applications for replacement equipment, NTIA anticipates that it will fund digital-upgradable transmitters as the usual replacement for analog transmitters at the power level required to achieve the licensed analog ERP, if justified as urgent replacement of radio transmission equipment. Transmitter replacement applications will be placed in Priority 2 or Priority 4A, as appropriate, depending on whether the applicant provides the only public radio signal to an area (see §§2301.4(b)(2) and (4)). Grant recipients will be able to add an IBOC exciter and additional power output modules as needed to PTFP-funded digital-upgradable transmitters. The cost for the IBOC exciter and additional power output modules above the amount initially approved for the replacement transmitter will be the responsibility of the grantee for FY 2004 awards. NTIA reminds potential applicants that licensing fees, including licensing fees related to the use of IBOC technology, are not eligible for PTFP funds.

NTIA may also directly fund fully compliant IBOC digital transmitters as replacement equipment, when fully justified by the application. Applicants requesting full IBOC digital transmitters as part of equipment replacement projects must include documentation of the station's digital conversion plan demonstrating its programming readiness to begin digital broadcasting upon receipt of PTFP funding. Included should be its plans, if any, to utilize Program Associated Data or the Supplemental Audio Channel when authorized by the FCC. The request for a digital transmitter, in itself, is not sufficient justification to replace an otherwise adequate analog or composite STL. The need for the replacement of the STL should be supported by technical documentation addressing the program channel and interface requirements of the digital transmitter. Digital conversion applications must directly address in its technical exhibits the type of analog/digital signal combining proposed.

Corporation for Public Broadcasting grant funds. NTIA is aware that the Corporation for Public Broadcasting (CPB) has a grant program focused on projects to convert public radio stations to digital broadcasting. In order to facilitate application processing by both CPB and PTFP, applicants for PTFP funds should clearly identify in their application whether they have applied to CPB for funding and list the equipment requested from CPB. The submission of an application to CPB will have no effect on NTIA's evaluation of the PTFP application. NTIA will coordinate grant awards with CPB to ensure that no equipment is funded for the same applicant by both grant programs.

3. Internet streaming

Given the limited availability of funds, NTIA has emphasized support of basic equipment required for a public broadcast station to serve its local audience (see the Final Rules, §2301.4, passim). NTIA continues to receive more activation and replacement applications than it can fund in any cycle. NTIA has received a few applications for equipment to provide Internet streaming. The applications have not been favorably evaluated by the outside peer reviewers or the national advisory panels.

NTIA has determined that streaming on the Internet goes beyond the provision of a basic local public broadcasting service. Until Internet streaming becomes a basic part of a station's service to its own community, therefore, NTIA will place any applications it receives for streaming equipment in Priority 5B (see §2301.4(b)(5)(ii) of the PTFP Final Rules). Priority 5B relates to equipment required for the production of "programming for regional and national use."

3. Television Broadcasting and Digital Conversion

Over the past four years, NTIA has awarded most of its television funds for projects to convert public television stations to digital broadcasting. The FCC's adoption of the Fifth Report and Order in April 1997 required that all public television stations begin the broadcast of a digital signal by May 1, 2003. In FY 2000, NTIA instituted several new policies regarding applications for projects to convert public television stations to digital transmission capability. NTIA continued those policies during the FY 2001, FY 2002 and FY 2003 grant cycles. During these four grant cycles, PTFP was able to assist in the digital conversion of over 200 public television stations by funding projects which contained almost 100 tower-related projects, 190 digital transmitters, over 200 antennas, as well as STLs, intercity microwave relays, encoders, video servers, satellite interconnect, test and monitoring equipment. For FY 2003, NTIA awarded $30.9 million in funds to 79 projects which assisted 116 public television stations in the conversion to digital technologies, and also awarded $3.1 million for eleven urgent television equipment replacement projects. The awards ranged from $42,344 to $1,790,935.

In FY 2004, PTFP policies will change to reflect the progress made by public television stations in constructing transmission facilities required to meet the FCC's mandate to begin digital broadcasting. In addition to eliminating multi-year funding for digital conversion projects, PTFP will focus on funding equipment needed to meet remaining FCC requirements and deadlines. Related changes in application procedures and priorities are explained below.

1. Discontinuation of multi-year funding

Before discussing the policies in effect for FY 2004, we wish to clarify our reason for not continuing the policy on multi-year funding which was in effect during the FY 2000-2003 period. NTIA instituted multi-year funding for digital conversion of transmission equipment because we recognized that the conversion of such facilities could not be accomplished by many licensees in the one- to two-year project period which is typical of PTFP awards. Multi-year projects were designed to help applicants which had to convert multiple broadcast transmitters. It also assisted single station licensees who needed additional time to raise funds and rebuild their transmission facility. During the period FY 2000-2003, PTFP awarded multi-year grants to 47 licensees to assist in the digital conversion of 152 stations. The FCC's deadline for beginning digital broadcasts was May 2003. This first phase of digital conversion is almost complete, as virtually every public television station either has begun digital broadcasting or has funded its conversion and has facilities under construction.⁽²⁾

There does not appear to be a need for multi-year funding of digital power upgrade or master control projects. The upgrade of low power transmission facilities can be accomplished within the usual one-to-two year PTFP project period. Indeed, the FCC's tentative deadline set at June 2006 to complete these upgrades and the projected cessation of analog broadcasting in December 2006 means that stations must complete these digital upgrade projects within the next two years. We note that PTFP received no multi-year applications in FY 2003.

2. Remaining digital conversion requirements and deadlines

   NTIA recognizes one of the greatest challenges facing America's public television stations is completing the conversion of its broadcast facilities to digital technologies. In addition to the installation of digital transmission equipment, over 350 stations must overcome other technical and financial challenges in order to complete conversion to digital broadcasting. The FCC has established a series of deadlines in its transition plan for digital conversion of television broadcasting in the United States. The deadlines include a number of items, such as replication of analog service, simulcast requirements, digital channel selections and, finally, cessation of analog broadcasting.

   NTIA has considered how best to distribute digital conversion funds to public television stations through the PTFP. One of NTIA's goals during the FY 2004 Grant Round is to ensure that PTFP's administrative procedures as well as its funds can support public television's needs in meeting the FCC's deadlines. Another of NTIA's goals is to maintain an acceptable balance between equipment replacement projects and digital television conversion projects.

   While the May 1, 2003, deadline has passed, NTIA believes that considerable work remains to complete the digital conversion of America's public television system. NTIA recognizes that a substantial number of digital public television stations were constructed with lower-power facilities that were intended to meet the FCC's initial digital broadcast requirement.⁽³⁾ Many people who live within the standard coverage area of the station's analog signal (which the FCC refers to as Grade B coverage), particularly residents of rural areas, cannot receive the station's lower power digital signal. The FCC has tentatively concluded that digital public television stations will have until July 1, 2006, to replicate their analog Grade B coverage or to maximize their facilities.⁽⁴⁾ Stations that do not increase their power by the FCC's final deadline will lose digital television service protection for the uncovered area. The FCC's tentative deadline of July 1, 2006, is only six months prior to the December 31, 2006, end date of the digital transition.⁽⁵⁾

   The transmission facilities of those public television stations constructed at lower power must be upgraded to ensure that people viewing analog public television today will be able to receive public television from digital facilities in the future. Many public television stations will want to begin this transmission upgrade so their full-power digital facilities can be completed by the FCC's tentative July 2006 deadline.

   NTIA also recognizes that conversion of transmission equipment to digital technology, while important, is only part in the conversion of a public television station to digital broadcasting. We believe that most stations have an immediate need to convert their basic master control support infrastructure to store, distribute and broadcast digital signals. In the longer term, many stations will also need to convert their production equipment to digital technologies so they can originate local programming at a technical level that is compatible and comparable in quality with productions available from national sources or other local stations.

   For the FY 2004 grant cycle, NTIA is revising its funding of digital television equipment to emphasize 1) projects for power increases of lower-power digital facilities, and 2) increased digital conversion of master control equipment.

3. FY 2004 procedures for Broadcast Other (digital television conversion applications)

NTIA intends to remain responsive to the equipment replacement needs of public television stations. NTIA's balancing of equipment replacement and digital conversion applications is discussed in the following sections.

In order to assist public broadcasting licensees in converting to digital technologies, NTIA is modifying its application procedures in the following areas. Sections (1), (2), and (6) are different from the FY 2003 grant cycle.

1. Subpriorities for digital conversion projects. In order to process applications for digital conversion in an orderly manner and to provide guidance to potential applicants for the FY 2004 Grant Round, NTIA will divide the Broadcast Other category into three Subpriorities. Digital television projects will be placed into Subpriorities A and B because the FCC has mandated television's digital conversion and has established a series of deadlines that television stations must meet. (Digital radio conversion projects will be placed in the new Subpriority C.) NTIA notes that in the past it has been able to fund applications each year in most if not all of the five traditional broadcast Priorities and anticipates that it will be able to do the same in FY 2004.

   The two Subpriorities for television digital conversion projects are:

Subpriority A. Television Digital Transmission Equipment. NTIA will assign the following applications for conversion of public broadcasting facilities to advanced digital technologies at the first subpriority level within the Broadcast Other category. These applications are intended to assist public television stations in meeting FCC-imposed deadlines regarding transmission power. These projects are in the highest subpriority in order to ensure digital public television signals to the largest number of United States residents. These applications will receive equal consideration as subpriority A.

- An application to convert the analog transmission facilities of a public television station to digital technology.

- An application to increase the power of a digital public television station which was initially constructed at a lower power in order to meet the FCC's May 2003 requirement. The stations funded should replicate the station's comparable analog Grade B coverage, unless otherwise justified.

- An application to "maximize" the power of a digital public television station in order to increase population coverage. The applications funded will be expected to document significant population increase beyond the station's comparable analog Grade B coverage.

Subpriority B. Television Digital Master Control and Production Equipment. NTIA will assign the following applications for conversion of public broadcasting facilities to advanced digital technologies at the second subpriority level within the Broadcast Other category. Conversion of a public television station's master control and production equipment is the next step in the transformation of public television. These applications will receive equal consideration as subpriority B.

- An application to convert basic master control equipment to digital technologies. In order to be highly competitive, we expect applicants to address how the master control equipment will support multi-channel digital broadcasting.

- An application to convert production equipment to digital technologies. In order to be highly competitive, we expect applicants to address how the equipment will be used to produce programming that is widely distributed on a regional or national basis or that will be used for the creation of both local and national High Definition programming.

2. Equipment eligible for digital television conversion projects and equipment replacement. For FY 2004, NTIA will support the equipment necessary for a public television station to comply with the FCC's digital conversion deadlines. This includes equipment required for digital broadcast of programs produced locally in analog format as well as the broadcast of digital programming received from national sources. NTIA is posting on its Internet site a listing of equipment (the Digital TV List) which is eligible for PTFP digital television conversion funding. Printed copies of this list are also available from PTFP at the address shown in the Address to Request Application Package section of this document. This list is similar to equipment lists PTFP used during last year's Grant Round. The Digital TV List includes transmission equipment (transmitters, antennas, STLs, towers, etc.) as well as distribution equipment located in a station's master control (routing switchers, video servers, PSIP generators, digital encoders, etc.). For FY 2004, the list has been expanded to include additional equipment to be located in a station's master control.

NTIA believes that many stations must replace obsolete equipment in order to complete their digital conversion projects and address multi-channel distribution. NTIA is continuing its revised policies to permit the replacement of obsolete equipment as part of digital conversion projects. If the digital conversion application includes the urgent replacement of an existing item of equipment, the application will be considered as a Broadcast Other, rather than as replacement under Priorities 2 or 4.

If the purpose of an application is just for replacement of urgently needed equipment, even though the equipment is drawn from the Digital TV List, the application will be classified as a Priority 2 or 4, as appropriate.

Any application which includes equipment replacement as a justification for the urgency criterion should submit documentation of downtime or other evidence in support of the urgency evaluation criterion as contained in §2301.17 of the PTFP Final Rules. The need to replace current equipment in order to maintain existing services will, in many cases, strengthen the urgency criterion of a digital conversion application.

Because of the requirement that all public television stations begin digital broadcasts, all public television applications, whether submitted for Priority 2, Priority 4 or the Broadcast Other category, should include the station's comprehensive plan for digital conversion and explain how the requested equipment is consistent with that plan. Failure to provide detailed information on the applicant's proposed or existing digital conversion plan will place a television application at a competitive disadvantage during the evaluation of the technical qualification criterion as described in 15 CFR §2301.17 of the PTFP Rules.

Enhanced Interconnection and Optimization Project. NTIA calls applicants' attention to the fact that equipment related to PBS's Enhanced Interconnection and Optimization Project (EIOP) is not included on the Digital TV List. The EIOP project is still under development and, according to the EIOP timetable, the first EIOP-equipped station is not intended to be operational until July 2004. NTIA is following the EIOP project with interest, but believes that it is premature to fund any EIOP equipment at this stage of development.

Production Equipment. NTIA notes that while a television station must use digital transmission and distribution equipment to begin digital broadcasting, digital production equipment is not required to meet the FCC's 2006 deadline. As the deadline approaches, NTIA has reluctantly concluded that, with the funds available to it in FY 2004, it cannot fund television production equipment at the same level as it has prior to the institution of the digital conversion policies of FY 2000.

Television production equipment, however, will continue to be eligible for PTFP funding for urgent equipment replacement under Priority 2 and Priority 4, as appropriate. For the FY 2004 Grant Round, however, NTIA will fund television production equipment replacement applications only for those projects that present a "clear and compelling" case for the urgency of such replacement.

Digital conversion of a public television station's production equipment will improve the station's ability to provide public service to its community. NTIA will now accept digital television production equipment as part of conversion projects and will place these applications in Subpriority B of the Broadcast Other category. In order to be highly competitive, we expect applicants to address how the equipment will be used to produce programming that is widely distributed on a regional or national basis or that will be used for the creation of High Definition programming.

Analog Transmission Equipment. While analog television broadcasting is currently scheduled to end in December 2006, NTIA recognizes that some stations are currently operating with failing analog transmitters.⁽⁶⁾ NTIA is reluctant to make major investments in analog transmission equipment at this time, but will fund analog transmitter replacements in "clear and compelling" situations where replacement is necessary to maintain public television service. In order to be highly competitive, we expect applicants for replacement of analog transmission equipment to thoroughly document the urgent need for replacement and the status of available replacement parts. Applicants should also discuss the usage of the analog equipment after the transition to digital is complete, thereby strengthening the protection of the Federal investment in the transmitter (e.g., whether a frequency change for digital is contemplated, thereby permitting the reuse of the analog transmitter on the digital channel).

When making the final selection of awards under the procedures of §2301.17, NTIA will take care to ensure that there is an acceptable balance between projects awarded for equipment replacement projects and those awarded for digital conversion projects. Further, NTIA will consider as part of this balance those stations in the Broadcast Other category (1) which request digital conversion projects and (2) which also include elements of equipment replacement. NTIA will not fund applications in the Broadcast Other category requesting digital conversion to the exclusion of those Broadcast Other applications which include documentation supporting equipment replacement as part of their urgency justification.

3. Effective date for expenditure of local matching funds for digital television conversion projects. Within the limitations of Federal regulations, NTIA supports efforts undertaken by public television stations which bring the benefits of digital television broadcasting to their communities as quickly as possible.

At the beginning of NTIA's digital television conversion initiative in FY 2000, NTIA announced (64 FR 72225-72234) that it would permit applicants to include equipment purchased with non-federal funds after July 1, 1999, in a PTFP application for digital television conversion projects. This date was selected to coincide with the beginning of the 2000 fiscal year used by many state and local governments

In the FY 2003 Notice of Closing Date (67 FR 64298-64306), NTIA indicated that it anticipated that July 1, 1999, will be the effective date in the FY 2004 and FY 2005 Grant Rounds for the expenditure of non-federal funds for projects in the Broadcast Other category. For the FY 2004 grant round, we will accept equipment purchased with non-federal funds after July 1, 1999, in a PTFP application for Broadcast Other projects. We expect to use this date for the FY 2005 grant cycle as well.

4. Funding levels for television projects. In order to ensure that sufficient Federal funds are available to support the conversion of the nation's public television stations, NTIA is continuing its recent policy regarding the presumed Federal funding level for television equipment. The presumption of a 40% Federal share will extend to all television projects for digital conversion or to replace or upgrade equipment. Because of the emphasis NTIA places on the extension of broadcast services to unserved areas, however, NTIA has retained the 75% level of Federal funding applications proposing new television facilities in Priority 1 (§2301.4(b)(1)).

As already noted, NTIA recognizes that many small stations, primarily in rural areas, will be unable to raise even a 50% local share of the funds required for their PTFP projects. NTIA has long permitted stations to request more than the standard level of Federal support upon a showing of "extraordinary need" per §2301.6(b)(ii) of the PTFP Rules. NTIA will permit applicants to qualify for hardship funding and receive up to a 67% Federal share of their project costs. An applicant can qualify for up to a 67% Federal funding by certifying that it is unable to match at least 60% of the eligible project costs, and either (a) by providing documentation that its average annual cash revenue for the previous four years is $2 million or less, or (b) by providing documentation that the eligible project costs are greater than the applicant's average annual cash revenue for the previous four years.

In addition, NTIA will continue to permit any applicant to provide justification that it has an "extraordinary need" for Federal funding up to the legal limit of 75% of eligible project costs.

In order to gather additional funds to award to stations which qualify under the hardship criteria, NTIA encourages financially able applicants for digital television conversion projects to request a smaller share of Federal funds than the standard 40%. NTIA will add three additional points to the application evaluations from the independent review panels for applicants in the Broadcast Other category who request no more than 25% Federal funding. This provision will give extra credit to applications already highly rated and, based on NTIA's previous experience, this extra credit is often sufficient to move highly rated applications into the range for funding.

When making the final selection of awards, however, NTIA will take care to ensure that there is an acceptable balance between projects awarded to stations requesting a 25% Federal share and those requesting a higher Federal share. NTIA will not fund applications requesting a 25% Federal share to the exclusion of applications meeting the hardship criteria or to the exclusion of those requesting the standard 40% Federal share.

5. Use of CPB matching funds.Under the PTFP Rules, NTIA has limited the use of CPB funds for the non-federal share of PTFP projects to circumstances of "clear and compelling need" (15 CFR §2301.6(c)(2)). NTIA recognizes that it will be difficult for many public television stations to raise the funds required to meet the FCC's digital broadcasting deadline. Therefore, NTIA continues its past policy that applicants may submit justification under this section for the use of CPB funds as part of their local match. Any request for the use of CPB funds must be accompanied by a statement regarding any limitations that CPB has placed on the expenditure of those funds.



6. Coordination with CPB's Digital Distribution Fund. NTIA is aware that the Corporation for Public Broadcasting has a grant program focused on projects to convert public television stations to digital broadcasting. In order to facilitate the application processing by both PTFP and CPB, applicants for PTFP funds should clearly identify in their application whether they have applied to CPB for funding and list the equipment requested from CPB. The submission of an application to CPB will have no effect on NTIA's evaluation of the PTFP application. NTIA will coordinate grant awards with CPB to ensure that no equipment is funded for the same applicant by both grant programs.


4. Distance Learning and Nonbroadcast Projects

Since 1979, NTIA has funded nonbroadcast distance learning projects through the Special Applications category as established in §2301.4(a) of the PTFP Rules. NTIA encourages applications for innovative or unique distance learning projects which address demonstrated and substantial community needs. For fiscal year 2003, NTIA awarded $1.4 million in funds to eleven grants for distance learning projects. The awards ranged from $42,000 to $304,872.

The growth of digital technologies provides new opportunities for distance learning projects using both broadcast and nonbroadcast facilities. NTIA encourages applicants to consider the use of digital technologies in proposing unique or innovative distance learning projects for funding in FY 2004. Examples of innovative digital applications include projects (1) which use broadband technologies for distance learning, (2) which distribute educational or informational programming via Direct Broadcast Satellite technologies, (3) which provide multi-media content using the digital television transmission infrastructure and delivered through a method that is not a typical broadcast channel, or (4) which incorporate video, voice, graphics and data capabilities for online distance learning services. NTIA also encourages applicants to consider broadcast projects which use the multi-channel capacity of digital television to provide innovative distance learning projects.

All distance learning applications must address substantial and demonstrated needs of the communities being served. NTIA is particularly interested in distance learning projects which benefit traditionally underserved audiences, such as projects serving minorities, people living in rural communities, or those living in disadvantaged areas where distance learning services will provide significant educational opportunities.

NTIA recognizes that, due to the multi-channel capability of digital television, distance learning components may well be a part of a digital conversion application. NTIA will, therefore, consider such distance learning proposals under the subpriorities established in the section related to Television Broadcasting and Digital Conversion. If NTIA determines that a broadcast distance learning project is not part of a digital conversion application, NTIA will evaluate the application pursuant to §§2301.4(b)(6) and 2301.17.

The November 22, 1991, PTFP Policy Statement (56 FR 59168 (1991)) mentioned in the Application Forms and Regulations section discussed a number of issues of particular relevance to applicants proposing nonbroadcast educational and instructional projects and potential improvement of nonbroadcast facilities. These policies remain in effect and will be available to all PTFP applicants as part of the Guidelines for preparing FY 2004 PTFP applications.

II.    Award Information