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S. Rep. No. 230,"&,l(l('" 104th Cong., 2d Sess. at 163.  The"9X,l(l(,,"  S- xCommission amended its dual network rule to reflect this directive.WX_ yO-ԍxOrder, 11 FCC Rcd 12374 (1996). W We believe, at this time, that no  xbroadcast television network has begun to deliver a dual stream of video programming. We seek comment on whether the current dual network rule is no longer in the public interest.  S4-The Remaining Rules  S-  x25. The UHF Television Discount. The national television ownership rule states that an entity  S- xmay own any number of television stations (subject to the restrictions of the local ownership rule) so long  xas the combined audience reach of the stations does not exceed 35 percent, as measured by the number  xof television households in their respective ADIs. Under our rules, UHF television stations are attributed  S- xwith 50 percent of the television households in their ADI market.R_ yO -ԍx47 C.F.R.  73.3555(e)(2)(i). R The Commission has stated that it  S-would review the UHF discount in the biennial ownership review.x_ yO-  .ԍxNotice of Proposed Rule Making in MM Docket Nos. 96222, 91221 and 878, 11 FCC Rcd 19949, 19956 (1996).    x26. The Commission adopted the UHF discount in 1985 due to concerns that UHF station signals  S6 - xgenerally cannot reach as large an audience as VHF station signals. 6 _ yO-ԍxSee Memorandum Opinion and Order in Gen. Docket No. 831009, 100 FCC 2d 74, 9294 (1985). Since that time we have observed  S - xin other contexts that this UHF signal disparity has been ameliorated over the years.2!  ` _ yO-  /ԍxSee Report and Order in MM Docket No. 94123, 11 FCC Rcd 546, 58386 (1995) (repealing the prime  yO- xZtime access rule); Report and Order in MM Docket No. 8768, 3 FCC Rcd 638 (1988), clarified 4 FCC Rcd 2276  x(1989) (eliminating the policy under which applications to initiate or improve VHF service were considered contrary to the public interest if they threatened adverse economic impact on existing or potential UHF stations).2 This is due in part  xto improved television receiver designs, as well as the fact that many households receive broadcast  S - xchannels via cable rather than by overtheair transmission. When the UHF discount was adopted in 1985,  Sj- xcable passed approximately 60 percent of all television households"jH _ yOR-ԍxEstimate based on data in Television Factbook (Cable and Services volume, 1986 ed.), pp. A39 and A44.Ģ and had approximately 32 million  S7- xKsubscribers.k#7_ yO-ԍxSee 1997 Television and Cable Factbook at F1.k Today, the pass rate has risen to 97.1 percent with approximately 64.2 million subscribers.j$7h_ yO?!-ԍxFourth Annual Report, supra at para. 1415. j  x.Moreover, the Supreme Court has recently upheld the constitutionality of the "mustcarry" rules which  S- x.require cable systems to carry local television broadcast stations.y%_ yOi$-ԍxTurner Broadcasting Systems., Inc. v. FCC, 117 S. Ct. 1174 (1997).y Parties have nonetheless urged us to  S- xcontinue the UHF discount policy given the significant number of television households that do not" %,l(l(,,"  S-subscribe to cable.&_ yOh-  ԍxSee Notice of Proposed Rule Making in MM Docket No. 96222, 11 FCC Rcd 1995254 (1996) (summarizing comments on issue of whether UHF discount policy should be retained).  S-  ^x27. We request comment in this proceeding on whether the UHF discount should be retained,  x>modified, or eliminated. In this regard, commenters may wish to address whether the discount, at its  xcurrent level, remains appropriate in light of the decreasing disparity between VHF and UHF television  xjdue to improvements in transmission and reception technology, cable carriage of UHF television stations  xunder our must carry rules, and increasing cable penetration. Is there any evidence that the current UHF  xdiscount provides a competitive advantage to networks that own UHF stations? For example, note the  xTable in Appendix A, which indicates the audience reach of the top 25 TV group owners without the UHF  S5- xdiscount. While the audience reach of many group owners are unaffected, the reach of several group  xowners, including Fox and Paxson, would exceed the national reach cap were it not for the discount.  xShould we decide that the discount be retained in some form for analog television, does it make sense to  xretain such a discount at all once we have transitioned to digital television transmission? At that time,  x[we expect broadcast television stations will be operating on "core" channels, most of which are currently  S6 - x.allotted to UHF television.'6 _ yO-  ԍxSee Memorandum Opinion and Order on Reconsideration of the Sixth Report and Order in MM Docket  yO-No. 87268, FCC 9824 (released February 23, 1998). Finally, if the discount were reduced or eliminated, in what manner should group owners that exceed the new limits be grandfathered?  S -  x28. Daily Newspaper/Broadcast Crossownership Rule. The daily newspaper/broadcast cross xownership rule prohibits the common ownership of a broadcast station and a daily newspaper in the same  S7- xlocale.(@7x_ yOO-  /ԍx The rule provides that: No license for an AM, FM or TV broadcast station shall be granted to any party  x(including all parties under common control) if such party directly or indirectly owns, operates or controls a daily  xnewspaper and the grant of such license will result in: (1) The predicted or measured 2 mV/m contour of an AM  xstation, computed in accordance with  73.183 or  73.186, encompassing the entire community in which such newspaper is published; or (2) The predicted 1 mV/m contour for an FM station, computed in accordance with  xx 73.313, encompassing the entire community in which such newspaper is published; or (3) The Grade A contour  xof a TV station, computed in accordance with  73.684, encompassing the entire community in which such newspaper is published. 47 C.F.R.  73.3555(d). The Commission adopted the rule in 1975.u)7 _ yOW-  ԍxMultiple Ownership of Standard, FM, and Television Broadcast Stations, Second Report and Order, 50 FCC  yO- x2d 1046 (1975) ("Second Report and Order"), recon., 53 FCC 2d 589 (1975) ("Recon. Order"), aff'd sub nom.  yO- xFederal Communications Commission v. National Citizens Committee for Broadcasting, supra. The provisions of  yO-47 C.F.R.  73.3555 do not apply to noncommercial educational FM and TV stations. See 47 C.F.R.  73.3555(f). u Like all of our multiple ownership rules, the  S- xnewspaper/broadcast crossownership rule rests on the twin goals of promoting diversity and economic  S- x>competition.e*0_ yO#-ԍxSecond Report and Order, supra at 1074. e The Commission determined that, as a general rule, granting a broadcast license to an  xlentity in the same community as that in which the entity also publishes a newspaper would harm  Sk- xdiversity.C+k_ yO&-ԍxId. at 1075.C  The Commission ordered divestiture in a number of egregious cases and prohibited the"k P+,l(l(,,s"  S- xtransfer of other combinations to new owners.m,_ yOh-ԍxSecond Report and Order, supra at 1076, 107884.m Although the Commission, in adopting the rule, noted  S- xits expectation that there could be meritorious waiver requests, it set forth very stringent waiver criteria.- X_ yO-  /ԍxThe criteria are: 1) inability to sell the station; 2) the only possibility of the station's sale would be at an  xartificially reduced price; 3) separate ownership and operation of the newspaper and the broadcast station could not  xbe supported in the locality; and 4) the purposes of the rule would be disserved by its application or application of the rule would be unduly harsh.  xAs a result, only two cases, both involving television/newspaper combinations, have been found to warrant  Sg-permanent waiver of the rule..Xg@_ yOG -  ԍxField Communications Corp., 65 FCC 2d 959 (1977); Fox Television Stations Inc., 8 FCC Rcd 5341, 5349  yO - x(1993); aff'd sub nom. Metropolitan Council of NAACP Branches v. FCC, 46 F.3d 1154 (D.C. Cir. 1995). In both cases, the combination had previously been owned by the same or substantially the same parties.   x29. For several years Congress precluded the Commission from spending authorized funds "to  xrepeal, retroactively apply changes in, or to begin or continue a reexamination of the rules and the policies  S- xestablished to administer" the newspaper/broadcast crossownership restriction.#/` _ yO-  .ԍxSee, e.g., Department of Justice and Related Agencies, Appropriations Act, 1993, Pub. L. No. 102395, 106  xZStat. 1828 (1992). These appropriations restrictions were continued in effect through subsequent appropriations  yO+- xlegislation and continuing resolutions that funded the agency until April 26, 1996, when a budget was enacted. See  xDepartments of Commerce, State, Justice, the Judiciary and Related Agencies for FY '96, P.L. 104134, 110 Stat.  xw1321. The restriction on repealing, retroactively applying or reexamining the newspaper/broadcast crossownership rule is no longer contained in this Agency's appropriation legislation.# In the Commission's  x1994 appropriation, however, Congress provided that the Commission could "amend policies with respect  xto waivers" of the broadcastnewspaper crossownership rule with respect to newspaper/radio  S- xcombinations.0_ yOz-ԍx107 Stat. 1167 (1993); see also H. Rept. 103293, 103rd Cong., 1st Sess (1993), at 2. Subsequently, restrictive language concerning this rule was dropped from Commission  x[related appropriations legislation thereby removing the statutory ban on Commission review of not only its waiver policy under the rule, but also the rule itself.   @x30. In 1996, the Commission opened an inquiry to consider amending the waiver policy with  S - x|respect to newspaper/radio combinations.1 h_ yO -ԍxSee Notice of Inquiry in MM Docket No. 96197, supra.  Since the scope of this biennial ownership review  S - xencompasses the issues raised in the outstanding NOI, we will place the comments we have already  S -received into the record of this review and take them into account in our review of the broader rule.   "x31. Additionally, we note that a Petition for Rulemaking seeking elimination of the rule in its  S- xentirety was filed by the Newspaper Association of America ("NAA") on April 28, 1997.H2X_ yO#-  >ԍxSee Newspaper Association of America, Petition for Rulemaking in the matter of amendment of Section  x,73.3555 of the Commission's Rules to eliminate restrictions on newspaper/broadcast station crossownership (April 28, 1997) ("NAA Petition").H We will place  S-this filing in the record of this proceeding and invite comment on the merits of the petition.  0   x32. Generally, the NAA Petition argues that in adopting the rule there never was a record of"k 2,l(l(,,"  xevidence that crossowned stations engaged in anticompetitive practices. Indeed, NAA states, the record  S- xLdemonstrated that, in general, there was significant diversity or "separate operation" between commonly  x=owned broadcast stations and newspapers and that newspaperaffiliated broadcast stations tended to be  x/superior licensees in terms of locally oriented service. NAA further argues that, whatever the FCC's  x]original reasons for the rule were, "[i]n the abundantly diverse and highly competitive mass media  xmarketplace of the late 1990s, maintenance of these selective crossownership restrictions is unnecessary,  S- xdiscriminatory, and unjustifiable."A3_ yO6-ԍxId. at 16.A NAA points to relaxation in other Commission ownership rulesA4X_ yO-ԍxId. at 40.A and  S- xzargues that the newspaper/broadcast crossownership rule unfairly singles out newspaper publishers,  xdenying them the ability to realize efficiencies and synergies while leaving their competitors free to do  S5- xso.T55_ yO -ԍxId. at 38 et seq.T NAA also argues that relaxation of the newspaper/broadcast crossownership rule will help preserve  x.newspapers and broadcast stations as viable media outlets and enhance diversity. Finally, NAA asserts  xthat the rule is inconsistent with the First Amendment. Although the newspaper/broadcast crossownership  S - xrule was sustained by the Supreme Court, NAA argues that developments in First Amendment  Si - x.jurisprudence since then,W6Xi x_ yO-  ԍxCiting Chesapeake & Potomac Telephone Co. v. U.S., 42 F.3d 181 (4th Cir. 1994), vacated and remanded  yOI- xsub nom., United States v. C&P, 116 S. Ct. 1036 (1996) and 44 Liquormart, Inc. v. Rhode Island, 116 S. Ct. 1495 (1966).W "suggest that the courts today would require a far stronger showing than was  xmade in 1975 to support such a direct limitation on the free speech rights of a particular class of  S -citizens."D7 _ yO;-ԍxNAA Petition at 46.D   x 33. A number of parties, however, have argued for the continuation of the rule. Supporters of  Sj- xthe rule commenting in the Notice of Inquiry on our newspaper/radio waiver policy assert that to give one  x.person or entity both a daily newspaper and a broadcast station in the same community would severely  xcurtail both competition and diversity. Supporters contend that daily newspapers often dominate the local  x.advertising market and to give a party with such dominance a broadcast outlet would allow it to exercise  S- x_market power with respect to the local advertising market. 8 ( _ yOf-  ԍxSee Comments of David E. Hoxeng d/b/a ADX Communications in MM Docket No. 96197 at 2. Hoxeng  xprovides as an example San Antonio, TX, where, he states, the costperthousand to newspaper advertisers  yO- x\skyrocketed following the buyout and closure of one San Antonio daily by the other. Id. at 23. See also Comments of Tennessee Association of Broadcasters filed in MM Docket No. 96197 at 5.  Supporters also contend that  xnewspaper/broadcast combinations would give a single entity too much of a voice with respect to forming  S8- xzopinion on public issues. The new media pointed to by opponents of the rule, they state, do not add  xsignificant local viewpoints, are not locally based, and do not provide news or information on local  S- xissues.9_ yO$-ԍxSee Joint Comments of Black Citizens for a Fair Media et al. filed in MM Docket No. 96197 at 1819. Although supporters of the rule agree that cable television and the Internet have the potential  xto facilitate debate on local issues, they dispute that they yet serve that purpose to any significant degree" 9,l(l(,,"  S-and argue that these media are costly and do not reach large segments of the community.::_ yOh-ԍxId.:  S-  x!34. We invite comment on these competing positions with respect to the newspaper cross xownership restriction. We specifically ask commenters to address whether the rule should be retained, modified or eliminated.  S-  S-  { x"35. Competitive Effects on the Market for Delivered Programming. In the TV Ownership Further  S- xyNotice we tentatively considered that delivered video programming was a sufficiently distinct product so  xas to represent a different product market relative to radio stations and newspapers for competitive  S6- xanalysis purposes.h;6X_ yO. -ԍxTV Ownership Further Notice, supra at 3536.h Since newspapers do not operate in the market for delivered video programming,  xallowing crossownership between television and newspapers in a local market would not appear to harm  x.competition in the market for delivered video programming. Similarly, since newspapers do not operate  x[in the market for delivered audio programming, allowing crossownership between radio and newspapers  xin a local market would not appear to harm competition in the market for delivered audio programming. We invite comment on these views.  S -  x#36. Competitive Effects on the Market for Advertising. In the TV Ownership Further Notice we  xtentatively considered that the local advertising market includes video advertising (broadcast and cable),  Sl- xradio advertising and newspaper advertising.<l_ yO-  ԍxAllowing such joint ownership should have no effect on competition in the national advertising market because of differences in the geographic dimensions of this market. Total local advertising revenue for radio, television,  xLnewspaper, and cable was $68 billion in 1996. Local radio accounted for $12 billion (17.2 percent of the  xktotal), television accounted for $21 billion (30.3 percent), newspapers accounted for $34 billion (49.7  S- xpercent), and cable accounted for $2 billion (2.9 percent).=@_ yO-  Mԍx"Estimated Annual U.S. Advertising Expenditures 1990 1996," Prepared for Advertising Age by Robert J. Coen, McCannErickson. In contrast to the effect on the markets for  x.delivered programming, permitting the owner of a broadcast TV or radio station to own a newspaper, or  xvice versa, could give the company the market power to raise local radio, television, and/or newspaper  x0advertising rates, depending on the market share of the combined entity. We invite comment and  xevidence on this issue, and on the levels of local advertising share that might give rise to competitive  x]concern. Commenters may also wish to comment on NAA's views concerning competition in the  xadvertising market. While newspaper local advertising revenue may be as large as combined television  xand radio local advertising revenues, NAA argues that it includes newspaper classified advertisements, a market in which broadcast stations do not compete with newspapers.  S-  ?x$37. Competitive Effects on the Program Production Market. Newspapers, being a print medium,  xare not a participant in the video and audio program production markets. Thus, relaxing this rule would not appear to harm competition in these supply markets. We invite comment on this view.  S -  x%38. Other Economic Effects. Broadcaster and newspaper interests have long made the argument  xjthat the quality of news and public affairs programming to the public, a core concern of the Commission,  x could be enhanced if broadcasters could share in the expertise of a newspaper's operations. We seek  xcomment on this issue. Could the same beneficial results be achieved through nonattributable joint"r =,l(l(,,!"  xventures? Studies documenting and comparing the news and public affairs programming of existing  xnewspaper/broadcast combinations with the news and public affairs programming of broadcast facilities that are not owned by a newspaper in the same geographic market would be particularly informative.   x&39. Similar claims have been made with respect to efficiencies realized as a result of the  xcombination's advertising sales force. While any realized reduction in expenses could make the joint  xenterprise more economically viable than the separate operations were before the combination took place,  xwe are most interested in whether such efficiencies would produce benefits for broadcast audiences and advertisers. We seek comment on this view.  S-  !x'40. Effects on Diversity. The newspaper/broadcast crossownership rule is intended to promote  x/media diversity on the local level. The maintenance of such diversity has been a central Commission  xMobjective since its establishment. However, there have been changes since the rule was adopted. For  xjexample, the Commission now allows some crossownership between television and radio stations in the  xsame local market and Congress has directed us to relax our local radio ownership limitations. In  xaddition, there has been an increase in the number of radio and TV stations and local newspapers. We  xmust examine the rule in this context, but with a full recognition of the importance of diversity in local  xmarkets. Clearly, combined operations reduce the number of separately owned outlets. We seek comment  Sk- xon the impact of this reduction on the public interest. We also seek comment on whether and to what  x=extent, newspapers and broadcast stations under common ownership express contrasting points of view or cover each other in a critical manner.  S-  x(41. In this regard, we point out that television, newspapers, and radio continue to be America's  Sl- xmajor source of news.>l_ yO-ԍxAmerica's Watching: Public Attitudes Toward Television 1997, Roper Starch Worldwide Inc. The Roper survey found that more than twothirds of Americans usually get their  S9- xnews from television, and 37 percent from newspapers.n?9X_ yO1-ԍxRespondents were permitted to name more than one news source.n The survey indicated that Americans also rely  x.on radio as a news source, but to a lesser extent than television and newspapers. The survey also found  S- xthat 69 percent Americans trust television, even more so than newspapers, as their source of news. We  xconsequently wish to proceed cautiously in this area and seek comment on how the public's reliance on these media for news would be affected if we were to relax this rule.  S-  Ax)42. The combination of a large daily newspaper and a large broadcast station could have a  xsignificant impact on diversity. Nevertheless, most, if not all, television markets have more than one daily  S- xjnewspaper and these vary greatly in size.@_ yO)-  .ԍxDMA Test Market Profiles: Media/Marketing Information by Designated Market Areas (DMA) 1995, A.C. Nielsen Company. While the leading daily newspaper in a television market can  xhave more than a 40 percent circulation, most have less than a five percent circulation. We seek comment  x.on whether the impact on diversity depends on the relative size of the newspaper and broadcast facility  xNinvolved in a potential merger. Commenters should also address NAA's argument that the gain in  xdiversity that animated the newspaper/broadcast rule has been achieved. Are, as NAA argues, various pay  xjvideo delivery services and other informational media, together with an increase in broadcast stations and  xweekly newspapers, sufficient to assure diversity in the absence of the rule? Or, as argued by opponents  xof relaxation of the rule, are such other informational media too limited in availability or use, or do such  xmedia provide insufficient information on issues of local concern to offset the loss of diversity on the local  x.level that would accompany elimination or relaxation of the newspaper/broadcast crossownership rule? " @@,l(l(,,6$"  x.We also seek comment on how diversity is served in suburban markets where the appropriate outlets to  xbe examined may include metropolitan television and radio stations and community or suburban newspapers rather than newspapers in the major city.  S4-  x*43. Cable/Television Crossownership Rule. Section 76.501(a) of the Commission's Rules  xeffectively prohibits common ownership of a broadcast television station and cable system in the same  S-local community.AX_ yO6-  ԍxThe rule prohibits a cable operator from carrying any broadcast television station if it directly or indirectly  xowns, operates, controls, or has an interest in a television broadcast station whose predicted Grade B signal contour overlaps any part of the area within which its cable system is serving subscribers.  The Telecom Act eliminated a similar statutory prohibition.aB_ yOV -ԍxSee Subsection 202(i) of the Telecom Act. a   x+44. The rule was adopted in 1970 in order to further the Commission's policy of promoting  S5- xdiversity in local mass communications media.C 5x_ yOM-  ԍxAmendment of Part 74, Subpart K, of the Commission's Rules and Regulations Relative to Community  xAntenna Television Systems; and Inquiry Into the Development of Communications Technology and Services to  yO- x-Formulate Regulatory Policy and Rulemaking and/or Legislative Proposals, Second Report and Order, in Docket No. 18397, 23 F.C.C. 2d 816, 820 (1970).  It was adopted over the objections of parties including  xthe National Cable Television Association ("NCTA") and the National Association of Broadcasters  x("NAB") the NCTA on the ground that the Commission lacked the authority to do so and should leave  x.monopoly considerations to the Federal Trade Commission and the Department of Justice; the NAB on  Si - xthe ground that any resultant contribution to diversification would be de minimis and at the expense of  S7 - xpublic service programming on cable which broadcasters are best qualified to originate.BD7 ` _ yO7-ԍxId. at 818.B However, the  xDepartment of Justice stressed that the rule was "needed to insure that healthy and vigorous competition  S - xoccurs in markets where entry is limited and the competitive alternatives are necessarily few in number."BE _ yOa-ԍxId. at 819.B  x\In adopting the rule, the Commission made clear that it was avoiding any ban on joint ownership of a  xtelevision broadcast station and cable system not located in the same area. "It is not our desire to keep  xtelevision broadcasters out of the CATV industry, but to avoid overconcentrations of media control ...  xwe should have no objection to exchange of CATV systems among broadcasters which would maintain  S-their involvement in the CATV industry while eliminating local crossownerships."BF _ yO-ԍxId. at 821.B  Sl-  #x,45. This is the first time since adopting the cable/television crossownership rule that the  S9- x>Commission has reviewed the rule. Indeed, since 1984, the rule was required by statute.G9_ yO"-  >ԍxThe Cable Communications Policy Act of 1984 added Section 613 of the Communications Act of 1934,  xas amended (47 U.S.C.  533). Section 613(a)(1) of the Act provided that "It shall be unlawful for any person to  xybe a cable operator if such person, directly or through 1 or more affiliates, owns or controls, the licensee of a  x;television broadcast station and the predicted grade B contour of such station covers any portion of the community served by such operator's cable system." That provision was eliminated by Section 202(i) of the Telecom Act. When the  xTelecom Act eliminated the statutory provision, the Conference Report clarified that repeal of the  x prohibition should not prejudge the outcome of any review by the Commission of its rules regarding"G,l(l(,,4"  S- xcable/broadcast crossownership.jH_ yOh-ԍxHouse Rep. No. 458, 104th Cong., 2d Sess. at 164. j The Telecom Act also eliminated our rule prohibiting broadcast  S- xytelevision networks from owning or controlling cable systems.`IX_ yO-ԍxSee Subsection 202(f) of the Telecom Act.` While broadcast television networks are  xnow statutorily permitted to buy cable systems, they are still generally precluded from doing so on any  xsignificant basis by the cable/broadcast crossownership rule, because the networks are also broadcast television licensees. We seek comment on whether this rule should be retained, modified or eliminated.  S-  x-46. Effects on the Market for Delivered Programming. Television stations compete in the market  xfor delivered video programming with cable system operators, wireless cable operators and possibly with  Si- xDBS operators serving their "local" market. We note that in its Fourth Annual Report on the status of  xcompetition in the market for the delivery of multichannel video programming, the Commission stated  xthat "local markets for the delivery of video programming generally remain highly concentrated and  xNcontinue to be characterized by some barriers to entry and expansion by potential competitors to  S - xincumbent cable systems."J _ yO%-  ԍxFourth Annual Report, supra at para. 11. Section 628(g) of the Communications Act of 1934, as amended,  x;requires the Commission to report annually to Congress on the status of competition in the market for the delivery  x;of video programming. Congress imposed this annual reporting requirement as one means of obtaining information  xon the competitive status of markets for the delivery of multichannel video programming delivery that would aid  x-both Congress and the Commission in determining when there was competition sufficient to reduce or eliminate many of the regulatory restraints imposed on the cable industry.  While the ability of the broadcast spectrum to compete as a transmission  xmedium with cable is effectively limited by the amount of broadcast spectrum and channels that are  S7 - x=assigned to television markets, the Report notes that DTV has the potential to allow the broadcasters to  x!become more effective competitors with cable companies in the multichannel video programming  S -distribution market.eK ` _ yO-ԍxFourth Annual Report, supra at para. 95.e  Sk-  x.47. We seek comment on the relevance of our conclusions in the Fourth Annual Report on our  xconsideration of competitors to broadcast television. We seek comment on whether these changed market  xcircumstances render our rule unnecessary. Also, we seek comment on the possible effects that repeal  xmor relaxation of the cable/television crossownership rule may have on the market for delivered  xyprogramming in particular. Would common ownership of a cable system and a television station increase  xor diminish the program choices, or the preferred programs, available to audiences? Would repeal or  x[relaxation raise competition concerns in this market? Could relaxation of the rule result in public interest  xbenefits? Could the same beneficial results be achieved through nonattributable joint ventures? Should a distinction be made in judging the effect of this rule on local versus national programming?  Sm-  x/48. Effects on the Market for Advertising. Allowing joint ownership of a television station and  xa cable system in a local market might give the joint owner the economic power to raise its advertising  S- xrates within the local service area if, by virtue of the combination, the local market became concentrated.L _ yO$-  ԍxAllowing such joint ownership should have no effect on competition in the national advertising market because of differences in the geographic dimensions of this market.  S- xkWe stated in the TV Ownership Further Notice that we tentatively consider that the local advertising  x>market includes video advertising (broadcast and cable), radio advertising and newspaper advertising. "H L,l(l(,,k"  x/Evidence on whether significant market power in the local advertising market already exists is mixed.  x?As we stated earlier, total local advertising for these media was $68.5 billion in 1996. Local cable  xzadvertising revenues were small ($2.0 billion, 2.9 percent of total local advertising) when compared to  xlocal commercial broadcast television station advertising revenues ($20.7 billion, 30.3 percent of total local  S4- xjadvertising), but they are increasing in size and importance.}MX4_ yO-  kԍx"Estimated Annual U.S. Advertising expenditures 19901996," Prepared for Advertising Age by Robert J.  yOd- xCoen, McCannErickson. See also Bernstein Research, Network Television Primer, February 1998 at 6 (showing advertising growth rates for cable networks and television).} Radio local advertising revenues accounted  xfor $11.7 billion (17.2 percent of total local advertising) and newspaper accounted for $34 billion (49.7  x=percent of total local advertising). Prior studies have found mixed evidence regarding the impact of cable  S- xon broadcast TV station advertising revenues.hN_ yO# -ԍxTV Ownership Further Notice, supra at 3571.h Thus, at this time, it is not clear whether cable system  Sh-operators offer effective competition to broadcast station operators in providing local advertising.:Ohx_ yO -ԍxId.:  S-  x049. When considering advertising substitutes, we recognize that while many firms use a mix of  xvideo, audio, print, and other media to advertise their products and services, some firms may rely on video  xadvertising almost exclusively and are, therefore, most affected by any market power that might be created  xby a modification to this rule. We have previously noted that it is not clear how substitutable radio and  S6 - x.newspaper local advertising is for broadcast television local advertising.;P6 _ yO-ԍxId. ; We seek information and data  xabout the appropriate scope of the product and geographic advertising market within which television  xstations and cable systems compete. Statistical evidence supporting factbased analysis on the substitutability of these media in the local advertising market will especially be welcome.  S7-  x150. Effects on the Program Production Markets. We specifically seek comment on whether the  xcable/broadcast television rule is no longer necessary in light of the current state of the program  xZproduction market. Television networks, broadcast television stations and cable systems purchase or barter  xfor video programming in a national market in the sense that producers of video programming typically  x/create product which is marketed to be delivered in more than one local market. However, broadcast  xtelevision stations and cable systems also obtain video programming which is marketed to be delivered  xin local markets only. The program market could be affected if Commission modification or elimination  xof the cable/television crossownership rule permitted a cable/television combination to exercise market  xpower in the purchase of video programming for delivery in the local market. Suppliers of video  x\programming could be forced to sell their product at below competitive market prices in order to gain  xaccess to a local market controlled by one or a few local group owners. We seek comment on whether  x]cable/broadcast television combinations could exercise monopsony power i.e., the ability of the  xcable/television combination to artificially restrict the price paid for programming. We solicit evidence  xon the potential market power in the program production market if we were to eliminate or relax the  xcable/television crossownership rule. Specifically, we seek comment on whether other broadcast stations  x0and alternative providers of delivered video programming (e.g., MMDS and DBS) may mitigate a  x\cable/television combination's potential for monopsony power by providing program producers with  xadditional local outlets for their product. We ask commenters to address whether our analysis of this issue  xis affected by whether the programming in question is networkprovided programming, syndicated  xzprogramming sold on a national basis, or programming produced for particular local markets. We also"oP,l(l(,,!"  xseek comment on the potential for a cable/television combination to deny alternative providers of delivered  xvideo programming access to the programming of the television station involved in the cable/television  x=combination. On a related matter, we seek comment on whether our channel positioning and mustcarry  xrules provide sufficient protection to ensure that if a cable company owns a local television station, the cable company could not discriminate in favor of its owned television station.  S-  @x251. Other Economic Effects. Allowing cable/television crossownership within a local market  xmay permit an entity to realize economies of scale, reducing the costs of operations. Joint ownership may  xypermit costsharing in administrative and overhead expenses, sharing of personnel, joint advertising sales,  xand the pooling of resources for local program production (such as news and public affairs programming).  xThe cost savings from these economies could then be used to provide better programming to the public,  xbetter coverage of local issues and possibly lower the cost of advertising and/or increase the quality of  xservice available to advertisers. We seek evidence from commenters of the existence and magnitude of  xsuch economies and whether they can be reached through alternatives to common ownership, e.g., joint  xventures. In addition, we ask commenters to describe how likely such economies are to be passed on to audiences and advertisers.  S -  x352. Effects on Diversity. Our concern with diversity is most acute with respect to local ownership  x.issues. Both television and competing video outlets are viewed at the local level. While the existing rule  x{may foster diversity by promoting a larger number of independent video programming outlets in a  xcommunity, Section 202(h) directs us to solicit comments on whether the rule is no longer necessary in  xthe public interest. We ask commenters to address the impact on diversity if we were to modify or  xeliminate the cable/television crossownership rule. For example, in recent years, the number of outlets  Sm- xproviding video programming to consumers at the local level has increased.Q m_ yO-  ԍxThe number of television broadcast stations reached 1561 in 1997. In addition, DBS service is available  xnationwide and the proportion of television homes passed by cable reached 97.1 percent in June 1997. In addition,  yOe- x-252 wireless cable systems are in operation, mainly in urban areas. Fourth Annual Report, supra at para. 11 and 14. We seek comment on the  ximpact of the availability or use of such outlets on our assessment of the continuing need for this rule.  xWould any and all cable/television combinations lead to greater harm to diversity than other ownership  x=combinations that Congress or the Commission permit? Since cable and broadcast television may be the  xclosest substitutes in the video marketplace, should the Commission be especially vigilant in promoting diversity in the context of this rule?  S-  x453. Experimental Broadcast Stations. Subpart A of Part 74 of the Commission's RulesTR_ yOX-ԍx47 C.F.R.  74.101 74.184.T provides  xfor the licensing of experimental broadcast stations. These are stations "licensed for experimental or  xdevelopmental transmissions of radio telephony, television, facsimile, or other types of telecommunication  So- xservices intended for reception and use by the general public."GSo@_ yOO"-ԍx47 C.F.R.  74.101.G Licenses for such stations are issued in  xorder to allow them to carry on research and experimentation for the development of new broadcast  xtechnology, equipment, systems, or services that cannot be accomplished using a licensed broadcast  S- x=station.GT_ yOF&-ԍx47 C.F.R.  74.102.G A multiple ownership rule pertaining to experimental broadcast stations prohibits any person  x(or persons under common control) from controlling directly or indirectly two or more experimental"` T,l(l(,, "  x[broadcast stations unless it can be shown that the research program requires the licensing of two or more  S-separate stations.GU_ yO5-ԍx47 C.F.R.  74.134.G  Sg-  x554. Because this is an ownership rule pertaining to a type of broadcast station, we believe that  xSection 202(h) of the Telecom Act requires the Commission to review the rule as part of its biennial  xbroadcast ownership review. However, experimental broadcast stations generally are prohibited from  S- xproviding regular program service.GVX_ yO-ԍx47 C.F.R.  74.182.G Accordingly, it does not appear that they significantly participate  xLin competitive or diversity markets. Nevertheless, we seek comment on whether this rule remains in the public interest.  S-IV. Waivers  S -  x655. As we begin this first biennial review of our broadcast ownership rules, we believe it is  ximportant to review and restate our approach to granting conditional waivers of broadcast ownership rules  xwhich are under active consideration by the Commission in a rulemaking or inquiry proceeding.  x[Generally, we have not granted conditional waivers of a broadcast ownership rule simply on the grounds  xthat the rule was the subject of an ongoing rulemaking or inquiry proceeding, believing that such a blanket  xlapproach would make our enforcement processes unworkable and would subject our regulatees to  xundesirable levels of uncertainty. Perhaps more importantly, such an approach would necessarily assume  x[that compliance with the subject rule during the pendency of its review was not in the public interest, an  xassumption which would ordinarily lack a substantial record basis at the notice of inquiry or notice of  x!proposed rulemaking stage of a proceeding. Nonetheless, there are limited areas of our broadcast ownership waiver practice where we have consciously departed from this general approach.  S8-  x756. For example, in certain cases in recent years the Commission has granted interim waivers or  x.extensions where a pending proceeding is examining the rule in question, the Commission concludes that  xthe application before it falls within the scope of the proposals in the proceeding, and a grant of an interim  xwaiver would be consistent with the Commission's goals of competition and diversity. This is most likely  xto occur where protracted rulemaking proceedings are involved and where a substantial record exists on  xLwhich to base a preliminary inclination to relax or eliminate a rule. An example of this situation involves  xthe TV duopoly rule geographic market standard currently under review in our local ownership  S-rulemaking.OWX_ yO[-  |ԍxSee Second Further Notice in MM Docket No. 91221 & 877, 11 FCC Rcd 21655, 21681 (1996)  x(Commission states that granting waivers satisfying the proposed standard would not adversely affect its competition and diversity goals in the interim).O  Sm-  x857. In contrast to those situations, in our first biennial review of our broadcast ownership rules,  xwe do not believe it appropriate to provide for conditional waiver of any of the ownership rules under  xreview in this proceeding solely because of the pendency of this review. Here, for example, we do not  xhave a protracted proceeding or substantial record on any of these rules that leads us to initial conclusions  xabout any specific proposals to modify or eliminate any of the rules at issue here. In addition, we do not  xhave substantial waiver experience suggesting an appropriate course of action regarding the rules under  xreview herein. We retain, of course, both the right and the obligation to review any request for waiver  xof our rules based upon the specific facts in a particular case. What is important is whether the public" W,l(l(,,U#"  S-interest would be served by a grant of the waiver.X_ yOh-ԍ xSee WAIT Radio v. FCC, 418 F.2d 1153, 1157 (D.C. Cir. 1969).  S-  x958. We are aware that in at least one case a conditional waiver of the radionewspaper cross Sg- x ownership rule has been granted based upon the pendency of a proceeding.YgX_ yO_-  mԍxLetter to Joel Rosenbloom from Chief, Mass Media Bureau concerning ABC/Capital CitiesDisney Company merger, dated October 24, 1996, p. 2. To the extent that this  xdecision suggests that the pendency of a proceeding by itself would be sufficient basis for a waiver, it is  xjsuperseded, although as a matter of equity we do not alter its governance of the situation to which it was  S-addressed.3Z _ yO -  ԍxWe note that the staff, on March 6, 1998, granted an extension of the Tribune Company's temporary waiver  yO - xto commonly own a television station and newspaper in the Miami, Florida market.  Stockholders of Renaissance  yO - x;Communications Corporation, DA 98456 (MMB March 6, 1998). That action was based on special circumstances and does not, in our view, stand in contradiction to the conditional waiver standard we articulate here.3  Sh-V. Conclusion  S-  x:59. By this Notice, we solicit comments on these and any other issues pertinent to our review  x.of our broadcast ownership and other rules. Commenters should frame their discussion and analysis in a  xmanner consistent with our framework for addressing our historic competition and diversity concerns.  xWe ask commenters to provide data and evidence to support their positions so as to facilitate objective analysis of the issues raised.  S -ADMINISTRATIVE MATTERS  Sj-  ?x;60. Pursuant to applicable procedures set forth in Sections 1.415 and 1.419 of the Commission's  S7- xRules, 47 C.F.R. Sections 1.415 and 1.419, interested parties may file comments on or before May 22,  S- xj1998, and reply comments on or before June 22, 1998. To file formally in this proceeding, you must file  xan original plus six copies of all comments, reply comments, and supporting comments. If you want each  xCommissioner to receive a personal copy of your comments, you must file an original plus eleven copies.  xMYou should send comments and reply comments to Office of the Secretary, Federal Communications  xCommission, 1919 M Street, N.W., Washington, D.C. 20554. Comments and reply comments will be  xavailable for public inspection during regular business hours in the FCC Reference Center (Room 239),  xM1919 M Street, N.W., Washington, D.C. 20554. Copies may be obtained through the Commission's  xcontract copier, International Transcription Service, Inc., 1231 20th Street, N.W., Washington, DC 20036. ITS can also be reached at (202)8573800 or by facsimile at (202)8573805.  S-  x<61. Subject to the provisions of 47 C.F.R.  1.1203 concerning "Sunshine Period" prohibitions,  S- xthis proceeding is exempt from ex parte restraints and disclosure requirements pursuant to 47 C.F.R.  1.1204(b)(1).  S:-  x=62. Accordingly, IT IS ORDERED that pursuant to the authority contained in Sections 4, 11, 303,  xand 403 of the Communications Act of 1934, as amended, 47 U.S.C. Sections 154, 161, 303, and 403,  S-and Section 202(h) of the Telecommunications Act of 1996, this Notice of Inquiry IS ADOPTED.   x>63. Additional Information: For additional information regarding this proceeding, contact Roger"nZ,l(l(,,!" Holberg [(202)4182130] or Dan Bring [(202)4182170], Mass Media Bureau. x` ` hhFEDERAL COMMUNICATIONS COMMISSION  S-x` `  hhMagalie Roman Salaspp  xx x` `  hhSecretary "5Z,l(l(,,"   S- SEPARATE STATEMENT OF CHAIRMAN WILLIAM E. KENNARD T  Sg-TPIn the Matter of 1998 Biennial Regulatory Review Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted  Q-~ Pursuant to Section 202 of the Telecommunications Act of 1996ă  xToday the Commission launched one of the keystone proceedings of the Biennial Review, the review of  xthe Commission's broadcast ownership rules. In conducting this review, we will be guided first and  xLforemost by the Biennial Review provisions of the 1996 Act, which require that the Commission review  xits broadcast ownership rules and repeal or modify any regulation that it determines is no longer in the public interest.  xIn assessing the public interest, we must stay focused on the two key aspects of the public interest:  xpromoting competition and promoting diversity. Not only are both of these goals rooted in nearly half  xa century of communications law and policy but these goals remain relevant because broadcasters still serve as the most important source of news and information for Americans.  S8- xBoth competition and diversity are all the more important today because we recently have experienced  xthe most dramatic increase in consolidation in the broadcast industry in our history. We need to  xMunderstand how this consolidation has affected our competition and diversity goals. We also need to  xNunderstand the impact of consolidation on small businesses, including small businesses owned by  xyminorities and women. Broadcast remains the way that most Americans get vital information about their  xlocal communities. So retaining diversity of ownership of broadcast outlets is, in my view, vital to the democratic process.  x.The proceeding we launch today will begin a very important dialogue about the competitive structure of  xthe broadcast industry today. I encourage the broadcast industry and the public to participate fully in this  xdialogue in order to inform our decisions regarding the competitive structure of the industry. I look  xkforward to working with the broadcast industry, the public, and my colleagues as we, together, take a critical look at our ownership rules. Q m$g XXSEPARATE STATEMENT OF FCC CHAIRMAN WILLIAM E. KENNARD R REGARDING LAUNCH OF BIENNIAL REVIEW  OF BROADCAST OWNERSHIP RULES TP x` ` Today the Commission launched one of the keystone proceedings of the Biennial Review, the review of the Commission's broadcast ownership rules. In conducting this review, we will be guided first and foremost by the Biennial Review provisions of the 1996 Act, which require that the Commission review its broadcast ownership rules and repeal or modify any regulation that it determines is no longer in the public interest.  Sp"-x` ` In assessing the public interest, we must stay focused on the two key aspects of the public interest: promoting competition and promoting diversity. Not only are both of these goals  S $-rooted in nearly half a century of communications law and policy but these goals remain relevant because broadcasters still serve as the most important source of news and information for Americans.  S%- x` ` Both competition and diversity are all the more important today because we recently  S>'-have experienced the most dramatic increase in consolidation in the broadcast industry in our history. We need to understand how this consolidation has affected our competition and diversity goals. We also need to understand the impact of consolidation on small businesses, including small businesses owned by minorities and women. Broadcast remains the way that most Americans get vital information about their local communities. So retaining diversity of ownership of broadcast outlets is,  S?+-in my view, vital to the democratic process. "?+Z,,,v/"Ԍx` ` The proceeding we launch today will begin a very important dialogue about the  S-competitive structure of the broadcast industry today. I encourage the broadcast industry and the public to participate fully in this dialogue in order to inform our decisions regarding the competitive  Sg-structure of the industry. I look forward to working with the broadcast industry, the public, and my colleagues as we, together, take a critical look at our ownership rules.  S- Q  T T  S-T"Z,,," T   T T  Sg-T Separate Statement Nof Commissioner Susan Ness  S-T P  Q5-Re:xReview of the Commission's Broadcast Ownership Rules and Other Rules Adopted  0(#(#X S-Pursuant to Section 202 of the Telecommunications Act of 1996 Today, we launch our first biennial review of the broadcast ownership rules pursuant to the Telecommunications Act of 1996. Just as it is a good idea to clean out the attic or basement periodically, I believe the Commission should and will take a hard look at its regulations and follow the statutory directive to "repeal or modify any regulation it determines to be no longer necessary in the public interest" (Sec. 202 (h) of the Telecommunications Act). The Commission has long held the view that the public interest is served by the twin goals of promoting competition and diversity of voices. I subscribe to that view. Some argue that media consolidation does not have an adverse effect on diversity. I disagree. What's needed are independently owned outlets not a variety of content controlled by one owner. In 1945, the Supreme Court counselled that the First Amendment "rests on the assumption that the widest  S9-possible dissemination of information from diverse and antagonistic sources is essential to the welfare  S-of the public..." (Associated Press v. United States, 326 U.S. 1, 20 (1945)(emphasis added). The wisdom of the Court's opinion is as valid today as it was when it was penned in 1945. "Antagonistic" sources can only be truly antagonistic (in the best sense of the word) if they are separately owned and genuinely compete in the marketplace of ideas. We should not confuse "multiple" choices with "independent" choices. For example, we now have "multiple" sources of news and information offered by NBC the national broadcast network, CNBC, and MSNBC which is all to the good. However, by contrast, "independent" choices are available to viewers by the emergence of competitors to CNN MSNBC and Fox News. As we look at the specific rules under review in this proceeding, I urge commenters to help us assess the cumulative effect of the sweeping changes in radio and television since the Congress relaxed the national ownership rules and the local radio ownership rules.  S=- Local Radio Ownership:  I note the Commission's finding that control by the top four radio group  S -owners over total radio advertising dollars in markets across the country has gone from 80 percent in  S -1996 to a whopping 90 percent in 1997. In just one year, the other stations in those markets and  S!-that could be dozens of stations have seen their combined market share cut in half! This stark fact must have consequences that need to be spelled out in this proceeding. How are smaller stations able to compete? How are they able to take a risk on new services or talent? How are they able to continue providing community and charitable support, which rarely contributes to the bottom line? Are our ownership rules inadvertently causing the financial suffocation of small entrepreneurial broadcasters? What is the impact on the number of minority and femaleowned outlets?  S(- Video Programming:  I want to explore the relationship between ownership of local stations and programming. Does structural independence among local stations contribute to a competitive and diverse marketplace for programming? What impact, if any, does the everincreasing web of relationships between program suppliers and station owners have on the independence of news and"@+Z,,,v/" information as well as on entertainment programming?  S- NewspaperBroadcast CrossOwnership: Our long standing ban on common ownership of daily newspapers and local broadcast stations is due for review. As we think about changes in this rule, we should consider whether we take for granted the importance of critical reporting between and about newspapers and television/radio. We assume our newspapers will take a TV or radio station to task on errors, omissions, and editorial points of view and generally they do. Likewise, TV and radio stations challenge local newspapers every day. This healthy antagonism aids viewers and readers as they become informed and then form their opinions. The critical question we need to ask is whether such a dynamic will continue to exist if common ownership of these traditional adversaries is permitted. As our country has changed and our population has become more suburban over the last fifty years, new questions arise in our diversity analysis. As city populations have migrated to metropolitan and suburban areas and even "exurban" areas, we may need to consider how to measure diversity within different parts of large markets. Many communities situated in the shadow of the major metropolitan city are served primarily by the large TV and radio stations in the major city, along with a community or suburban newspaper. In my experience, only a handful of these media outlets truly focus on issues of special concern to these outlying communities. Where proposed combinations involve stations or papers serving the suburban community, in addition to evaluating diversity choices for the urban population, we should also focus on the impact of the acquisition on suburban communities.  R- Conclusion At the heart of my deep and abiding concern about diversity of ownership of America's media is my view that such diversity is an "insurance policy for democracy." The free market of ideas and information is essential to selfgovernance. We must not be lulled into a sense of complacency by having more channels, more formats, and the Internet. Is it in the public interest if the overwhelming number of significant outlets are owned by a  S-small handful of players? We need to insure that there are enough truly independent and antagonistic providers of information at each level of content development and distribution. "Z,**"   x` `  hh@hpp  S- xZ` `  hh@hpp    Sg-  SEPARATE STATEMENT OF COMM. HAROLD W. FURCHTGOTTROTH In the Matter of 1998 Biennial Regulatory Review: Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Communications Act  Sh- xI am pleased to support this Notice of Proposed Rulemaking. It puts us on the right track toward meeting our obligation under section 202(h) to assess the continued necessity of our ownership rules in light of competitive developments since their adoption and, if they are indeed unnecessary, to eliminate or modify them.  S - xAs an initial matter, I express my agreement with the separate statement of my colleague Commissioner Powell. Like him, and for the reasons he gives, I believe that a reevaluation of our traditional regulatory goal of "diversity" is a critical part of this biennial review. As he observes, this sometimes amorphouslydefined goal and the assumptions upon which it rests must be clearly articulated and supported by facts, not conjecture, in order to withstand judicial review. Below, I set forth the additional questions that I see as relevant to our section 202(h) inquiry.  S- First Amendment As An Affirmative Basis for Ownership Rules x I would like to make clear my belief that the First Amendment is no source of affirmative authority to regulate mass media ownership, as parts of this item might be construed to suggest. For the time being, I would simply note that a quick refresher on the text of the First Amendment should be enough to establish that proposition: "Congress shall make no law . . . abridging the freedom of speech," U.S. Const., Amdt. 1. Phrased entirely in the negative, this provision is by its terms a  S9-limitation on not an expansion of ĩ governmental power.  S- Analysis Under Section 202(h)  S- xAlthough today's item does not spell out what it means to assess whether a regulation is "necessary in the public interest as the result of competition," as the statute requires, it seems to me that in analyzing that issue it would be useful for commenting parties to consider: (i) the original purpose of the particular rule in question; (ii) the means by which the rule was meant to further that purpose; (iii) the state of competition in the relevant market at the time the rule was promulgated; (iv) the current state of competition as compared to that which existed at the time of the rule's adoption; (v) and, finally, how any changes in competitive market conditions between the time the rule was promulgated and the present might obviate, remedy, or otherwise eliminate the concerns that originally motivated the adoption of the rule. x Such considerations are directly related to the language of the statute, which clearly indicates that Congress wanted the Commission to consider the very real possibility that competitive forces have eliminated or decreased the need for ownership regulation and that our rules should keep pace, as near as possible, with the times.  Sq&- Spectrum Scarcity  S>'- xThe congressional goal embodied in section 202(h) of eliminating anachronistic regulation, described above, brings me to my next topic. Many, if not most, of the rules under review in this proceeding are based upon a theory well known to those in the communications world: the "spectrum  Sr*-scarcity" rationale.  I believe the Commission is obliged to review the factual underpinnings of this fiftyfive yearold rationale to see whether they hold true in today's day and age. I accordingly"@+,,,v/" encourage interested commenters to address this issue. xThe empirical basis of the "spectrum scarcity" argument has been roundly criticized by some of America's most distinguished jurists and commentators, even by former members of this  S4-Commission.n4< {O- x.ԍ#X\  P6G;/P#See e.g., Time Warner Entertainment Co. v. FCC, 105 F.3d 723, 724 n. 2 (D.C. Cir. 1997) (Williams, J.,  {Of- xZdissenting from denial of rehearing en banc) ("[P]artly the criticism of Red Lion rests on the growing number of  {O0- xbroadcast channels."); Action for Children's Television v. FCC, 58 F.3d 654, 675 (1995) (Edwards, C.J., dissenting)  x(spectrum scarcity is "indefensible notion" and "[t]oday . . . the nation enjoys a proliferation of broadcast stations,  xand should the country decide to increase the number of channels, it need only devote more resources toward the  {O - xdevelopment of the electromagnetic spectrum"); id. at 684 (Wald, J., dissenting) ("[T]echnical assumptions about  {OT - xxthe uniqueness of broadcast . . . have changed significantly in recent years."); Telecommunications Research and  {O - x-Action Center v. FCC, 801 F.2d 501, 508 n.4 (D.C.Cir. 1986) ("Broadcast frequencies are much less scarce now  {O - xthan when the scarcity rationale first arose in [1943]."), cert. denied, 482 U.S. 919 (1987); Glen O. Robinson, The  {O - xJElectronic First Amendment: An Essay for the New Age, Duke L. J. at 5 (forthcoming Spring 1998) ("By the 1980s  x. . . the emergence of a broadband media, primarily in the form of cable television, was supplanting traditional,  xsinglechannel broadcasting and with it the foundation on which the public interest obligations had been laid. If  xKit ever made sense to predicate regulation on the use of a scarce resource, the radio spectrum, it no longer did.");  {O- xLaurence H. Winer, Public Interest Obligations and First Principles at 5 (The Media Institute 1998) ("In a digital  xage offering a plethora of electronic media from broadcast to cable to satellite to microwave to the Internet, the mere  {Of- xmention of 'scarcity' seems oddly anachronistic."); Rodney M. Smolla, Free Air Time For Candidates and the First  {O0- xAmendment at 5 (The Media Institute 1998) ("Scarcity no longer exists. There are now many voices and they are  xall being heard, through broadcast stations, cable channels, satellite television, Internet resources such as the World  xJWide Web and email, videocassette recorders, compact disks, faxes through a booming, buzzing electronic bazaar  {O- xof wideopen and uninhibited free expression."); J. Gregory Sidak, Foreign Investment in American  {OT- xTelecommunications: Free Speech at 30304 (AEI 1997) ("On engineering grounds, the spectrumscarcity premise  {O- x. . . is untenable."); Lillian R. BeVier, Campaign Finance Reform Proposals: A First Amendment Analysis, CATO  yO- x<Policy Analysis, No. 282 at pp. 1, 13, 14 (September 4, 1997) ("There is no longer a factual foundation for the  x;argument that spectrum scarcity entitles the government, in the public interest, to control the content of broadcast  {Ox- xspeech."); Fowler & Brenner, A Marketplace Approach to Broadcast Regulation, 60 Tex. L. Rev. 207, 22126 (1982). To be sure, the Supreme Court has not overruled its decisions that rely upon the  S-spectrum scarcity rationale in affirming the constitutionality of FCC regulations, see, e.g., Red Lion,  S-395 U.S. 367 (1969); FCC v. League of Women Voters of Cal., 468 U.S. 364 (1984), and of course it goes without saying that it is not the job of this agency to make constitutional law or to question Supreme Court precedent. But the underlying premise of those judicial decisions is that, as a factual  S7-matter, communications outlets are sparse. The empirical validity of spectrum scarcity is something quite different than the constitutional jurisprudence based thereupon. x When it comes to empirical questions relating to an administrative agency's area of expertise,  Sk -courts have traditionally deferred to agency judgments on those matters. See Syracuse Peace Council  S9 -v. FCC, 867 F.2d 654, 660 (D.C. Cir. 1989). The flip side of that judicial deference, however, is the agency's continuing responsibility to reexamine its judgments as time goes by and circumstances change. As the United States Court of Appeals for the D.C. Circuit has explained: "The Commission's necessarily wide latitude to make policy based upon predictive judgments deriving from  Sn-its general expertise implies a correlative duty to evaluate its policies over time." Bechtel v. FCC, 957  S<-F.2d 873, (D.C. Cir. 1992) (citation omitted); see also Geller v. FCC, 610 F.2d 973 (D.C. Cir. 1979) ("Even a statute depending for its validity upon a premise extant at the time of enactment may become invalid if subsequently that predicate disappears. It can hardly be supposed that the vitality of conditions forging the vital link between Commission regulations and the public interest is any less  Sq-essential to their continuing operation."); National Ass'n of Regulatory Utility Com'rs v. FCC, 525 F.2d 630, 638 (1975) ("The [Federal Communications] Commission retains a duty of continual  S -supervision."), cert. denied, 425 U.S. 992. " ,**"ԌxNot only are we dutybound to reexamine the facts upon which we have in the past based our regulatory judgments about broadcasting, but the Supreme Court has clearly indicated that it might revisit its constitutional jurisprudence in this area if the FCC "signal[ed] . . . that technological developments have advanced so far that some revision of the system of broadcast regulation may be  S4-required." FCC v. League of Women Voters, 468 U.S. 364, 377 n.11 (1984); see also  S-Telecommunications Research and Action Center, 801 F.2d at 509 n.5 (explaining that, in League of  S-Women Voters, "the [Supreme] Court . . . suggested that the advent of cable and satellite technologies  S-may soon render the scarcity doctrine obsolete.").Z< yO- x[ԍ#X\  P6G;/P#Also, in its most recent statement regarding spectrum scarcity, the Supreme Court noted the "scarcity of  {O- xavailable frequencies [for the broadcast medium] at its inception," Reno v. American Civil Liberties Union, 117 S.Ct. 2329, 2342 (1997) (emphasis added), seeming to distinguish between past and present scarcity. The D.C. Circuit recently ventured to say that the  Sk-Court's "suggestion" in League of Women Voters "may impose an implicit obligation on the  S9-Commission to review the spectrum scarcity rationale." Tribune Co. v. FCC, 133 F.3d 61, 68 (1998).  S- x xThe biennial review required by 202(h) of the Communications Act provides the perfect  S -opportunity for us to carry out this duty. Indeed, as the Tribune court observed upon the heels of its comment about our "implicit obligation" to reconsider spectrum scarcity, Congress in section 202(h)  S< -"directed the FCC to review all of its media ownership rules." Id. at 69. To my mind, the factual validity of spectrum scarcity is a critical element of the analysis required by 202(h). By its plain terms, that section mandates that we ask whether changes in competition have obviated the "public interest" need for our regulations. One of the most fundamental ways in which the broadcast landscape may have changed is that, due to increased competition, there are significantly more outlets  S>-for communication than there once were.>< {O- x;ԍ#X\  P6G;/P#In the mid to late 1980s, the Commission undertook this very inquiry. See Inquiry Into Section 73.1910 of the  xCommission's Rules and Regulations Concerning Alternatives to the General Fairness Doctrine Obligations of  {OZ- xwBroadcast Licensees, 102 FCC 2d 145 (1985) ("1985 Fairness Report); In Re Complaint of Syracuse Peace Council,  xi2 FCC Rcd 5043 (1987). The Commission concluded that "our comprehensive study of the telecommunications  xmarket in the 1985 Fairness Report has convinced us that [the spectrum scarcity] rationale that supported the  {O- xdoctrine in years past is no longer sustainable in the vastly transformed, diverse market that exists today." Id. at  x<para. 64. These decisions have not been vacated or reversed, and they are still good administrative law. At the  xsame time, they are now over ten years old, and the communications industry has undergone even more change in  xthe interim. If these decisions do not already provide the basis for applying a higher level of scrutiny to broadcast  x;regulation, as might very well be, they are at least an excellent starting point for a reassessment of the current state of the communications market. x To be sure, a great deal of our existing regulatory scheme depends upon the validity of spectrum scarcity. That, however, is no reason not to undertake a thoughtful review of the matter. If the world around us has changed to such a degree that our past assumptions no longer make sense, then we must acknowledge that truth. We cannot stick our heads in the regulatory sands, hoping that no one will notice the eroded foundation of our rules.  Ss-  "@P ,**"   x` `  hh@hpp  S-T SEPARATE STATEMENT OF TPr COMMISSIONER MICHAEL POWELL TP  Q- Re:Xx 1998 Biennial Regulatory Review Review of the Commission's Broadcast Ownership Rules and other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, MM  Sh-Docket No. 9835(# xIn the 1996 Telecommunications Act, Congress directed the FCC to review all of our ownership rules every two years and repeal or modify any regulation that is "no longer in the public interest." I support this Notice of Inquiry initiating the review. It is indeed time to take a sober and realistic look at our broadcast ownership rules in light of the current competitive communications environment. xOwnership rules have a long history in telecommunications regulation. At various times, we have justified these rules out of concern over possible competitive harms that might befall viewers and listeners (monopoly prices and restricted output). More often, however, many of the rules we propose to reevaluate today are hinged on considerations we loosely call diversity. xIn mandating that we review these ownership rules every two years, Congress appeared primarily concerned that we adjust or eliminate these rules if, as is anticipated by the Telecommunications Act, sufficient robust competition develops. We have a duty to take a hard look at our ownership rules in light of the current state of competition and to ask and answer whether in light of significant changes in competitive conditions these rules continue to have vitality. In this regard, I endorse fully Commissioner FurchtgottRoth's clearly enumerated framework for considering these issues, as well as his call to address squarely the validity of spectrum scarcity rationales for our rules. xIn all likelihood, however, the pivotal issues in this proceeding are likely to revolve around diversity. While competitive concerns are traditionally evaluated using wellestablished analytical standards, diversity is a much more visceral matter bathed in difficult subjective judgments and debated in amorphous terms. It has always been difficult to articulate clearly the government's interest in "diversity," and it has become even more difficult to do so in light of current judicial precedents. Yet we must do so, if we are to affirm any of our ownership rules based on such an interest, and we must do so with adequate rigor and clarity in order for such rules to withstand judicial scrutiny. xWhat do we need to know in order to complete this difficult task? At various times there have been a number of distinct expressions of diversity, which serve as a useful beginning framework for evaluation:  S!-Xx(1) Diversity of ownership : What should this mean? Merely a variety of owners, regardless of ethnicity or gender? Adequate representation among owners of minorities and women? If so, how great should that representation be to meet the public interest standard? Is diversity of ownership a legitimate government interest   standing alone, or only in combination with other objectives, such as diversity of programming? (#  Sq&-Xx(2) Diversity of programming : What is the objective here? A variety of fare? Programming that is tailored to local communities? Programming that is targeted to particular minority or gender groups within a community? And, what is the relationship between ownership and programming, if any? (#  Sr*-Xx(3) Diversity of outlets : This can mean many different things as well. Do we wish to maximize the number of diverse outlet mediums (e.g., T.V., radio, newspapers, internet, etc.)? "?+,,,v/" Do we wish to promote multiple outlets of the same type, and if so for what purpose (ownership opportunity, diversity of programming and viewpoint)? How do we measure the adequate number of outlets under the public interest standard?(# xIn the end, we will have to evaluate each of these diversity objectives alone and in combination and consider carefully whether governmentimposed prophylactic ownership restrictions actually serve to advance any or all of these objectives, and if so, whether such restrictions are narrowly tailored to meet our objectives. We must be capable of explaining the link between ownership restrictions and our asserted diversity objectives. I urge commentators to provide comments with sufficient depth and sober analysis to allow us to do so. ",**"    `(#(#X  S4- SEPARATE STATEMENT OF COMMISSIONER GLORIA TRISTANI ă  Q- In the Matter of 1998 Biennial Review Review of the Commission's  Broadcast Ownership Rules and Other Rules Adopted Pursuant to  Qh-S Section 202 of the Telecommunications Act of 1996 TP x I welcome the opportunity to initiate this biennial review of our broadcast ownership rules. In addition to our statutory mandate to conduct such a review, I believe it is healthy to reexamine our rules periodically to ensure that they are still in the public interest. xThe Commission's mandate in this proceeding is to determine whether any of our broadcast ownership rules are no longer necessary in the public interest as a result of competition. I write separately to state my belief that our twin interests of competition and diversity must be analyzed separately and subject to different standards of proof. Competition focuses on issues of market power. Market power can be constrained by competition even where there are only a handful of competitors in a market, and even though such competition does not reach all segments of society. In the cable context, for example, competition is deemed "effective" (and hence rates are not regulated) if a cable operator faces at least one competitor that passes 50% of the homes in its service area and 15% of subscribers take service from such competitor(s). In this context, those residents who may not have a competitive choice can benefit from those that do. xDiversity, in my mind, is different. Diversity promotes democratic values by ensuring that people are exposed to a range of views on issues of public concern. Unlike our interest in competition, I believe that our interest in promoting a diversity of voices and viewpoints can be satisfied only through a large number of separatelyowned competitors in a market. Similarly, unlike our interest in competition, I do not believe that our interest in diversity can be satisfied if large segments of society do not have access to such diversity. When it comes to issues of selfgovernance, we cannot afford to become a nation of information haves and havenots. Thus, I would ask those commenters who believe that our interest in diversity has been satisfied to adduce evidence not only that diverse sources of comparable information exist, but also that all segments of society rich and poor, urban and rural, minority and nonminority, apartment dwellers and single family home owners have legal and practical access to such diversity and are actually making use of it. For instance, it could be stipulated that the Internet provides diverse sources of information. But if a large number of people do not have access to a computer, or if those who have a computer find that accessing these sources is too cumbersome or too expensive, I would find it difficult to conclude that the Internet has rendered unnecessary our interest in promoting broadcasting diversity. xI stress that I have not prejudged the outcome of this inquiry. I thought it appropriate, however, to apprise commenters of the general standard by which I will ultimately decide whether our broadcast ownership rules are no longer necessary.