Good afternoon. It's wonderful to be in the lovely seaside town of Monterey for the impressive 50th anniversary of the CBA. I'm tickled pink that the CBA invited me to be part of this celebration, because it gave me a great excuse to flee the heat, humidity and general hot air of Washington D.C. and relax in the cool fog of my home state.

As Eddie Fritts mentioned this morning, I am a "lame duck" Commissioner at present, one of three lame ducks in fact. But as Eddie will attest, my staff and I are still fully engaged on the issues, and we don't intend to let up until my successor actually comes through the FCC's door.

In retrospect, I've been terribly fortunate to be at the FCC during a historic time. I've helped make decisions involving the transition to Digital TV, the first ever PCS auctions, and the implementation of the Telecommunications Act of 1996. And I think I made a difference, which is a very rewarding feeling.

Today, I am going to update you on the FCC's Digital TV decisions and our proceedings on radio and television ownership. Then, I will sound an alarm about the unrelenting attacks on the First Amendment by many in government who think it's their business to decide your program content.

Digital Television

Before we go there, let's start with a topic I know is near and dear to your hearts -- digital television. While I wasn't around for the whole saga of DTV, I was lucky enough to be involved in the tail end of the proceeding. The long and winding road of making digital TV a reality was certainly a highlight of my tenure. It may well be the most significant docket I worked on, because it touches every American's life. Sure, 94% of Americans have telephones, but an impressive 98% own televisions. I guess that means we're a nation that would rather watch "Friends" than talk to friends!

When I first sat down and studied DTV, it became clear to me that digital is the technology of the future. Without it, I feared that your industry will not be able to keep up with your competitors. I came to believe that our world class system of free over-the-air television could become threatened, if broadcasters were to stay locked into outdated 1950s technology by government mandate.

Unfortunately, the path back to the future has been painfully slow. Some opposed a standard, others wanted the DTV spectrum auctioned, and many threw up roadblocks in the decision making process. But eventually, the sun, moon and the stars lined up, and we finally churned out a trilogy of DTV orders.

The first, adopted last December, was the DTV standards decision, which set the technical ground rules. Now, some argued loudly that it was "too regulatory" for the FCC to mandate a DTV technical standard. In the context of free TV, however, this argument made no sense to me. As I mentioned before, almost every American has a television. We rely heavily on TV for news, information and entertainment. By having a DTV standard, we can assure the public that the DTV sets they purchase will work, no matter where they live in the United States.

The naysayers also contended that the standard would stifle innovation. I disagreed. The DTV Standard that we adopted reflected an agreement between the computer and the broadcast industries. It permits enough flexibility to allow the inevitable convergence of computer and television technology.

The other two pieces in the DTV trilogy fell into place in April, when we adopted the DTV Allotments and Service Rules. The DTV Allotments decision identifies the 6 MHz of loaner spectrum that each broadcaster will use during the DTV transition period. The DTV Service Rules set up the regulations for the transition and the future.

I'm told we've received over 250 petitions for reconsideration of the DTV Allotment decision. Many of these petitions identify particular problems that may not have been evident to our staff when they were trying to devise a country-wide plan. In some instances, I fear, solutions may be difficult. I have faith in our talented FCC engineers, however. If there is a way to make this work, I know they will find it.

One piece of good news for those of you who operate near the Mexican border is that our coordination with Mexico is going well. We have a Memorandum of Understanding that calls on both countries to work jointly to assign a second channel to existing stations on both sides of the border. The staff tells me that they expect to firm up the allotments quickly.

I realize that the DTV transition is fraught with challenges on your part. In addition to allotment issues, there will be financial, tower siting and zoning challenges. This is why I insisted that the transition plan include a waiver process to account for these difficulties.

Now that you have convinced the Commission to make this switch, you need to convince the average American. When DTV made headlines, a whole lot of folks made clear to me that they were skeptical that the change to digital will be worth the cost of a new set. When these folks write to me, their letters invariably begin, "Dear Stupid."

I sincerely hope that you will join with me in assuring your viewers that the improvements will indeed be worth the cost. Of course, you and I know that the DTV improvements are more than just pretty pictures and improved sound quality. DTV ushers your industry into the Information Age. DTV gives you new flexibility to provide better service to consumers. For example, it will give you the option of sending multiple signals. You may also get a new revenue stream by providing supplemental services.

I hope that you will also think about ways to help your low income viewers make the digital leap -- after all, it is in your interest to maximize your audience. What I am suggesting is once you get down to 95% penetration of DTV sets, you should voluntarily sit down with the advertisers, the set manufacturers and your fellow broadcasters to think of creative ways to move these last hold outs to DTV.

With regard to the timing of this transition, let me warn you that something's afoot up on the Hill that might make it sooner than you think. The FCC anticipated a nine year transition, with status reviews every two years to ensure consumers really were making the switch. That led some on Capitol Hill to seek a firm deadline in the year 2006. The most recent reports I have seen indicate that a compromise is in the works. It would set the return date for the analog spectrum at 2006, if 85% of the households in a local market received the digital signal over the air or on cable. I suggest that you keep an eye on this issue.

There's one other aspect that has been controversial at the FCC. In the service rules, we specifically decided not to address the issue of public interest obligations in the digital age at this time. That was because some at the FCC wanted to take the opportunity of the change in technology to impose more specific and quantified public interest programming obligations on broadcasters. Others -- and I am in this camp -- oppose such an approach.

In my view, the flexible public interest standard applied for the past 60 plus years has served us well. I don't see a need to change. I believe that any consideration of changing the public interest standard should at least wait until broadcasters have converted to DTV and we have some practical experience with how the system works. It's simply premature, with DTV not yet a reality.

Broadcast Ownership

Onwards to radio and television ownership, a hot topic at the FCC. What's in the works is an examination by the FCC of our broadcast ownership rules to see what changes are needed. We hope to wrap it up this fall.

My own views on broadcast ownership harken back to my belief that the FCC ought not overregulate, especially where there is vibrant competition and diversity. The time has come for the FCC to wake up and smell the coffee, and recognize the actual competition broadcasters face. We should establish rules that will allow you to realize economies of scale and respond to competition.

I think that is what Congress was signaling in the 1996 Telecom Act. After all, the Act eliminated the national limits on the number of radio and television stations a broadcaster can own. It also specifically relaxed the local radio ownership rules so that it is now permissible to own up to eight radio stations in the largest markets. In addition, the Act directed the Commission to relax our one-to-a-market rules and eliminate the cable/broadcast cross-ownership rule. In sum, I think Congress was telling the FCC to relax our regulatory grip.

The 1996 Act was much less specific with regard to our local television ownership rules. Congress did tell us to relook at those rules, however, and I believe we must do so with an eye toward the new video market realities.

Today, television broadcasters face competition from direct broadcast satellites and both wired and wireless cable. To respond to this competition, I favor relaxing our television duopoly rules and eliminating outmoded cross-ownership rules. Where diversity would suffer in small markets, I might think twice about the duopoly rule, but in the largest markets, I am less concerned.

You should know that Congress is working on its own solution. I'm told by Hill sources that the Budget Reconciliation Bill will contain language that will relax the duopoly rule for stations whose Grade A contour encompasses cities with populations of 400,000 or more. It will also advise the FCC to grandfather TV LMAs that were in existence as of February 8, 1996, and allow LMAs in the future. It is expected that this provision will meet opposition in the Senate, so who knows what will happen. As they say in the business, stay tuned!

In the meantime, we still have a diverse set of views among the sitting Commissioners. I'm not sure all of them understood Congress' message to relax our regulations. We are talking, however, and I hope we can forge a compromise and finish up our work.

Content Regulation

On to my final subject. Today, I'd like to issue a call to action to help end the trend of increased government intrusion into your program content decisions.

Most recently, this trend has grabbed national headlines because of the high profile issue of the new TV rating system. While most TV broadcasters have reluctantly gone along with the push to add content indicators to the system that was developed earlier this year, the NBC network has courageously refused. Says NBC's Warren Littlefield, "I've have never been more afraid than I am of the content rating issue. . . . This one is serious. It started as a little snowball that was rolling down the hill, and as broadcasters, I think we're looking at a potential avalanche right now."

While I cannot comment on the merits of one rating system or another, I must point out that Mr. Littlefield is right to be afraid. And so should you. This isn't just a TV issue; any intrusion into your First Amendment rights will spill over into radio too.

From my catbird seat at the FCC, I've seen the avalanche coming, and it's been a rough-and-tumble battle for those of us dead set against serious harm to the First Amendment. Commissioner Quello and I have found ourselves working overtime to stop this avalanche of government intrusion into your content. And we have found ourselves in full disagreement with the Chairman and others, who

to press for increasing FCC involvement in content regulation.

A brief history: In a September 1995 speech, Chairman Hundt said that he wanted to transform our general public interest obligation into "concrete" and "quantifiable" programming commitments enforceable through fines or possibly non-renewal of broadcast licenses. This quantification was one of the key issues in our children's television proceeding. Although three commissioners opposed the strict quantitative approach advocated by the Chairman, we did eventually accept a staff processing guideline of three hours. The guideline approach has a quantification aspect, but it also provides a measure of flexibility in the rules that protects a broadcaster's discretion.

Another front in this campaign to control media content involves political advertising. At the Chairman's request, the FCC convened an En Banc Hearing on political broadcasting. At that hearing, numerous speakers told us why broadcasters, as part of their public interest obligation, should give political candidates free television time. The argument goes that broadcasters use the public airwaves for free and it would defray the costs of campaigning. So why shouldn't the FCC look into this and perhaps order broadcasters to donate air time? If you follow this line of reasoning, maybe we should ask airlines to give free airline seats to political candidates -- they too use the public airways, and with the cost of flying, free seats surely would defray campaign costs too!

Next, the Chairman proposed mandates for counter advertising and certain types of PSAs. With the 1996 Telecom Act came mandates for the V-chip and the "voluntary" TV rating system.

Recently, the Chairman voiced concerns about whether news coverage by the electronic media is fair. He is entitled, of course, to ask such a question, but the Chairman goes a step farther and suggests that there ought to be governmental policies to attempt to "assure that news is broadly and in some sense fairly communicated through the electronic media." This approach is especially offensive to the First Amendment's guarantee of a free press, because in no way does the First Amendment countenance government deciding whether news is being presented "fairly" or setting government policies to ensure that the news is balanced.

The Commissioners also continue to disagree about the need for an FCC Notice of Inquiry on distilled spirits advertisements. For First Amendment and fairness reasons, Commissioner Quello and I voted down such an Inquiry at the July FCC meeting.

Here were my reasons in a nutshell. First, let me make clear that I share the concern about the serious societal problems of underage drinking, drunk driving and alcoholism. However, I believe these problems should be addressed directly, by stronger enforcement of laws restricting the sale of alcohol to minors, by improving drivers' education, and by programs that assist recovering alcoholics.

In my view, an FCC Notice would be an indirect attempt to reduce perceived demand, by raising the specter of restricting distilled spirit advertising under the guise of public interest considerations. I do not believe this is a proper use of the FCC's regulatory authority.

This is particularly true when one is speaking about the mere presence of truthful liquor advertising on television directed at adults. Concerns about misleading or false advertising and even advertising aimed at minors have been directed to the Federal Trade Commission, and they are looking into this matter.

I strongly disagreed with those who suggest that the FCC must open this inquiry as a step toward ensuring that broadcasters serve the public interest. In my view, the FCC's general public interest mandate is not a plenary authorization to conduct broad-ranging inquiries ultimately aimed at dictating program content.

Now, I am not saying there should be no forum for those who are worried about truthful liquor advertising on the broadcast medium. What I have tried to make clear is my belief that Congress is the proper forum. And, if Congress were to explicitly, by law, decide that it needs the help of the FCC to gather facts, I of course would follow the law. I believe that Congress, as our elected representatives, should decide what content issues the FCC should address. I note that the courts seems to agree with me that it is just too dangerous to let unelected government officials dictate program content without specific Congressional direction.

Let me be crystal clear as to my message today. This avalanche of government intrusion into your content is reaching crisis proportions. The rock slide is about to roar over you and bury you. Every broadcaster in this room must begin speaking out strongly and firmly about why the First Amendment must be protected for our democracy to stand. You must tell everyone why unelected government officials must not be allowed to mandate what free Americans can and cannot see on TV.

Conclusion

As my FCC tenure draws to a close, I wanted to take this opportunity to express my heartfelt appreciation to your industry for your cooperation and support during my time at the Commission. It has been an honor and a privilege to serve as a Commissioner. I tried to make practical, deregulatory decisions that made sense for both broadcasters and the audiences that depend on you.

I wish the CBA another wonderful 50 years of nurturing your industry, educating the public about your work, and continuing to serve the public interest in a Digital Age. I don't envy your tasks. You have a lot of work to do in the coming months as you bring four new FCC Commissioners up to speed on your issues. As for me, I'll be hummin' "California, here I come" in just a few months, so I am sure our paths will cross again. I sure hope they do.

Thank you for your kind attention.