Public TV Can Offer For-Pay Services

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The nation's public television stations have received the go-ahead to use their digital spectrum to compete for commercial revenue through advertising and for-pay services still under development.

A divided Federal Communications Commission on Oct. 11 granted approval for such use. Some cast the decision as a public-policy tragedy, others as a modest proposal that would help the country's 350 public-TV stations fund the transition to digital technology.

"I just can't convince myself that this is what we ought to be doing," said commissioner Michael Copps, a Democrat who cast the lone vote against the plan.

FCC chairman Michael Powell dismissed the idea that the agency was allowing public television to veer from its charter mission of providing commercial-free educational programming.

"It's a mischaracterization to suggest that it's a radical move to commercialization," Powell said.

Under the FCC's plan, public stations will be allowed to use slices of their digital spectrum to provide subscription services. But the stations may only air advertising within those services.

To prevent the digital spectrum from becoming a revenue-generating bonanza, the FCC insisted that public stations keep a "substantial majority" of their digital bit stream devoted to their core mission. However, the agency refused to define "substantial majority."

Coupled with the bandwidth restrictions, the FCC required the public stations to surrender 5 percent of their gross revenue derived from ads and subscription services to the U.S. Treasury.

The amount of spectrum available for subscription services will vary depending on the video programming that public stations provide via digital signals.

"If they do high-definition TV, there's not much left over for other services," said FCC Mass Media Bureau official Mary Beth Murphy. "But if they do a standard-definition picture, there would be quite a bit left."

For several years, the group that represents public TV stations — the Association of America's Public Television Stations — has lobbied to gain spectrum-use flexibility. The only setback in the agency's decision was the obligation to pay the 5-percent fee, which APTS believes Congress intended for commercial stations only.

"This flexibility will strengthen public television's capability to create the content for our expanded free, over-the-air, noncommercial educational services," said APTS president John Lawson.

The public TV stations are still determining the types of services they'll offer. Some proposals call for beaming weather reports and stock market data to personal computers with tuner cards. Other ideas include the transmission of textbooks to schools or the creation of a teleconferencing service with national reach.

The National Association of Broadcasters, which represents commercial stations with designs on offering their own fee-based data services, declined to comment on the FCC's action.

The National Cable & Telecommunications Association noted that although public TV stations are entitled to mandatory carriage on cable systems, they are not entitled to carriage of their revenue-generating services.

"To the extent that they use any of that spectrum for commercial purposes, they lose any must-carry rights to that service," said NCTA spokesman David Beckwith.

An APTS source agreed with that legal point, but added that cable carriage could be possible if public stations agreed to share revenue with the cable operators.

In a lengthy statement read at the FCC's Oct. 11 public meeting, Copps explained that the commercialization of the public-television system was legally problematic and perhaps a step that could erode public support for the entire enterprise.

"Public television is the gem of broadcast television," said Copps. "Public broadcasting was to be what commercial broadcasting was not."

Defending the FCC's action, Powell said it was important to understand the narrow scope of commercial opportunity in the agency's decision.

"Nothing permits the use of the primary broadcasting signal for those purposes," Powell said.

But the FCC's refusal to quantify exactly how much of the digital spectrum could be devoted to fee-based services and advertising caught the attention of House Energy and Commerce Committee chairman Rep. Billy Tauzin (R-La.)

"Certainly, chairman Tauzin recognizes that public broadcasting, like commercial broadcasting, needs some flexibility in order to make the transition to digital," said Tauzin spokesman Ken Johnson. "That said, the FCC ruling opens the door to creeping commercialism and we may very well ask the agency to tighten its definition of substantial majority."

Andrew Schwartzman, president of the Media Access Project, a public-interest law firm, fought against granting public stations spectrum flexibility in the manner chosen by the FCC.

"We are saddened by a decision that is bad law, and worse policy, and we'll probably take it up to court," Schwartzman said.

Public broadcasting was intended to be a "commercial-free zone," Schwartzman said. Departing from that tradition would alienate viewers, causing Congress to reduce its financial support, he added.

The idea of allowing subscription services was not so bad, said Schwartzman, except that the FCC refused to quantify the amount of spectrum that can be used for that purpose.

"I have problems with the fee service, but the law clearly lets them do something," he said. "The question is how much."

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