The HD Commercial LPFM Express - Not so fast!!

Oh dear. Here we go again. No matter what idea someone comes up with, it's not going to make LPFM a commercial service.

A recent article in Radio World is suggesting that if an LPFM station pays (through the nose) for iBiquity HD Radio that they can use the multicast (HD-2) streams to provide a "commercial" service. We are hearing that even the "FCC" approves it. Well, time for some bubble bursting. Sort of.

I have been researching the question of whether an LPFM (or for that matter, any non-commercial educational/NCE) FM station may use its digital capacity for "commercial" purposes.

Some of this was addressed in the Digital Audio Broadcasting Second Report and Order (R&O) of MM Docket 99-325.

Where it comes to "multicasting" (the HD-2 stream), the Commission does not associate it with "subsidiary" communications but for "datacasting" (sending data to the radio or for dedicated applications), it does take §73.295 into consideration. (See paragraph 43) In paragraph 44, the FCC further discusses §73.593 which applies to NCE stations. This rule states that while NCE stations are not required to use their subcarrier capacity, if it chooses to do so it is subject to the same rules that apply to commercial stations (§73.295) but it must be done in a manner that is not detrimental to existing or potential radio reading services or otherwise inconsistent with its public broadcasting responsibilities. If you read into that, you may think that the FCC is saying that NCE stations can provide subsidiary services on its excess HD bandwidth on a commercial basis as long as they set space aside for reading services and as long as the service does not interrupt their non-commercial stream. If it was only that easy.

In the Second R&O, Multicasting is addressed in paragraphs 33 through 42. Nowhere in that section does the FCC associate the multicast (HD-2) streams with the subsidiary services like it did when it discussed datacasting.

Now you may ask what is a subsidiary service. The subsidiary communications authorization (or SCA) is the subcarriers of a standard FM signal. These signals are not receivable by a standard FM receiver and requires special equipment. Over the years, the most common applications for SCA was background music services, data paging services, subscription foreign language services and radio reading services for the blind and visually impaired. The SCA services were never intended for regular public consumption. It is illegal to market an SCA capable radio and it is illegal to receive an SCA service that you are not authorized to receive. (See 47 USC 605 and 18 USC 2510-2521).

With all of that said, I really think that the huge difference here is whether the service could be received by the general public. Unless the HD multicast stream is being operated as subscription service (I am not sure if that functionality has actually been put into radio receivers), the HD multicast streams are receivable by the general public and that Section 605 of the Communications Act does not apply to HD multicast receivers and listening to multicast streams. They are subject to public consumption. Therefore, they are not a subsidiary service.

Now, let's go to paragraph 50 of the Second R&O, which states:

50. NCE radio stations face unique opportunities and challenges as they move to implement DAB. The Act states that a “noncommercial educational broadcast station” must be “owned and operated by a public agency or nonprofit private foundation, cooperation, or association” or “owned and operated by a municipality and which transmits only noncommercial programs for educational purposes.” In 1981, Congress amended the Act to give NCE stations more flexibility to generate funds for their operations. As amended, Section 399B of the Act permits NCE stations to provide facilities and services in exchange for remuneration as long as those uses do not interfere with the station’s “provision of public telecommunications services.” Section 399B, however, does not permit NCE stations to make their facilities “available to any person for the broadcasting of any advertisement.” Section 73.503 of the Commission’s rules addresses the licensing requirements and service of NCE FM stations. Under our rules, an NCE FM broadcast station will be licensed only to a nonprofit educational organization and upon showing that the station will be used for the advancement of an educational program. Although the Commission does not reserve frequencies for NCE use in the AM service, and thus has not codified noncommercial eligibility rules for this service, the Commission has treated AM stations that satisfy the NCE FM eligibility rules as noncommercial AM stations. Under Section 73.621 of the Commission's rules, public television stations are required to furnish primarily an educational as well as a nonprofit and noncommercial broadcast service.

So here we have a quick 101 on the non-commercial educational rules. It notes that under Section 399(b) of the Communications Act, an NCE still can not make their facility available for commercial broadcasting. Let's move forward...

51. In 2001, the Commission concluded that an NCE television licensee must use a substantial majority of its digital television capacity for nonprofit, noncommercial, educational broadcast services. In addition, the Commission held that the statutory prohibition against broadcasting of advertising on NCE television stations applies to broadcast programming streams provided by NCE licensees, but does not apply to any ancillary or supplementary services presented on their excess DTV channels that do not constitute broadcasting. In Office of Communication, Inc. of United Church of Christ v. F.C.C., the U.S. Court of Appeals for the District of Columbia Circuit upheld the DTV NCE A&S Order. In the DAB FNPRM, we sought comment on what, if any, special rules or considerations should apply to NCE radio stations in light of our decision regarding NCE DTV stations and the D.C. Circuit’s UCC decision. We also sought comment on how we can ensure NCE radio stations remain noncommercial in nature as the radio industry converts to DAB.

This mentions something that was brought up by a reader of REC's Facebook page. When digital television was introduced, it also had multicasting capability similar to what we have in digital radio. In the DTV proceeding, the Commission considered the multicast streams provided by a DTV station as broadcasting and not an ancillary or supplementary service. Just like the (X.2) channels in the DTV world are considered broadcasting, a similar argument can be made for HD-2 in the radio world. Therefore, if the HD-2 is considered "broadcasting" it should be a non-commercial service consistent with the DTV decision that was upheld by UCC v. FCC. I don't see any difference between the two technologies here. Supporting commercial use of HD bandwidth is whom some in LPFM consider as "Public Enemy #2":

52. NPR favors a flexible use policy for NCE station digital bandwidth. It states that it does not expect the remunerative use of digital bandwidth to result in a profusion of commercial service offerings by NCE radio stations. NPR further states that it expects any subscription or other services provided by NCE stations to relate to each station’s NCE mission. For instance, although subscription services are not anticipated for several generations of digital radio receivers, some NCE radio stations may experiment with offering “pledge-free,” but otherwise identical, versions of their free over-the-air services to those listeners who financially support the station. NPR adds that since the authorization of enhanced underwriting and remunerative subcarrier services in the early 1980s, the ensuing diversity of revenue sources has emerged as the key to public radio’s independence from any single revenue source. According to NPR, while the remunerative use of NCE station facilities and analog spectrum has, to date, provided only modest amounts of revenue, the remunerative use of digital technology will enable NCE stations to better weather the periodic downturns in corporate and foundation underwriting, membership dues, and, in the case of public radio, state and federal funding.

NPR raises a good point here. What about subscription services? Now, this might be a moot point these days since the interest in HD Radio seems to be slowly dying. Since a subscription service is not receivable without authorization (similar to the analog SCA model), would that now put the HD stream under the category of a subsidiary service thus allowing for commercial service? The Public Interest Coalition (PIC), disagrees...

53. PIC argues that NCE radio stations, like NCE television stations, should be obligated to “use their entire digital capacity primarily for a nonprofit, noncommercial, educational broadcast service,” meaning a “substantial majority” of the entire digital capacity. PIC urges the Commission not to repeat the “error” it made in authorizing NCE DTV stations to offer remunerative services. PIC also asserts that the “over commercialization” resulting from remunerative activities will discourage public support for public broadcasting. PIC additionally claims that allowing NCE radio stations to offer advertising supported non-broadcast services violates the intent underlying the original reservation of spectrum and will reduce “the ratio of noncommercial-to-commercial programming.”

I disagree. NCE HD stations using their bandwidth that is not directly receivable with a conventional radio and not disturbing the public radio (including reading service) mission should be able to use that bandwidth to provide services that can offset some costs.

54. NPR objects to PIC’s suggestions, stating that NCE television stations are subject to a more exacting regulatory mandate to furnish “primarily” a non-profit and noncommercial television broadcast service. NCE radio stations, on the other hand, are licensed “for the advancement of an educational program.” NPR notes that the Commission adopted a higher standard for NCE television stations because such stations use greater amounts of spectrum, have more extensive coverage areas, and are far fewer in number. NPR also asserts that requiring NCE radio stations to reserve a “substantial majority” of their entire digital capacity for a free NCE service would significantly restrict station flexibility to determine the appropriate mix of services, and how much capacity to devote to each, based on the specific needs of their community of service. NPR states, for example, that such a “substantial majority” requirement would prevent stations from dividing the 96 kbps bitstream into two 48 kbps service streams. According to NPR, a minimum quantitative requirement, and one requiring a “substantial majority” of the bitstream, in particular, would countermand the inevitable improvement in audio coding technology that will otherwise permit higher quality audio using fewer kilobits.

Reading deep into NPR's response, it would suggest that bandwidth should not matter but it should be the type of service offered. As long as the primary service gets as good of a quality as its analog counterpart and space is set aside for reading services on request, I don't see an issue of using the excess bandwidth for subscription services. The FCC decides to table the discussion but the bottom line is they are preserving the non-commercial nature of the NCE service and assuring that basic services are still provided.

55. We defer consideration of the issues discussed above to a later date. As noted above, we have decided to further examine the offering of subscription services in a Second Further Notice of Proposed Rulemaking. In addition to our concern about maintaining the free nature of all terrestrial radio services, we wish to preserve the noncommercial educational nature of NCE service. We will address both issues after considering the comments in response to our Second Further Notice of Proposed Rulemaking. In any event, we hold that an NCE radio station is obligated, like its commercial counterpart, to provide at least one free over-the-air digital programming stream that is comparable to or better in audio quality than its analog signal.

OK.. So again.. If the service is receivable by the general public free of charge, it is considered broadcasting. The FCC does not allow NCE stations to broadcast advertising. This extends to digital television multicast streams and there's no reason why it should not (based on the current rules and statutes) extend to digital radio multicast streams. Likewise, if the service is not receivable by the general public, such as a subscription service, datacast or analog SCA service, the NCE/LPFM station can offer for a profit. However, subcarrier or subscription HD bandwidth used for radio reading services must still be provided on a non-profit basis (you can charge just enough to recover costs).

Therefore, before you get on the phone with iBiquity tomorrow, think about this. Is adding HD to an LPFM station really worth it, especially if your station is inside another station's interference contour and you are limited to 10 watts or less? Myself, I would like to see the FCC permit more development and implementation of differing digital audio broadcast formats that do not require the same royalty structure as iBiquity HD Radio. DRM Plus has potential.

REC has been made aware that information confirmed by a staff member in the FCC's Audio Division for the Radio World article was acknowledged as inaccurate. It is our understanding that there will be a clarifying article coming out.