Politics and DTV

After coming down hard on the electronic manufacturing industry for foot-dragging on DTV, the FCC, in this election year, has declined to take action on a number of controversial and long-pending DTV issues. It had been anticipated that the Commission would, during its September meeting, address at least some of those issues, which include multichannel must-carry, satellite carriage, cable tier digital programming and the quality of the digital signal as carried by a cable system.

The Commission's reluctance to act is rooted in politics. There is wide disagreement among Chairman Powell and his three fellow commissioners about how the Commission should proceed on digital must-carry.

When the commissioners will look at these issues is anyone's guess. Most likely, they may wait until well after the November elections, when the composition of the new Congress and its telecom subcommittees becomes clear.

In the meantime, Representatives Billy Tauzin (R-La.) and John Dingell (D-Mich.) circulated a draft bill that would require broadcasters to begin digital-only broadcasting by Dec. 31, 2006, regardless of the number of digital sets in service in any community. At the present time, broadcasters are subject to a Dec. 31, 2006, deadline for final transition from analog to DTV — but that deadline is subject to an exception which provides that there be at least 85 percent digital use in any market before stations in that market would be required to convert to digital. Under the proposed legislation, that 85 percent litmus test would be removed and Dec. 31, 2006, would be an absolute drop-dead date not subject to any exemptions.

Tauzin has been an outspoken critic of the broadcast industry for failing to move more quickly to implement DTV and make more DTV programming available. To many, though, the Tauzin-Dingell approach is another example of the government trying to force a consumer-driven industry to move forward when there is clearly little or no consumer demand, particularly in a very weak economy.

Regulatory fee delinquencies mean big problems

A little-known consequence of making late regulatory fee payments is worth highlighting.

The hefty 25 percent late payment penalty that the FCC assesses on regulatory fee payors is a strong incentive to get those payments in on time. In addition, however, prospective participants in FCC auctions are required to certify under penalty of perjury that they are not currently delinquent on any non-tax debt owed to any federal agency. If you are currently in default, you cannot participate at all in the auction. If you are a “former defaulter” who has since cured your outstanding delinquencies, you may participate but you have to pay 150 percent of the upfront payments that would otherwise be due.

One auction participant recently became all too familiar with these provisions when it received a notice that a regulatory fee from last year had apparently been received by the FCC one day late. The licensee wanted to dispute the 25 percent late fee, which was assessed by the FCC on the eve of the auction. The late fee involved was only a few hundred dollars, but the applicant had to pay the disputed fee in order to be eligible to participate in the auction. Then, adding insult to injury, it had to make an additional 50 percent upfront payment because it had taken on the status of a “formerly delinquent” payor. In some auctions, this add-on to the upfront payment could amount to thousands or even millions of dollars, even though the late payment at issue was only a hundred dollars.

Harry C. Martin is an attorney with Fletcher, Heald & Hildreth PLC, Arlington, VA.

Dateline

The next FCC deadline for television broadcasters is Jan. 10, 2003, when quarterly problems/programs lists must be placed in stations' public files and Forms 398 (children's program reports) must be filed with the FCC.

The deadline for NCE-TV stations to complete their DTV buildouts is May 1, 2003.

All stations must file biennial ownership reports in 2003 on the anniversary of their renewal application filing dates.

The television renewal application cycle will begin again in 2004.