Digital Audio Broadcasting Systems and Their Impact on the Terrestrial Radio Broadcast Service, 45670-45693 [E7-15922]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 72, Number 157 (Wednesday, August 15, 2007)]
[Rules and Regulations]
[Pages 45670-45693]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15922]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 99-325; FCC 07-33]


Digital Audio Broadcasting Systems and Their Impact on the 
Terrestrial Radio Broadcast Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Commission adopts rules to foster the 
development of a vibrant terrestrial digital radio service for the 
public and to ensure that radio stations successfully implement digital 
audio broadcasting. The Commission's goals in this Second Report and 
Order are to begin to adopt service rules and other requirements for 
terrestrial digital radio.

DATES: Effective September 14, 2007, except for the rules in 47 CFR 
73.404(b), 47 CFR 73.404(e), and 47 CFR 73.1201, which contain 
information collection requirements that have not been approved by OMB. 
The Federal Communications Commission will publish a document in the 
Federal Register announcing the effective date.

FOR FURTHER INFORMATION CONTACT: For additional information on this 
proceeding, contact Brendan Murray, Brendan.Murray@fcc.gov of the Media 
Bureau, Policy Division, (202) 418-2120.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Report and Order, First Order on Reconsideration, and Second Further 
Notice of Proposed Rulemaking, FCC 07-33, adopted on March 22, 2007, 
and released on May 31, 2007. The full text of this document is 
available for public inspection and copying during regular business 
hours in the FCC Reference Center, Federal Communications Commission, 
445 12th Street, SW., CY-A257, Washington, DC 20554. These documents 
will also be available via ECFS (https://www.fcc.gov/cgb/ecfs/). 
(Documents will be available electronically in ASCII, Word 97, and/or 
Adobe Acrobat.) The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request this document in accessible formats 
(computer diskettes, large print, audio recording, and Braille), send 
an e-mail to fcc504@fcc.gov or call the Commission's Consumer and 
Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 
(TTY).

Initial Paperwork Reduction Act of 1995 Analysis

    This document contains modified information collection requirements 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the Office of Management and Budget (OMB) 
for review under Section 3507(d) of the PRA. The Commission will 
publish a separate Federal Register Notice seeking public comments on 
the modified information collection requirements. Therefore, OMB, the 
general public, and other Federal agencies will be invited to comment 
on the modified information collection requirements contained in this 
proceeding once the Federal Register Notice is published. In addition, 
we note that pursuant to the Small Business Paperwork Relief Act of 
2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previously 
sought specific comment on how the Commission might ``further reduce 
the information collection burden for small business concerns with 
fewer than 25 employees.''
    In this present document, we have assessed the effects of easing 
the filing requirements imposed on entities that wish to implement 
IBOC, and find that the steps taken will reduce paperwork burdens on 
small entities because they will no longer be required to seek prior 
authorization to implement certain technologies for use with digital 
audio broadcasting.

Summary of the Report and Order

I. Introduction and Executive Summary

    1. In the Digital Audio Broadcasting Report and Order, we selected 
in-band, on-channel (``IBOC'') as the technology enabling AM and FM 
radio broadcast stations to commence digital audio broadcasting 
(``DAB''). We note that in this Second Report and Order as well as in 
the Second Further Notice of Proposed Rulemaking (published elsewhere 
in this issue), DAB generally refers to the digital service broadcast 
by radio stations whereas IBOC generally refers to the technical system 
supporting DAB service. This terminology, and the subject matter 
discussed herein, applies to terrestrial over-the-air broadcasting. 
Satellite radio service, offered by XM and Sirius, is not a subject 
under consideration in this proceeding. In the DAB R&O, we adopted 
notification procedures allowing existing AM and FM radio stations to 
begin digital transmissions immediately on an interim basis using the 
IBOC system developed by iBiquity Digital Corporation (``iBiquity''). 
We concluded that the adoption of a specific technology would 
facilitate the development of digital services for terrestrial 
broadcasters. We deferred consideration of final operational 
requirements and related broadcast licensing and service rule changes 
to a future date. In a Further Notice of Proposed Rule Making 
(``FNPRM''), 69 FR 27874, we addressed issues left unresolved in the 
DAB R&O, 69 FR 78193, and sought comment on what changes and amendments 
to Part 73 of the Commission's rules were necessary to facilitate the 
adoption of DAB.
    2. Through this proceeding, we seek to foster the development of a 
vibrant terrestrial digital radio service for the public and to ensure 
that radio stations successfully implement DAB. Our statutory authority 
for implementing these goals is derived from, inter alia, Sections 1, 
4, 303, 307, 312, and 315 of the Communications Act. Our goals in this 
Second Report and Order are to begin to adopt service rules and other 
requirements for terrestrial digital radio. However, we find it 
necessary to ask additional questions, in a Second Further Notice of 
Proposed Rulemaking, on how to preserve free over-the-air radio 
broadcasting while permitting licensees to offer new services on a 
subscription basis. We also resolve and dispose of several petitions 
for

[[Page 45671]]

reconsideration that were filed in response to the DAB R&O.
    3. In summary, the Commission, in this Second Report and Order, 
First Order on Reconsideration, and Second Further Notice of Proposed 
Rulemaking:
     Refrains from imposing a mandatory conversion schedule for 
radio stations to commence digital broadcast operations;
     Allows FM radio stations to operate in the extended hybrid 
digital mode;
     Requires that each local radio station broadcasting in 
digital mode provide a free over-the-air digital signal at least 
comparable in audio quality to its analog signal;
     Continues to require that the main digital broadcast 
stream simulcast the material aired on the analog signal;
     Adopts a flexible bandwidth policy permitting a radio 
station to transmit high quality audio, multiple program streams, and 
datacasting services at its discretion;
     Allows radio stations to time broker unused digital 
bandwidth to third parties, subject to certain regulatory requirements;
     Applies existing programming and operational statutory and 
regulatory requirements to all free DAB programming streams, but defers 
the issue of whether and how to apply any specific new public interest 
requirements;
     Authorizes AM nighttime operations and FM dual antenna 
configurations;
     Considers and addresses other technical matters, such as 
FM translator and booster operations and TV Channel 6 interference 
issues;
     Defers discussion of whether the Commission should impose 
content control requirements that would prevent listeners from 
archiving and redistributing digital musical recordings transmitted by 
digital broadcast stations;
     Recognizes that further negotiations between the United 
States and the international community are taking place to resolve 
possible disputes about the implementation and operation of DAB by 
domestic radio stations;
     Dismisses several pending Petitions for Reconsideration 
and Petitions for Rulemaking that asked, inter alia, the Commission to 
reconsider the adoption of iBiquity's IBOC system as the technology 
chosen for DAB transmission;
     Seeks further comment on appropriate limits to the amount 
of subscription services that may be offered by radio stations.

II. Background

A. In-Band On-Channel Technology
    4. IBOC technology makes use of the existing AM and FM bands (In-
Band) by adding digital carriers to a radio station's analog signal, 
allowing broadcasters to transmit digitally on their existing channel 
assignments (On-Channel) while simultaneously maintaining their analog 
service. iBiquity's IBOC DAB technology enables radio stations to 
provide enhanced sound fidelity, improved reception, multiple audio 
streams, and new data services. It permits the transmission of near-CD 
quality audio signals on the FM band, and improved fidelity on the AM 
band, to digital-ready radio receivers along with information services, 
such as station, song and artist identification, stock and news 
updates, and local traffic and weather bulletins. These digital signals 
are free from the static, hiss, pops, and fades associated with the 
current analog system. iBiquity's IBOC technology will also allow for 
new radios to be ``backward and forward'' compatible, allowing them to 
receive existing analog broadcasts from stations that have yet to 
convert and digital broadcasts from stations that have converted. 
Existing analog radios will continue to receive analog broadcast 
signals.
    5. The iBiquity IBOC system evaluated by the DAB Subcommittee of 
the National Radio Systems Committee (``NRSC'') are ``hybrids'' in that 
they permit the transmission of both analog and digital signals within 
the spectral emission mask of a single AM or FM channel. In the hybrid 
mode, the iBiquity IBOC system places digital information on 
frequencies immediately adjacent to the analog signal. The digital 
signals are transmitted using orthogonal frequency division 
multiplexing (``OFDM''). The FM IBOC system has an extended hybrid 
mode, providing greater digital capacity than the hybrid mode. The IBOC 
system is also designed to eventually permit radio stations to convert 
to an all-digital mode of operation. The IBOC system uses perceptual 
coding to discard information that the human ear cannot hear. This 
reduces the amount of digital information, and as a result, the 
frequency bandwidth required to transmit a high-quality digital audio 
signal. In addition, the IBOC system in hybrid mode is designed to 
blend to analog when digital reception fails. This blending feature 
eliminates a digital ``cliff effect'' that would otherwise result in 
the complete and abrupt loss of reception at locations where the 
digital signal fails.
B. The Regulatory Development of Digital Audio Broadcasting
    6. In 1990, the Commission first considered the feasibility of 
terrestrial and satellite digital radio services. As to the former, the 
Commission concluded that the digital terrestrial systems then under 
consideration were undeveloped and that it was premature to engage in 
discussions regarding DAB standards, testing, licensing, and other 
policy issues. In 1999, the Commission, recognizing new technological 
developments and innovations, commenced this proceeding to foster the 
adoption of a DAB system and develop a record regarding the legal and 
technical issues raised by the introduction of DAB. In the DAB NPRM, 
the Commission, inter alia, proposed criteria for the evaluation of DAB 
models and systems and considered certain DAB system testing, 
evaluation, and standard selection issues.
    7. In the DAB R&O, the Commission selected the hybrid AM and FM 
IBOC system tested by the NRSC as the de facto standard for interim 
digital operation. As of the effective date of the DAB R&O, we stated 
we would no longer entertain any proposal for digital radio 
broadcasting other than IBOC. We found that IBOC was the best way to 
advance our DAB policy goals. We also found that this technology was 
supported by the broadcast industry and was the only approach that 
could be implemented in the near future. We recognized that the IBOC 
system was spectrum-efficient because it can accommodate digital 
operations for all existing AM and FM radio stations with no additional 
allocation of spectrum. The NRSC tests, as explained in the DAB R&O, 
showed that both AM and FM IBOC systems offer enhanced audio fidelity 
and increased robustness when encountering interference and other 
signal impairments. The tests also indicated that coverage for both 
systems would be at least comparable to analog coverage. We stated that 
audio fidelity and robustness will greatly improve when radio stations 
move to all-digital operations.
    8. We established the following requirements for radio stations in 
the DAB R&O: (1) During interim IBOC operations, stations must 
broadcast the same main channel program material in both analog and 
digital modes; (2) interim IBOC facilities must use the station's 
authorized antenna system; a public notice seeking comment on the use 
of a dual FM antenna system was issued by the Media Bureau after the 
DAB R&O was released. The Media Bureau approved the use of separate FM

[[Page 45672]]

antennas in 2004; (3) due to interference concerns, stations 
implementing IBOC must communicate to the Commission the transmitter 
power output (for both analog and digital transmitters, if applicable) 
and must certify that the analog effective radiated power remains 
consistent with the station's authorization; (4) pending adoption of 
final rules, a licensee's authorization to transmit IBOC signals may be 
modified or cancelled by the Commission without prior notice or a right 
to a hearing to eliminate objectionable interference; and (5) IBOC AM 
stations may only operate during daytime hours.
    9. In the DAB FNPRM, our goal was to create a record that would 
lead to permanent DAB policies and requirements. We sought public input 
on several issues related to digital audio broadcasting. Specifically 
we sought comment on: (1) The appropriate policies the Commission may 
adopt to encourage radio stations to convert from an analog-only radio 
service to a hybrid analog/digital radio service, and, eventually, to 
an all-digital radio service; (2) the types of digital services the 
Commission should permit radio stations to offer; (3) how noncommercial 
educational (``NCE'') FM and low power FM stations may provide digital 
radio service to the public; (4) how the Commission's existing 
programming and operational rules should be applied to DAB; and (5) 
what changes and amendments to the Commission's technical rules are 
necessary to further the introduction of DAB.
    10. In the DAB NOI, we asked whether the transmission of digital 
radio signals, as a free over-the-air service, would create an 
environment for persons to engage in indiscriminate recording and 
Internet redistribution of musical recordings that are part of 
unencrypted free digital audio broadcasts and sought comment on how 
this matter should be addressed. On this point, we have been informed 
that interested parties are attempting to resolve this issue through a 
marketplace solution. We encourage this approach. Accordingly, we will 
defer further action on this issue at this time. In the DAB NOI, we 
also raised for comment whether there were international broadcast 
treaty matters that needed to be addressed at this time to ensure that 
DAB is successfully implemented in the United States.
C. Radio Statistics
    11. As of August 1, 2005, approximately 900 radio stations have 
entered into licensing agreements with iBiquity for its IBOC 
technology. As of September 30, 2005, there were 10,973 commercial 
radio stations, as well as 2,626 FM educational radio stations in the 
United States. Of the commercial stations, 6,215 were FM stations and 
4,758 were AM stations. There were also 3,920 FM translator and booster 
stations. Currently, 1,272 stations (195 AM and 1,077 FM) are 
authorized by the Commission to broadcast using the IBOC system, and 
approximately 700 FM stations have requested and received special 
temporary authority for multicasting. These stations are mostly located 
in the top 50 markets in the country and reach 60 percent of all 
potential listeners. At least 10 stations are on the air in each of the 
following markets: Los Angeles, Chicago, San Francisco, Boston, Detroit 
and Atlanta. Approximately, 85 percent of the IBOC stations on the air 
are FM stations and 15 percent are AM stations. iBiquity has announced 
that 21 of the nation's top radio broadcast groups have committed to 
accelerate broadcast conversion of 2,000 AM and FM stations to IBOC 
technology. Clear Channel Communications, Entercom and Cox Radio have 
all made substantial commitments to convert many of their stations to 
digital over the next few years. Moreover, ten of the largest radio 
firms have formed a strategic alliance to coordinate the rollout of 
DAB. This effort includes the coordination of multicast formats, 
securing digital automotive receiver designs, and lowering the price 
points for digital radio receivers.

III. Policies and Rules for DAB

A. The DAB Standard
    12. In the DAB R&O, we stated that the adoption of a DAB standard 
will facilitate an efficient and orderly transition to digital radio, 
and we supported a public and open standard-setting process. In the DAB 
FNPRM, we encouraged the NRSC to provide us with information on the 
standard setting process as events warrant. On April 16, 2005, the NRSC 
announced approval of the initial NRSC IBOC standard known as NRSC-5. 
The standard is based on iBiquity's IBOC technology. In the iBiquity 
system, audio source coding and compression are handled by iBiquity's 
HD codec. NRSC-5 does not include specifications for audio source 
coding and compression. iBiquity has committed to license all patents 
necessary to implement NRSC-5, either with or without the HD codec. It 
is also possible within the NRSC-5 standard to use audio source coding 
and compression schemes other than iBiquity's HD codec. On May 18, 
2005, the NRSC submitted NRSC-5 to the Commission for consideration and 
evaluation. A Public Notice seeking comments on the NRSC-5 standard was 
issued by the Media Bureau on June 16, 2005. Following the close of the 
comment cycle in August 2005, we will review the filings and then take 
further action. The NRSC adopted the NRSC-5-A IBOC broadcasting 
standard in September 2005. The NRSC-5-A IBOC standard adds sections 
concerning Advanced Application Services and a new reference document 
to the NRSC-5 IBOC standard, but the NRSC has not yet submitted the 
NRSC-5-A IBOC standard to the Commission for review. While our 
consideration of the NRSC-5 IBOC standards is continuing, we find that 
it is in the public interest to adopt certain policies, rules, and 
requirements for digital radio before we have completed our evaluation 
of the standards. Radio stations and equipment manufacturers need to 
move forward with the DAB conversion, and we need not wait until after 
final action is taken on the IBOC standards to provide such guidance to 
them.
B. Conversion Policy
    13. In the DAB FNPRM, we sought comment on the pace of the analog 
to digital radio conversion and the possibility of an all-digital 
terrestrial radio system in the future. We noted that Congress codified 
December 31, 2006, as the analog television termination date with 
certain exceptions, and we recognized that there is no analogous 
congressional mandate for the termination of analog radio broadcasting. 
We stated that the Commission has not considered a date certain as to 
when radio stations should commence digital broadcast operations 
because radio stations, unlike television stations, are not using 
additional spectrum to provide digital service. We also stated that 
band-clearing is not an issue. Based on these factors, we found that 
there was no immediate need to consider mandatory transition policies 
of the type contemplated with respect to DTV. However, we recognized 
the spectrum efficiencies and related new service opportunities 
inherent in the IBOC system. As such, we sought comment on what changes 
in our rules would likely encourage radio stations to convert to a 
hybrid or an all-digital transmission system and asked whether the 
government, the marketplace, or both should determine the speed of 
conversion from analog to hybrid and, eventually, to all digital radio 
service. We also asked whether we should conduct periodic reviews, in 
terms of the number of DAB receivers on the market and DAB stations on 
the air, to

[[Page 45673]]

help us decide how to set policy as the conversion to digital audio 
broadcasting moves forward.
    14. Commenters generally support a marketplace transition to 
digital audio broadcasting. For example, the State Broadcasters 
Associations (``SBAs'') states that the Commission should allow market 
forces to govern the adoption of DAB by the radio industry and that no 
station should be required to adopt IBOC or any other digital 
technology. The Public Interest Coalition (``PIC'') agrees that the 
market should govern the pace of the DAB transition. PIC states that 
allowing market forces to guide the digital radio transition will 
permit stations to convert at a pace dictated by their own needs.
    15. We will not establish a deadline for radio stations to convert 
to digital broadcasting. Stations may decide if, and when, they will 
provide digital service to the public. Several reasons support this 
decision. First, unlike television licensees, radio stations are under 
no statutory mandate to convert to a digital format. Second, a hard 
deadline is unnecessary given that DAB uses an in-band technology that 
does not require the allocation of additional spectrum. Thus, the 
spectrum reclamation needs that exist for DTV do not exist here. 
Moreover, there is no evidence in the record that marketplace forces 
cannot propel the DAB conversion forward, and effective markets tend to 
provide better solutions than regulatory schemes.
    16. iBiquity argues that in the early stages of the transition, the 
Commission should favor and protect existing analog signals. It states 
that this could be accomplished by limiting the power level and 
bandwidth occupancy of the digital carriers in the hybrid mode. At some 
point in the future, when the Commission determines there is sufficient 
market penetration of digital receivers, iBiquity asserts that the 
public interest will be best served by reversing this presumption to 
favor digital operations. At that time, broadcasters will no longer 
need to protect analog operations by limiting the digital signal and 
stations should have the option to implement all-digital broadcasts. We 
decline to adopt iBiquity's presumption policy because it is too early 
in the DAB conversion process for us to consider such a mechanism. We 
find that such a policy, if adopted now, may have unknown and 
unintended consequences for a new technology that has yet to be 
accepted by the public or widely adopted by the broadcast industry.
    17. Nevertheless, as enunciated in more detail below, we take 
significant steps to facilitate the digital radio conversion by 
adopting rules and policies that encourage radio stations to invest in 
digital equipment and programming. For example, we permit radio 
stations to provide various types of digital service as long as one 
free over-the-air digital stream of equal or greater quality than the 
station's existing analog signal is available for listeners. We also 
establish technical rules, such as permitting AM nighttime service, 
intended to reinvigorate the AM band. To ensure that DAB adoption 
proceeds in a timely manner, we will conduct periodic reviews of 
digital service and receiver penetration, as suggested by iBiquity, as 
circumstances warrant. iBiquity states that the Commission should 
conduct periodic reviews of station conversions and receiver 
penetration to ensure the functioning of market forces. iBiquity 
recommends the commencement of a first review five years after adoption 
of a Second Report and Order in this proceeding to check on the 
progress of the conversion. Other commenters agree that the Commission 
should periodically review the progress of the DAB conversion process.
    18. Extended Hybrid Mode. NAB asserts that the Commission's 
authorization of extended hybrid mode DAB operations will further the 
conversion process. According to NAB, the extended hybrid mode, which 
adds up to 50 kbps, (``kbps'' is the acronym for kilobits per second 
(1000 bits per second)), of data carrying capacity to an FM IBOC 
signal, will allow broadcasters to support a range of datacasting 
services without affecting the quality of the 96 kbps main channel 
digital audio signal. NAB asserts that while the use of the FM extended 
hybrid mode increases the bandwidth occupancy of the digital carriers, 
this will not increase interference to adjacent channels since the 
additional (i.e., extended hybrid) digital carriers fall between a 
station's primary digital carriers and its host analog signal. 
Consequently, each broadcaster will be able to control the level of 
impact these extended hybrid signals may have on its own transmission. 
NAB comments that the Commission should authorize broadcasters to adopt 
all three extended hybrid modes and allow broadcasters to make the 
appropriate operational decisions based on the needs of their 
listeners. In the extended hybrid mode, digital carriers are added at 
frequencies immediately adjacent to the analog FM signal. The three 
extended hybrid modes (MP2, MP3, and MP4) are defined by the number of 
digital partitions added (one, two, or four pairs), respectively. NPR 
submitted a detailed report in November 2004 about the effect of 
extended hybrid operation on the host analog signal in various 
receivers. The report concludes that the FM extended hybrid mode does 
not affect host analog reception in car radios, home stereo receivers, 
or subsidiary communications authorization receivers.
    19. The FM extended hybrid mode holds great promise for both 
broadcasters and their listeners. NPR has submitted data showing that 
the FM extended hybrid mode will work in most circumstances. NPR's 
report provides an ample basis for permitting radio stations to operate 
in an extended hybrid mode. Authorization of this digital mode will 
permit broadcasters to offer new and innovative services, especially to 
underserved populations, such as the visually impaired and non-English 
speaking citizens. If interference issues do arise, we are confident 
that the Commission staff will be able to resolve disputes on a case-
by-case basis, and we intend that the staff will address these 
complaints in a timely fashion. In this connection, the Media Bureau 
has full authority to adjust and, if necessary, prohibit hybrid 
operations by broadcasters.
    20. All-digital Mode. In the DAB FNPRM, we recognized that it may 
be premature to adopt policies for all-digital radio operation given 
that there are no standards for this type of broadcasting. NAB agrees 
that adoption of policies and procedures relating to the all-digital 
mode of IBOC operation would be premature in the absence of 
``comprehensive and impartial testing'' of all-digital systems. NAB 
states, however, that it is important to recognize that the all-digital 
mode is an integral part of the IBOC DAB system specification and that 
the software iBiquity provides to its transmitter and receiver 
manufacturer licensees includes an all-digital mode of operation. NAB 
states that when the time is ripe to consider use of the all-digital 
mode, consumers and broadcasters who have already invested in IBOC DAB 
equipment will not be disenfranchised and a smooth transition from a 
hybrid to an all-digital environment will be assured. iBiquity agrees 
that additional work is required before there is an industry consensus 
on the IBOC all-digital system.
    21. NPR states that it is premature for the Commission to 
contemplate a regulatory structure for all-digital terrestrial radio. 
It states that the elegance of the DAB transition is that the public, 
through its response to digital services, will determine the pace

[[Page 45674]]

of the transition. NPR further states that until the transition to all-
digital operation becomes more imminent, the Commission should refrain 
from adopting any policy affecting all-digital DAB. PIC states that the 
Commission should use its authority to facilitate public participation 
in the further development of digital radio technology.
    22. The ultimate goal of this proceeding is to establish a robust 
and competitive all-digital terrestrial radio system. We agree with NPR 
that it is premature, however, to consider the adoption of policies and 
rules for an all-digital mode of operation. There are many unresolved 
technical issues associated with the all-digital radio broadcast system 
and radio stations do not plan to offer all-digital service in the near 
future. Broadcasters, of course, are encouraged to experiment with an 
all-digital service, with appropriate authorization, but for regulatory 
purposes, our principle focus at this stage is to ensure that the 
ground rules are set for the introduction of hybrid IBOC DAB. When DAB 
receiver penetration has reached a critical mass and most, if not all, 
radio stations broadcast in a hybrid digital format, we will begin to 
explore the technical and policy issues germane to an all-digital 
terrestrial radio environment.
C. Service Rules
1. Flexible Uses
    23. As explained above, the IBOC DAB system provides radio stations 
with new flexibility and capabilities. First and foremost, it allows FM 
broadcasters to scale their audio quality from 96 kbps downward in 1 
kbps or smaller increments. Any reduction below 96 kbps frees capacity 
that can be devoted to other services. The AM system offers two levels 
of audio quality. The ``core'' AM carriers provide 20 kbps of robust 
monophonic sound. The ``enhanced'' layer adds an additional 16 kbps of 
digital carriers and enables full stereo sound. The AM system design 
allows broadcasters to devote the full 36 kbps to a single audio signal 
or, in the future, select only the 20 kbps core mode for audio and 
devote the remaining 16 kbps enhanced carriers for other services.
    24. The scaling of the audio codec, which permits broadcasters to 
reduce the number of bits devoted to the main channel audio signal, may 
affect the quality of the audio. An audio codec compresses digital 
audio data prior to transmission and decompresses data received. 
However, it will not impact the robustness of the signal. The audio 
quality may be affected because the reduction in the bit rate may 
increase the likelihood of digital artifacts. The trade-off between 
bits and audio quality is not linear. There can be a substantial 
reduction in bit rate before most listeners would notice any digital 
artifacts that might impact audio quality. The broadcasters' and 
listeners' tolerance for reduced audio quality depends on many factors, 
most importantly, station program format.
    25. The IBOC DAB system thus allows radio stations to broadcast a 
single high quality audio signal, multiple streams of lower quality 
audio, or various combinations of different quality audio signals. In 
addition, the system is capable of non-broadcast uses that are non-
audio and/or subscription-based in nature. In the DAB FNPRM, we 
tentatively found that permitting radio stations to use their bandwidth 
in a flexible manner is in the public interest. Section 303 of the Act 
compels the Commission to ``study new uses for radio, provide for 
experimental uses of frequencies, and generally encourage the larger 
and more effective uses of radio in the public interest.''
    26. NAB states that a digital radio station's service offerings 
should be determined by the licensee rather than by government mandate. 
NAB explains that digital business models will vary from licensee to 
licensee. Some stations, such as those with jazz or classical music 
genres, may choose to focus their resources on promoting the highest 
quality audio signal, while others may want to broadcast multiple 
streams of news, weather or financial information. NAB submits that 
these kinds of decisions are best left to consumer demand and the 
marketplace. NAB states that beyond an obligation to deliver at least 
one main audio channel of equal or better quality than a station's 
existing analog service, broadcasters should retain the flexibility to 
scale signals to enhance audio quality, to upgrade existing 
supplementary services, or offer new services for their audiences. NAB 
concludes that for DAB to fulfill its potential, supplementary services 
must be a viable option. NPR states that the Commission should not 
specify the amount of capacity stations should allocate to any given 
audio or data service. NPR argues that radio station licensees, like 
digital television licensees, should have the freedom to develop 
innovative services for the public.
    27. iBiquity also urges the Commission to adopt a flexible approach 
to its service rules because radio stations have only begun to explore 
the IBOC system options. iBiquity asserts that this approach will 
encourage broadcasters to experiment and will foster the development of 
innovative new services for the listening public. iBiquity states that 
the imposition of unnecessarily restrictive service rules will have the 
effect of stifling the development of new services. Cox likewise 
suggests that the Commission should maintain a ``do no harm'' position, 
arguing that if concerns arise later in the conversion, the Commission 
can always adopt responsive rules at that time. There were no comments 
criticizing the adoption of a flexible use policy.
    28. We expect and intend that the fundamental use of DAB will be 
for the provision of free over-the-air radio service. We will, 
therefore, require radio stations to provide at least one free digital 
over-the-air audio broadcast service. Specifically, radio stations 
operating in a digital mode must provide one free digital audio 
programming service that is comparable to or better in audio quality 
than that of their current analog service. Such a baseline requirement 
mirrors the Commission's analogous requirement for digital television 
stations, and is based on the same underlying policy consideration that 
significant benefits from digital conversion should flow directly to 
the public. We do not here alter the requirement set forth in the DAB 
R&O that a radio station must simulcast its analog programming service 
on its digital signal. However, we will revisit the simulcasting 
requirement in the future when we decide whether or not to approve the 
NRSC-5 standard. In any event, simulcasting is part of the IBOC 
operational structure and a radio station must duplicate its 
programming if it wants the DAB ``blend'' feature to work properly.
    29. Taking these points into consideration, we will permit radio 
stations to use their frequencies as the marketplace dictates, an 
approach supported by dozens of interested parties and consistent with 
our digital television policy. We are hopeful that this flexibility 
also will lead to a more rapid conversion to DAB. We elaborate on this 
issue below by addressing issues raised regarding some of the services 
DAB stations might choose to provide.
a. Digital Audio Broadcasting Signal Quality
    30. In the DAB FNPRM, we sought comment on whether or not we should 
require broadcasters to provide a high quality digital audio signal 
and, if so, what minimum bandwidth should be required for this purpose. 
We also sought comment on the amount of

[[Page 45675]]

capacity necessary to allow radio stations to broadcast a high quality 
digital signal while permitting the introduction of new datacasting and 
audio services.
    31. iBiquity supports the use of the IBOC system to improve audio 
quality. It believes, however, that market forces should be allowed to 
determine the optimal quality levels of the IBOC system. iBiquity 
argues that the Commission should not establish minimum quality 
requirements, but rather should allow radio stations to make their own 
determination of the appropriate level of audio quality for their 
particular listeners. NAB states that, at this early point in the 
digital radio transition, it is impossible to conclude with any measure 
of certainty the number of bits necessary to support a good quality 
main audio signal or how many secondary audio streams an IBOC radio 
station can transmit without degrading audio quality. Cox Radio adds 
that any restrictions contemplated by the Commission may become 
obsolete soon after they are adopted.
    32. As discussed above, we decline to require broadcasters to 
dedicate a minimum level of digital bandwidth to provide a high quality 
digital signal. Instead, we leave the decision as to the quality of the 
signal provided to the discretion of the radio station licensee, 
subject to the comparable signal obligation discussed earlier. The IBOC 
system allows stations to offer the public high quality audio, as well 
as a broad variety of other innovative services. We believe that we 
should provide broadcasters with the freedom to innovate and respond to 
the marketplace in developing not only the mix of services, but also 
the quality of the audio they will offer the public.
b. Multicasting
    33. The IBOC FM DAB system permits an FM radio station to broadcast 
multiple audio programming services within its assigned channel. As AM 
IBOC operation develops, iBiquity plans to introduce the option to 
split the digital AM bitstream into two channels. In order to provide 
multiple digital programming streams, a radio station must reduce the 
audio bit rate of its main channel broadcasts or use the extended 
hybrid mode to obtain additional capacity that can be devoted to a 
lower bit rate supplemental audio channel. Testing conducted by NPR 
established the viability of this functionality and also demonstrated 
that the supplemental channel will have coverage equivalent to the 
coverage of the main channel audio signal. Due in part to IBOC system 
design constraints, however, any supplemental audio services will not 
be able to take advantage of the blend function available to the main 
channel audio. The blend function enhances rapid tuning for the main 
channel digital signal and provides an analog backup signal in the 
event the main channel audio signal is lost. Therefore, any 
supplemental channel will require several seconds for tuning and will 
experience muting of the audio in the event of signal loss.
    34. In the DAB FNPRM, we asked how the availability of additional 
audio streams can further our diversity goals, particularly for people 
with disabilities and minority or underserved segments of the 
community. We tentatively concluded that adopting DAB service rules 
that encourage more audio streams would promote program diversity, and 
that, once the Commission adopts a policy in this area, radio stations 
would no longer need to obtain experimental authority to broadcast 
multiple digital programming streams. Section 303 of the Act compels 
the Commission to ``study new uses for radio, provide for experimental 
uses of frequencies, and generally encourage the larger and more 
effective uses of radio in the public interest.''
    35. Generally, commenters urged the Commission to authorize 
multicasting on a permanent basis, and at the same time, asked us to 
avoid excessive regulation that would disadvantage any new type of 
digital service. Specifically, commenters emphasized the benefits of 
multiple digital audio channels and how that IBOC feature will ensure 
the continuing viability of radio reading services as well as enhance 
the ability of broadcasters to offer more niche programming and public 
affairs broadcasts.
    36. The IBOC system makes it possible for FM radio stations to air 
additional streams of traditional radio programming (e.g., music, news, 
and sports), public safety services (e.g., national security 
announcements), assisted living services (e.g., radio reading 
services), non-English language programming, and news services to 
underserved populations. Experts state that one 96 kbps FM channel 
could be divided into up to eight streams of digital programming. Many 
stations commented that multicasting will foster the expansion of local 
public affairs programming generally and programming serving the 
Latino, Asian, and other communities of common cultural interest, in 
particular. A number of such stations comment that they will use their 
digital capacity to broadcast more foreign language services. Indeed, a 
large number of NCE stations filed comments specifically stating that 
the following program services are likely to emerge: (1) Special 
programming for English as a Second Language (``ESL'') listeners; (2) 
native American programming; (3) public affairs programming, such as 
school board, civic and local government meetings; (4) youth, young 
adult and student productions; (5) reading services for the blind; (6) 
homeland security/public safety programming; (7) arts and culture 
programming; (8) breaking news/special news events/emergency alerts; 
(9) international news coverage; and (10) educational/children's 
programming. NPR has announced that it will offer five music services 
for multicast streams on affiliated public radio stations: classical, 
jazz, electronica, triple-A, and folk. Other program offerings NPR is 
developing for stations with new channels include a news and 
information service and formats that would serve culturally diverse 
audiences. Westwood also said it would make its lineup of news, sports, 
talk and entertainment programming, as well as its traffic and 
information content available to HD Radio FM broadcasters' multicast 
services. In addition, iBiquity reports that commercial radio 
broadcasters, including Infinity, Capitol Broadcasting, and Greater 
Media have all launched new multicast digital radio streams with 
different formats in the summer of 2005.
    37. We will permit radio stations to provide multiple audio streams 
of digital programming without the need for individual station approval 
by the Commission. FM stations currently multicasting pursuant to 
experimental authority from the Commission are released from the 
requirement to submit a report, as specified in the letter granting 
multicasting authority. We believe that radio stations can best 
stimulate consumers' interest in digital audio services if they are 
able to offer the programs that are the most attractive to their 
communities. Further, allowing radio stations the flexibility to 
provide multicast services will allow them to offer a mix of services 
that can promote increased consumer acceptance of DAB, which, in turn, 
will likely speed the conversion process. Additionally, diversity of 
programming services may result from multicasting and provide 
programming to unserved and underserved segments of the population. We 
strongly encourage digital audio broadcasters to use their additional 
channels for local civic and public affairs programming and

[[Page 45676]]

programming that serves minorities, underserved populations, and non-
English speaking communities.
    38. Mt. Wilson Broadcasters opposes Commission action authorizing 
multicasting, at least at the present time, arguing that ``splitting 
the channel'' will derogate the service provided by FM radio stations. 
NPR asserts that Mt. Wilson Broadcasters is misinformed about the 
purposes of DAB, the technical feasibility of multicasting, and the 
competitive consequences of authorizing full-power broadcast stations 
to broadcast multiple audio channels. We find that multicasting will 
not derogate the service as Mt. Wilson argues. An FM station commencing 
DAB operations will have approximately the same geographic reach for 
its digital signal as for its analog signal. Moreover, splitting the FM 
signal into multiple digital streams will not harm listeners in any 
manner. As noted above, a licensee must provide a broadcast stream at 
least equivalent in quality to its existing analog service. In fact, an 
FM station operating a digital service will be able to provide more 
services than it could with only its analog signal. Accordingly we 
perceive no derogation of the type forecast by Mt. Wilson Broadcasters.
    39. Time Brokering. In the DAB FNPRM, we sought comment on the 
extent, if any, to which we should permit radio stations to lease 
unused or excess bandwidth to unaffiliated audio programmers. In this 
context, we noted that an unaffiliated entity may schedule the 
programming output of a particular digital audio stream for a period of 
time under a contract with the licensee. We stated that radio stations 
may benefit from leasing unused or excess air-time because they would 
have additional funds to invest in new programming, which, in turn, 
would benefit the public. We asked whether our diversity goals will be 
furthered if we allow independent programmers to lease excess capacity 
from broadcast licensees.
    40. We will permit radio stations to enter into time brokerage 
agreements for their digital bandwidth. ``Time brokerage'' (also known 
as ``local marketing'') is the sale by a licensee of discrete blocks of 
time to a ``broker'' that supplies the programming to fill that time 
and sells the commercial spot announcements in it. Because these 
agreements are essentially leasing arrangements, they achieve benefits 
similar to those achieved through leasing arrangements. The Commission 
has for many years permitted brokering of FM subcarriers and excess 
digital television bandwidth. Moreover, we permit stations to enter 
into time brokerage agreements on their main broadcast channels. 
Subject to our attribution rules, as noted below, broadcasters will 
have the flexibility in structuring business arrangements and 
attracting capital to make DAB a success. We agree with the SBAs that 
the adoption of this policy will allow licensees to recoup some of the 
costs associated with the digital conversion, and to increase outlet 
diversity. We strongly encourage digital audio broadcasters to enter in 
such agreements with ``eligible entities,'' which often include 
businesses owned by women and minorities. An eligible entity is an 
entity that would qualify as a small business consistent with SBA 
standards for its industry grouping. Moreover, the brokering of 
individual digital streams will provide a means to overcome some 
financial impediments to getting involved in broadcasting and there is 
a potential for new market entrants to take advantage of such 
arrangements. Whatever the agreement, it is the licensee who remains 
responsible for ensuring the fulfillment of all obligations incumbent 
upon a broadcast licensee, including ultimate control over program 
material aired on its station's facilities.
    41. In the DAB FNPRM, we also asked how Section 310(d) of the Act, 
regarding transfers of control, should apply to these situations as 
well as how the Commission's broadcast ownership limits and attribution 
rules would be affected if an unaffiliated programmer, that is also the 
licensee of another station in the same market, leases one of the 
additional audio streams. Moreover, we asked whether there should be an 
overall limit to the amount of programming time a particular radio 
station can broker or lease to others.
    42. A number of commenters raise issues regarding the interplay 
between multiple audio streams, brokering, and ownership issues. For 
example, REC Networks assert that when there is a substantial 
penetration of DAB receivers in the marketplace, owners of multiple FM 
stations in a single market should consolidate their multiple FM 
station broadcasts on a single channel, multicast their programming 
services using IBOC technology, and then divest their additional 
transmitter facilities. The SBAs state that brokering of a multicast 
audio stream would not constitute an illegal transfer of control. They 
argue that leasing of a digital stream is consistent with longstanding 
Commission treatment of time brokerage arrangements. Specifically, PIC 
argues, and we agree, that a licensee owning the maximum permissible 
number of stations in a particular market should not be allowed to 
acquire additional broadcast streams through time brokering agreements. 
Under the Commission's established policies for attribution of such 
agreements, we count the brokered station toward the brokering 
licensee's permissible ownership totals under the local broadcast 
ownership rules. Where an entity owns or has an attributable interest 
in one or more stations in a local radio market, time brokering of 
another station in that market for more than 15 percent of the brokered 
station's broadcast time per week will result in counting the brokered 
station toward the brokering licensee's ownership caps. We clarify 
that, in the multicast context, a station owner who programs more than 
15 percent of the total weekly hours broadcast on a digital audio 
stream of another station in the market will be considered to have an 
attributable interest in the brokered station. The interest 
attributable to a station owner in such circumstances is equivalent to 
the percentage of total broadcast time that the stream which is 
attributable to the station owner constitutes. Under a time brokering 
agreement, licensees must ensure that they maintain full, effective, 
and ultimate control over all material aired on their stations. 
Therefore, time brokering agreements do not raise transfer of control 
issues under Section 310(d) of the Act.
c. Datacasting
    43. In the analog context, all FM stations are authorized to 
transmit secondary services via an automatic subsidiary communications 
authorization (``SCA'') under Section 73.295 of the Commission's rules. 
Subsidiary communication services are those transmitted on a subcarrier 
within the FM baseband signal, not including services that enhance the 
main program broadcast service or exclusively relate to station 
operations. Subsidiary communications include, but are not limited to, 
services such as radio reading services, utility load management, 
market and financial data and news, paging and calling, traffic control 
signal switching, bilingual television audio, and point to point or 
multipoint messages. Some FM broadcasters currently provide emergency 
alert system notifications and paging functions under SCA 
authorization.
    44. Section 73.593 of the Commission's rules pertains to subsidiary 
communications services broadcast by NCE FM radio stations. Under our 
rules, the licensee of an NCE

[[Page 45677]]

FM station is not required to use its subcarrier capacity, but if it 
chooses to do so, it is governed by the SCA rules for commercial FM 
stations regarding the types of permissible subcarrier uses and the 
manner in which subcarrier operations are conducted. A significant 
difference from the commercial FM SCA rules, however, is the 
requirement that the remunerative use of an NCE FM station's subcarrier 
capacity not be detrimental to the provision of existing or potential 
radio reading services for the blind or otherwise inconsistent with its 
public broadcasting responsibilities.
    45. Similarly, Section 73.127 of the Commission's rules permits AM 
broadcast stations to use their AM carriers to transmit signals not 
audible on ordinary consumer receivers for both broadcast and non-
broadcast purposes. A station's AM carrier service authorization may 
not be retained or transferred in any manner separate from the 
station's license. The licensee must establish that the broadcast 
operation is in the public interest wholly apart from the subsidiary 
communications services provided. In the analog context, the station 
identification, delayed recording, and sponsor identification 
announcements required by Sections 73.1201, 73.1208, and 73.1212 are 
not applicable to leased communications services transmitted via 
services that are not of a general broadcast nature. For both AM and FM 
services, the licensee must retain control over all material 
transmitted in a broadcast mode via the station's facilities and has 
the right to reject any material that it deems inappropriate or 
undesirable.
    46. iBiquity, in a partnership with broadcasters and equipment 
manufacturers, has developed IBOC data services for terrestrial radio 
stations. The IBOC system permits radio stations to offer varied and 
robust datacasting applications. Using an established standard ID3 
format (ID3 is a file tagging software used to provide text information 
such as artist name and song title information. ID3 also supports text 
descriptions with ads, such as phone numbers and Web addresses.), 
information services can be used to provide listeners with song, CD 
title, and artist information. In addition, information and host 
profiles will complement advertisements and talk radio formats. 
Synchronized multimedia integration language (``SMIL''), a protocol 
used by iBiquity as the foundation for advanced application services 
(``AAS''), allows for the creation and delivery of new data services in 
the future. Some possible commercial applications envisioned by 
iBiquity include: (1) Enhanced information services such as weather and 
traffic alerts delivered to DAB receivers as a text and/or audio 
format; (2) enhanced advertising services; (3) listener controlled main 
audio services providing the ability to pause, store, fast-forward, 
index, and replay audio programming via an integrated program guide 
with simplified and standard user interface options; and (4) 
supplementary data delivery that will spur the introduction of 
automatic driving assistance applications, navigation and rear-seat 
entertainment programming. Robert Struble, iBiquity's CEO, has noted 
that the text of advertising messages could be synchronized to display 
on a DAB receiver's text screen at the same time as a related 
commercial is broadcast. We sought comment on whether we should permit 
radio stations to distribute any and all types of datacasting services. 
We also sought comment on what data services digital noncommercial 
educational stations should be permitted to offer.
    47. iBiquity urges the Commission to authorize datacasting services 
and to include sufficient flexibility in the datacasting authorization 
to promote innovation in this area. iBiquity states that there is 
tremendous opportunity for the development of low-cost innovative 
datacasting services. iBiquity submits that the greater capacity and 
reliability of data services based on the IBOC system will help ensure 
that data services are introduced. It suggests that promotion of 
datacasting will help introduce new services to the public and will 
also provide added value for consumers who invest in IBOC receivers. 
NAB similarly asserts that datacasting services are still in the 
nascent stage, and that the Commission's main goal at this time should 
be to encourage and enable broadcasters to innovate and experiment with 
these aspects of digital radio. NAB maintains that providing 
broadcasters with flexibility in this area will expedite the emergence 
of DAB. Bloomberg states that the Commission must not unnecessarily 
limit the ability of the DAB platform to carry program-associated data 
or other additional, innovative data services. It argues that the best 
way to encourage investment, and thereby spur terrestrial radio 
broadcasters to make the conversion to DAB, is to provide broadcasters 
with the utmost flexibility to develop new digital applications. The 
SBAs state that the Commission should permit licensees to provide for 
datacasting, within the constraints of the IBOC technical standards, 
mainly because it would enhance the multiplicity of information 
sources. NPR states that the opportunity to offer datacasting services 
will motivate stations to develop new services beyond what is available 
today. It expects stations to use their technical capabilities to 
provide homeland security-related services, addressing local, regional, 
or national events and emergencies, and provide expanded weather 
alerts, traffic safety, and other public safety services.
    48. Consistent with our decision with regard to audio multicasting 
services, we conclude that permitting broadcast licensees flexibility 
with regard to the provision of datacasting services is in the public 
interest. We will permit radio stations to provide any type of digital 
datacasting service, consistent with existing broadcast policies and 
rules applicable to analog SCA services, as long as it does not 
derogate the mandated stream of free audio programming. Our aim is to 
promote innovation and experimentation that will lead to applications 
that will serve the public, such as song and artist information as well 
as enhanced news, weather, and emergency updates. We note that, for 
reasons discussed infra, we will currently only allow datacasting that 
is subscription pursuant to an experimental authorization granted by 
the Commission.
2. Ancillary Subscription Services
    49. Radio stations may wish to offer certain digital audio or data 
content under a subscription model. In this context, ancillary 
subscription services may be available for a fee or the listener may 
simply need to enter a code to access the service. IBOC DAB has the 
potential to limit access to certain channels by receiver serial 
number, just like satellite radio receivers are presently able to do. 
In the DAB FNPRM, we sought comment on whether we should permit 
ancillary subscription services. One proposal offered in the DAB FNPRM 
was to permit ancillary subscription services as long as they do not 
derogate the free services a radio station broadcasts. We also asked 
whether we should impose spectrum fees for that portion of digital 
bandwidth used for ancillary subscription services. Commenters 
generally urged the Commission to permit ancillary subscription 
services, but argued against the imposition of fees associated with the 
offering of such services. iBiquity argues that broadcasters can 
currently provide both datacasting and supplemental audio channels 
using SCA analog frequencies without incurring additional spectrum fees 
and the same approach should be applied to digital services. NAB states

[[Page 45678]]

that it would be inappropriate to consider fees at this time because a 
fee requirement would have the effect of discouraging innovation and 
new services that would benefit the public. Nevertheless, we remain 
concerned that pay services, left unrestricted, could overwhelm free 
over-the-air services, to the detriment of the listening public. We 
expect terrestrial radio service to remain a free over-the-air service 
and, therefore, the amount of capacity devoted to ancillary 
subscription services must be limited. We thus seek further comment on 
ancillary subscription service issues in a Second Further Notice of 
Proposed Rulemaking, found below. Until this Rulemaking is completed 
and a determination is made regarding assessment of the five percent 
fee, discussed infra, we will only allow ancillary subscription 
services pursuant to an experimental authorization granted by the 
Commission. We would grant such authorizations for uses that serve the 
public interest, including current subcarrier services like radio 
reading services.
3. Noncommercial Educational Stations
    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 also requires that public stations engaged in revenue generating 
activities comply with accounting procedures designed to separately 
identify these commercial revenues and costs, and it prohibits 
Corporation for Public Broadcasting funds from being used to defray any 
costs associated with these activities. 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. Section 73.621 
of the Commission's rules provides that ``noncommercial educational 
broadcast stations will be licensed only to nonprofit educational 
organizations upon a showing that the proposed stations will be used 
primarily to serve the educational needs of the community; for the 
advancement of educational programs; and to furnish a nonprofit and 
noncommercial television broadcast service.''
    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. Like 
commercial DTV stations, NCE DTV licensees must pay a fee of five 
percent of gross revenues generated by ancillary or supplementary 
services provided on their DTV service. 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.
    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 NC