Recommendation:
Although the Advisory Committee makes no consensus recommendation about entirely new models for fulfilling public interest obligations, it believes that the Administration, the Congress, and the FCC should explore alternative approaches that allow for greater flexibility and efficiency while affirmatively serving public needs and interests.
The broadcast world will soon change from one with some stability and certainty—one analog signal for each broadcast station, operating usually 24 hours a day—to one with unpredictability, uncertainty and fluidity. Some broadcasters will operate one signal, as before, only in digital instead of analog. Some may operate multiple signals, perhaps two, perhaps many more, throughout the day and night. Others will shift between one high-definition channel and multiple channels. Others will add datacasting to the mix. Applying existing public interest obligations to this variegated universe will not be easy, and will certainly not entail a simple one-for-one exchange.
Looking ahead to the digital era, where the flexibility to fit the different patterns that will develop and that will change over time will be increasingly important, many members of the Advisory Committee believe that the Administration, the Congress and the FCC should consider developing a whole new model of public interest obligations.
There are many models to consider. For many of us, a very promising approach would be to move to a kind of "pay-or-play" model. Under this model, broadcasters would be given the choice of maintaining the existing regime of public interest obligations, or of paying a share of revenues to bypass those obligations, while receiving in return an expedited license renewal process. Another option is embodied in a proposal made several years ago by Henry Geller, a telecommunications scholar and former FCC general counsel. Geller would implement a mandatory "pay" system whereby all broadcasters would be relieved of their public interest obligations in exchange for 2 percent of their gross revenues and 1 percent of the revenues from license transfers. The money collected under the Geller plan would be used for an endowment for public broadcasters, other noncommercial telecommunications entities and noncommercial programming, including programming for children, and for free time for political candidates. These options, and others that have been suggested to the Advisory Committee, are described in Appendix D.
The revenues received could then be used to enhance the public interest, by funding noncom- mercial public interest programming and services, especially locally originated and oriented programming and services. All broadcasters, of course, would still have to adhere to all statutory requirements and provide closed captioning, emergency reports, and reasonable access to political candidates. But allowing some stations, including religious and shopping channels, to pay in lieu of other public interest obligations would not only be less cumber- some, it would free up resources that could be used to enhance the public interest. A "pay-or- play" type model would replace the traditional regulatory approach with a marketplace model analogous to the trading of "pollution rights" in environmental regulation.
Advocates of pay-or-play on the Advisory Committee include broadcasters and non-broad- casters alike, attracted to the freedom of choice it provides to broadcasters, its simplicity, and the opportunity under the model to more efficiently allocate resources in the public interest. But several Advisory Committee members objected vigorously to the very idea of pay-or-play, arguing that it would damage or destroy the ethos of public trusteeship on which broadcasting had been built. Some broadcasters likened pay-or-play to the Civil War era policy allowing wealthy individuals to buy their way out of military service. Others had practical objections, wondering how it would be possible to set up an equitable fee structure for the "pay" option, and how to allocate the revenues achieved to enhance the public interest.
Some critics worried that pay-or-play would result in broadcasters dropping all public interest- oriented programming, leaving public interest programming segregated on public broadcasting outlets, resulting in less exposure by citizens to important information on public affairs or programming for children or others.
It was clear from our spirited discussions that the Advisory Committee would come to no consensus on any specific alternative model of public interest obligations. It was worthy of note that the divisions in viewpoint represented in the Advisory Committee were not predict- able, based on affiliation or general perspectives. Even though we make no consensus recom- mendation in this area, we do believe that regulatory authorities, industry groups and public interest groups should explore carefully the range of alternative approaches to public interest obligations by broadcasters in the digital age, looking towards eventual adoption of a model that builds in more flexibility and efficiency while serving public needs and interests.