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Kevin Martin's Date with (Digital) Destiny

FCC Chairman Discusses Upcoming Digital-TV Transition, His Detractors and Why He's Not Running for Governor of North Carolina

By John Eggerton
Broadcasting & Cable, 9/22/2007 6:00:00 AM

Federal Communications Commission chairman Kevin Martin, who is rumored to have political aspirations in his home state of North Carolina and could always beat an early retreat to a private-sector payday, said he plans to be around Feb. 17, 2009, when the transition to digital TV takes place.
As the nation's cable operators and broadcasters prepare for the big day, the two industries are also required to prepare the public. Martin said broadcasters are already serving the public interest voluntarily, although they may need a push to better inform the FCC of those efforts. He added that the cable industry, left to its own voluntary commitments on TV-station carriage, would have likely left some viewers unable to watch broadcast TV.

At 40 years old, the fresh-faced, bespectacled regulator has been compared with Harry Potter, but for some in the cable industry, he comes across more as Lord Voldemort. He hopes the FCC's recent “dual-carriage” ruling that mandated cable carriage of digital broadcast signals after the transition will prevent his nightmare of a DTV-transition scenario.

In a rare and wide-ranging interview on the DTV transition, chairman Martin faces his detractors, opens up about the FCC's role and tells why he's not running for governor of North Carolina.

Commissioner Jonathan Adelstein referred to the fact that the FCC has not established public-interest obligations for DTV stations as outright dereliction of duty.

I disagree with commissioner Adelstein. I think that we have been establishing public-interest obligations. First, we have been very clear that all of the public-interest obligations that apply to broadcasters in analog also apply when they are broadcasting in digital. And we have actually expanded those in the context of things like children's television programming. So, I disagree.

I have also proposed to the other commissioners, and in fact it has been on circulation [for vote] since I became chairman, that broadcasters more specifically identify the kind of public-interest programming they are putting on and report that to the commission. And I think that will help let us know how much the broadcasters are doing to serve the public interest.

I am also always concerned that when we talk about a mandatory minimum that it becomes not only a floor, but a ceiling. I think that is only the amount that broadcasters would end up doing as well.

Is that part of the effort to get them to post more of their public files online?

Yes, but it does much more than that. So, the enhanced disclosure says that they need to make some of this information available online, but it also has a standardized form with quarterly reporting of the programming that is aired in response to particular issues, and it is provided on a quarterly basis. I think that would be a pretty significant change that the commission has had in front of it for several years that I continue to support. That would include reports on locally originated programming, news and current events and campaign reporting. They would have to be reporting how much of that they are doing, although there is not a requirement or a mandate to require a certain amount.

And I think that is a significant difference between me and commissioner Adelstein, who wants mandatory minimums in many of these categories. I think we should provide a mechanism for broadcasters to report to us how much they are doing in this area.

But not necessarily be setting quotas for what more they should be doing?

Not even “not necessarily.” No, I don't think we should be setting a quota or a mandatory minimum. I actually think the broadcasters are doing a lot to serve their local communities. I think we should be trying to gather that information and take a look at it. But I think the first step in evaluating how much they are doing means gathering information about what they are already doing, and then we can evaluate whether more needs to be done or not.

You said after the dual-carriage proposal passed that “Without the proper policies in place, viewers may be unable to realize the full opportunities” of the digital switch. What further policies should be in place?

I think that there are a variety of policies. Viewability was a central one to making sure that we are minimizing the burden to consumers. The item on how broadcast and cable educate consumers is an important one. There is a third periodic review of the DTV transition and the DTV table of allotments. So, there is still some other work to be done, but viewability was one of the most important policies.

How important is the multicast-must-carry element?

I think multicast must-carry is an opportunity for the transition and an opportunity for consumers. I think that if we provided multicast must-carry, broadcasters would have both the opportunity and incentive to provide multicasting with their digital signal. They would then be able to serve their local communities with multiple broadcast streams.

They can't rely on only the 15% of over-the-air households to justify the investment in those additional programming streams. But I think that that 15% of households who are only watching over-the-air television would benefit from having additional broadcast programming streams to watch. Trying to facilitate that would benefit them greatly. They would be able to watch that additional programming even with a simple digital-to-analog consumer device, which is part of the NTIA converter-box program. They wouldn't have to go buy a new HD television set to get the benefits of the digital transition.

So, I think that multicasting and the incentives that multicast must-carry provides are an important and essential opportunity to realize the full benefits of the digital transition.

The FCC is holding its next ownership hearing in Chicago Sept. 20. What do you say to someone who stands up and asks what opportunities there are for minority broadcasters in the digital world?

I would say that I have had in front of the other commissioners for almost six months an item that would allow broadcasters to take advantage of the digital transition by leasing out some of their digital capacity to a designated entity, like a minority broadcaster.

One of the things I have heard from many minorities interested in getting into broadcasting is that there is not additional broadcasting space and that there is a very high cost for getting into broadcasting because you have to build new facilities, including a tower. And this would provide an avenue for getting into broadcasting in a low-cost manner, and I encourage all my fellow commissioners to vote to adopt it.

What's the hold-up?

You have to ask the other commissioners [see "A Diversity of Voices" below], but I think that this would be an excellent opportunity for minorities and small businesses to try to lease capacity. As a result of the DTV transition, there will be many broadcasters who will have extra capacity. They would be able to lease that capacity and then get out an additional signal with a potentially new viewpoint in that community. I think that this is an important item.

Last week, Sen. Herbert Kohl (D-Wis.) hammered the FCC and NTIA in a hearing about the effect of the transition on seniors and introduced a bill that would mandate various benchmarks, public-service announcements and reporting requirements, saying that the FCC and NTIA were not coordinating the DTV transition well and that there was conflict among the commissioners about what should be done. Is he right?

We always welcome input and direction from members of Congress. Similarly, I am eager to work cooperatively with my colleagues on the commission and would work to implement DTV-related ideas they may have that are within our authority.

I am pleased to report that we are already moving forward on a rule-making that would require broadcasters, MVPDs [multichannel-video providers], retailers and manufactures to take certain steps to publicize the DTV transition and meet specified consumer education benchmarks. For instance, we are considering whether the commission should require the industry to report every 90 days on their consumer education efforts, require broadcasters to air public-service announcements and a rolling on-screen scroll about the transition, and require all MVPDs to include information about the transition in customers' bills.

The cable industry has argued that the digital, interactive, on-demand world could well drive the marketplace toward a more a la carte model. Wouldn't it be better to let the marketplace drive a la carte, rather than mandate it?

I would welcome and appreciate efforts to allow consumers to be able to pick and choose their channels and be able to help lower their cable bills. But I haven't seen the industry responding to consumers' demand to have more control over their content and cable bills, despite the fact that technology is providing that to them.

In the last 10 years, we have seen cable rates increase at a significant rate above inflation, increase significantly over the rates of every other industry we regulate. They have doubled in the last 10 years. Consumers are paying more and more for more and more channels they don't want. At the same time as those rates have doubled, Nielsen indicates the number of channels watched by a home has gone up from about 12 or 13 to 15, yet the number of channels has gone to over 100.

I think it is important for us to use every opportunity to allow [consumers] to have more control over their cable bills. And I would welcome the industry working on providing consumers more opportunity to control their cable bills as well.

What do you see as the FCC's principal role in the DTV transition?

We have a three-pronged approach to the DTV transition. We will be focusing on making sure we have the right policies in place. We will be trying to enforce those policies across the different sectors that we regulate, and we will be trying to make sure we inform consumers about the upcoming change. And I think our overall goal is going to be minimizing the burden on consumers and creating as smooth a transition as possible.

Unless you leave to run for governor of North Carolina, or exit early to make scads of money in the private sector…

I don't have any plans but to stay here at the commission.

...You are scheduled to be here in February 2009. So, if the DTV transition goes off track, what worries you most?

I think we took some important steps this week [in the FCC's public meeting approving dual carriage] to make sure that we are trying to minimize that burden to consumers. One of the things I was most concerned about is that a lot of the discussion has focused on over-the-air viewers and how we are able to educate them about the upcoming transition, and what they need to do to be able to continue to watch their broadcast stations. But there are approximately 40 million homes that subscribe to analog cable, and it was unclear what was going to happen to a lot of those homes and what broadcast signals they were going to be able to watch the day after the transition.

And I think that we were at a much greater risk of some of those viewers not understanding that there was going to be an impact on their watching as well. My nightmare scenario would have been if there were a significant number of consumers who didn't understand that they were going to be impacted even though they knew the transition was occurring. And they would have then woken up the day after and had a significant change after thinking it wasn't going to matter and, in many cases, had been told it wasn't going to matter or that it was going to be taken care of for them. And I think that was what I was very concerned about, so I was pleased the commission took steps this week to make sure we addressed those analog cable subscribers as well.

But the cable industry says it volunteered dual carriage for three years to help out with the DTV transition. Were you still concerned that viewers could wake up and be denied channels they were expecting?

Absolutely. [The cable industry] had offered to do three-year carriage, but they had carved out a significant number of their systems. If you look at the proposals they had put forward, they had said that any cable system that they defined as capacity-constrained could choose to carry which five top stations they wanted to bring down from analog, or the top five broadcast stations. The top five would not have included many of the must-carry stations and wouldn't even have included all of the retransmission-consent broadcast stations necessarily. And I asked the industry how many homes they were talking about, and they said that that carve-out alone was approximately one-third of the country. In addition to that, they set up an explicit exemption from having any dual-carriage obligation whatsoever.

So, I think that if all you had was their voluntary commitment, you would have seen a situation in which a significant number of viewers would have been impacted and left without being able to watch broadcast TV.

Small-market cable operators argue that without that “carve-out” for small cable operators, they won't be able to roll out rural broadband, which is a priority for the FCC.

I think it is critical that we implement the law that requires that every cable subscriber be able to view the local broadcast signals that they are required to carry. Congress explicitly said that broadcast stations must be viewable, and that is a legal requirement that I thought it was important for us to enforce.

You got a 5-0 vote and clearly you had to compromise. You didn't get everything you wanted.

I never get everything I want.

There are some who would argue that you are more Voldemort than Harry Potter as far as the cable industry is concerned. Does this show that you and cable can work together? Is there something nice you can say about cable?

I am anxious to always work with every industry the commission regulates. And the only thing I would add is that I don't think it is only the cable industry that would describe me as Lord Voldemort. I think at times other industries would put me in that category, as well.

What is the purpose of this week's DTV-education forum at the FCC? Is it to give consumer groups an opportunity to vent?

No, I think it is an opportunity to incorporate them into our consumer education process and make sure we're hearing what they think we should be focusing on and what methods we should be providing to make sure we are informing as many people as possible -- particularly those who are more likely to be over-the-air viewers and are going to be impacted, and the viewers from communities that we specifically pay attention to, like the elderly -- to make sure they are aware of the change.

The cable industry said it is going to launch its campaign, and the National Association of Broadcasters was preparing to unveil its first PSA as we were going to press. Are the cable and broadcast and consumer-electronics industries doing enough in terms of education?

I am anxious to see what they are going to do. I think that it is important that they all become very involved. The commission also has a proceeding before it asking whether we should be requiring certain kinds of information to be provided to consumers. We have already taken steps to require those at the point of sale and in retail stores, and we are looking at whether we should also be making certain requirements of broadcasters for their over-the-air PSAs and bill inserts in terms of cable operators.

So, I think the commission is still looking at what other things we can do, but we certainly appreciate all the steps the industries are beginning to take.

Are you going to wait and see how their campaigns unfold, or are you going to act on some of those requirements, like the PSAs or a mandatory on-screen scroll or reporting requirements?

Reply comments aren't even due until October. The campaigns are announced and beginning to get underway, so obviously we're going to take into account what's occurring. But I think that we'll take into account those comments [which the broadcast and cable industries made last week against mandatory requirements] to make sure we're doing all we can to inform consumers.

Some transmission experts say that the prototypes for digital-to-analog converter boxes weren't meeting standards for reception. How closely do you work with the NTIA, and what can you do to ensure that the boxes work?

Our engineers have been contracted to do some of the testing of the devices for NTIA to make sure they are conforming to the rules, so we will be involved in it from that perspective.

What about worries that the boxes may not be on store shelves in January. Are you concerned?

The NTIA is primarily responsible for that aspect of the program, and I think we are going to do everything we can from our end to facilitate getting out these devices as quickly as possible.

The FCC has asked for an additional $1.5 million from Congress for DTV education. You outlined some of those efforts in a letter to the Hill.

In that letter, I talked about efforts we had already undertaken, and what we would be able to do with additional media and additional coordination with other consumer entities and state and local governments, as well as getting our folks out to conferences to targeted audiences and translating a lot of our information into foreign languages.

Broadcasters say allowing unlicensed mobile devices to operate in the broadcast band could cause interference to DTV transmission and throw a wrench into the transition. The results of FCC tests appear to confirm that interference threat. So, do you support allowing unlicensed mobile devices in the band given that interference threat?

When the commission opened this proceeding, I said we didn't want to do anything that would jeopardize the transition because it was so important to minimize the impact on consumers. But I also think that from a technical perspective, theoretically, you should be able to manufacture a device that would sense or hear a broadcast signal and make sure it was operating in such a way that it did not interfere with that.

Our engineers have done some initial tests on the devices that have been produced thus far and made them public. The technology community has identified an additional box for us to test. So, we will make sure we continue to test any kind of device anybody brings us and continue to do that in a very public way. In general, I support a policy that would allow us to make more efficient use of the spectrum, including allowing for unlicensed devices as long as they don't create interference with broadcasters.

The commission is still working with both the broadcast engineers and the technology-company engineers to evaluate both the initial results of their tests and whether there are any tests or additional work on those or other devices. The technology committee said one of the devices was broken and that they have another device that would be able to operate as they had claimed. So, we're going to wait and see the results of those tests before we make any decisions.

So, that doesn't sound like you will be ready by next month to approve unlicensed mobile devices.

It depends on when the engineers get back to us. But we're doing this in a very transparent way where they are including both sets of parties so they can be there as part of the process to evaluate the results of our testing.

Can broadcasters be assured they will be part of that process?

Absolutely.

A Diversity of Voices
When asked why his fellow commissioners had not voted on his proposal to allow TV stations to lease DTV capacity to minorities and women to help boost the diversity of voices in the digital age, FCC chairman Kevin Martin replied, “You have to ask the other commissioners.” We did.

Commissioners Jonathan Adelstein and Deborah Taylor Tate did not respond by press time. The office of Commissioner Robert McDowell would only say that they were "still looking at it."

But Democratic commissioner Michael Copps, who has been a lead voice on the commission against further media consolidation and in favor of greater diversity, had a lot to say.

"The state of minority media ownership is a national disgrace," he told B&C. "There is no shortage of good ideas worth exploring. Last month, for instance, the commission at long last sought comment on dozens of proposals from the FCC’s own Diversity Committee and the minority public-interest community.

“If we are serious about fixing the problem in a comprehensive way, we should act on these proposals. The idea of leasing digital capacity raises some threshold questions. Will it help the groups we are trying to help? What is the relationship between the station and the entity leasing its spectrum? How will the FCC ensure that the entity leasing capacity is truly independent? Will there be costs and, if so, who will determine how much is charged for access?

“We cannot afford to get this wrong or focus too narrowly on a single proposal. Our goal ought to be first class media ownership and access for women and minorities, nothing less.”