Speech by FCC Chairman William Kennard to the National Association of Broadcasters. Title: "A New Tomorrowland." Re: Internet audio as broadcast, broadcast ownership rules, tax certificate programs, low power radio, and digital radio. Date: September 2, 1999. Source: Federal Communications Commission.

Speech of
William E. Kennard, Chairman
Federal Communications Commission
before the
National Association of Broadcasters
September 2, 1999
Orlando, Florida
(as prepared for delivery)

"A New Tomorrowland"

Thank you, Eddie, for that kind introduction. I want to thank Eddie and the entire NAB board for hosting the Chairman's breakfast.

Before I start, I want to introduce some members of the terrific FCC staff who are here today.

I know that all of you know Roy Stewart, Chief of the Mass Media Bureau. Last week, I had the privilege of presenting Roy with an award acknowledging the 35th Anniversary of his service at the FCC. We all owe Roy a tremendous debt of gratitude for his lifetime of service to the public in working with the broadcast industry.

And many of you know Susan Fox, who was my Senior Legal Advisor and who is now the new Deputy Chief of the Mass Media Bureau. I also want to be sure to introduce you to my new Senior Legal Advisor, Tom Power.

Almost 25 years ago, one of the biggest attractions in Disney World opened: Space Mountain. Most people remember Space Mountain because the whole ride was in the dark. But Space Mountain also had another part to it: the Home of Future Living.

As you came off the ride and stepped onto the Speedramp, you were treated to a look into the home of the future. You were shown the father having a business meeting through a monitor he held on his lap. In the nursery was a little camera that broadcast to other parts of the house so everyone could keep an eye on the baby. In one room, a kid took an interactive pottery lesson and in another, the mother ordered dishes through an onscreen catalog system.

Needless to say, by the 1980s, this part of the ride was updated significantly. And now, as we approach the millennium, the exhibit is totally different. The reason is simple: the Home of Future Living has arrived. Interactive TV, ordering on-line, and distance education are now part of our lives. And now it's mom on the PC having a business meeting, while dad's ordering dishes. Tomorrowland is now Todayland. Even in Disney World - the home of dreams and fantasy - they have to constantly keep apace of our changing vision of the future.

Perhaps it's fitting then that we meet today in Orlando, just a short ride from the Magic Kingdom. Because you who work in the broadcast industry know firsthand what it's like to be part of a world that is constantly changing, a world where the technology that was once found in our science fiction is now found in our cars, on our desktops, and in our pockets.

Think about what broadcasting looked like thirty years ago when Walt Disney World was being built. Back then, there were three TV networks; cable was still a novelty; and, at least in my house, interactive television was when my mom yelled at me to turn down the TV set. Most people listened to the radio by tuning their handheld transistor to a local AM station. And there were still homes where you could find a large wooden console radio sitting in the living room.

Today, there are seven networks, and cable systems serve almost 65 million TV households. Although the transistor radio has not disappeared, now, we listen in stereo, on FM, through headphones, and often to nationally-syndicated programs. And some people are even listening on their PC's linked to the Internet to ballgames, news, and music broadcast from around the country and around the world. The Internet is changing every facet of communications as we know it, and now that includes radio. It is a fundamental paradigm shirt. [Empasis added.]

As we cross over into the new millennium, we are clearly entering a new media age.

As broadcasting and radio enters its second century, our challenge is to strike a balance between clearing the path for America to reach the next horizon and remaining true to the principles that have guided us to this point.

These two priorities are what guided me in developing the broadcast ownership rules that the Commission adopted last month. When I spoke to the NAB this April, I told you that I was committed to modernizing the broadcast ownership rules. I asked you to join me in crafting commonsense ownership relief. You did. We worked together. And now we have a new, clearer set of broadcast ownership rules.

Finally, after eight years, we cleaned up the rules and provided the certainty that the market needs to grow and develop. But more than that, we adopted commonsense rules that recognize the dramatic changes that the media marketplace has undergone since the first broadcast ownership rules were adopted three decades ago.

We recognized that broadcasters need the flexibility to compete effectively. And we took the steps necessary to preserve free, local, over-the-air broadcasting.

That's why we relaxed the radio-television cross ownership rule, allowing parties to own up to two television stations and six radio stations in the larger markets.

Yet we also recognized that broadcast ownership rules serve principles that we still cherish -- principles like competition, localism, and a diversity of voices. To protect these vital principles, we adopted a "diversity floor" to make sure that no American lives in a community where they can't enjoy a diversity of independently-owned broadcast stations.

I'm proud that we brought closure to the broadcast ownership proceedings. But we can and must do more to make sure that there are a multitude of voices and opinions on the airwaves. Many in your industry and in the NAB recognize this. I commend Mel Karmazin and Lowry Mays for their leadership and for rising to the challenge of opening up the broadcast business to those who have been on the other side of the signal for far too long.

Others in broadcasting and in public service are doing their part too, working to revive an idea that the NAB itself pioneered: the tax certificate program. Vice President Al Gore, Senator John McCain, Congressman Charley Rangel, my friend and colleague Michael Powell, and your own Eddie Fritts are all working to find ways to create opportunities in the broadcast business.

And, as many of you well know, one of the most effective ways to create opportunity is the tax certificate program. We all know that the big group owners are able to use the tax laws to trade stations and grow their businesses on a tax-free basis. We need to harness the power of those tax incentives for small businesses and new entrants to broadcasting. We know the tax certificate works. It's a win/win. We need to bring it back.

But, we need to impose limits on how many times you can benefit from a certificate. This must be a hand-up, not a hand-holding. The responsibility lies with the new license holder to make the best of it.

Also, we need strict standards on firms eligible to purchase licenses so that large corporations or unscrupulous deal-makers operating as fronts are not the ones to benefit from this program.

And we need safeguards to make sure that we don't attract to this business those interested in the indiscriminate flipping of properties. We need new owners committed to building businesses and creating wealth that helps and serves their communities.

This type of program is sensible. It honors our commitment to equality for opportunity while respecting market forces and the hard work of entrepreneurs everywhere. It would go a long way to correcting injustices of the past, and preparing us for the future - a future in which our nation will be more diverse and in which telecommunications will play an even greater role.

Another way of creating opportunity is to use the airwaves to create more outlets of expression through low power radio. Now, I know that many of you are very concerned about low power radio. And that's why I came here today to speak to you in person about my vision for low power radio. I want to explain to you why I think we can work together to make low power work.

Low-power radio has the potential to create outlets for an array of new voices like churches, community groups, and colleges. It can give voice to those ideas not always heard, but which many yearn to hear.

Already, we've heard from a wide range of people and groups eager to seize this opportunity. Like state and local governments that want to use radio to communicate with the public. Like colleges and universities all around the country that want their students to learn how to run a real radio station, so that they can go to work for you one day.

I want to be very clear about two things. First, this FCC is committed to preserving the technical integrity of FM radio. And second, this FCC is committed to a digital future for radio. I want to personally assure you of my commitment to achieve both objectives. But these objectives are not inconsistent with having a low power radio service in this country.

I have been working with our engineers to make sure that a new low power radio service will not interfere with the existing radio service. Our engineers have released a study - a lab test on low power stations - that I believe is very promising.

Our study used a wide range of inexpensive radios. These included both new and used car radios, boom boxes and low-cost home stereos. These 21 radios were certainly not fancy, high-priced radios - what some engineers call "lab queens." In fact, they included two radios that a couple of engineers on our staff were about to throw away.

Our engineers found that all of the radios far exceeded the current interference protection standards for the third adjacent channel. And, all but two of these inexpensive radios exceeded the current interference protection standards for the second adjacent channel. These are the results of one study, and I look forward to carefully reviewing all of the technical studies that will be before us in the record.

Let's work with interference standards we have to develop an engineering solution for low power radio. These standards have worked. They've helped you to build the world's best broadcast system. We don't need to create a whole new set of interference standards, especially not just for the purpose of thwarting low power radio.

I am committed to working with you on low power. The question is how can we do it in the best possible way - whether 1 to 10 watts or 100 watts or 1000 watts? Whether commercial or non-commercial? To answer these questions and to move forward, we'll need your experts and engineers to work with ours. We need cooperation, not confrontation. That's why, in the coming weeks and months, our engineers plan to work closely with all interested parties on the technical questions.

And while working on this, we will - and we have - redoubled our efforts to shut down pirate radio stations. Under my leadership, the FCC has shut down more pirate radio stations than any other Commission. We've done it here in Florida. We've done it around the country. And we'll continue to do so. We can and will open the airwaves, but we will do so legally and responsibly.

In the end, to seize the future, government and industry need to work together. The whole world is going digital. From wireless phones to TV, the whole communications industry is going digital - and so should you. That's why we are working to develop digital radio. Last winter, we asked for comment on the first digital radio proposal that we received. And this coming fall, we will move ahead with a formal proceeding. We are anxious to work with you in developing the best digital service for you and for your listeners.

And as you change the ways in which you broadcast and run your businesses, we are changing too. We are building a new FCC for the 21st century. We are overhauling how we are organized and how we work with the industry and the public. In fact, in the coming months, the Mass Media Bureau -- under Roy Stewart's leadership -- will begin full electronic filing, a commonsense move that will make it faster for us to process forms and easier for you to do business.

In five years time, the FCC as we know it today will look very different. And so will your industry. We're going to change and you're going to change.

This change is daunting -- for both of us -- but the opportunities are also great. And of this I am sure, your industry will adjust to the challenges of the digital age, just as you have adjusted to every new communications technology of this century: from the challenges of television in the 1940's to the challenges of the Internet in the 1990's.

And, I am confident that this industry will demonstrate once again what it has shown time and again - an ability to adapt, to embrace change, and to find new and innovative ways of serving the American people.

Thank you.