Background: The Telecommunications Act of 1996 (1996 Act) established the basic framework by which the Federal Communications Commission (FCC) would issue licenses to offer advanced television services (1996 Act, § 201, adding new section 336 to the Communications Act of 1934).

In its Fifth Report and Order concerning advanced television services (7 Comm. Reg. (P&F) 863 (rel. Apr. 21, 1997), the FCC fleshed out the congressionally-mandated framework and promulgated a licensing regime for what it called digital television (DTV).

Several months later, the Balanced Budget Act of 1997 modified several aspects of the FCC's plan (See 143 Cong. Rec. H6033). The current licensing rules are outlined below.

I. Eligibility To Receive DTV Licenses

1996 Act provided that, if the FCC decided to issue DTV licenses, it should restrict eligibility to existing broadcasters (both licensees and those who simply hold construction permits (permittees)) (§ 336(a)(1)).

The FCC decided to award an additional 6 MHZ channel to all full-power broadcast licensees and permittees. It pledged to explore ways to enable low-power television (LPTV) operators and television translator stations to convert to DTV at some future point. (Fifth Report and Order ¶ 17-18)

The Balanced Budget Act directed the FCC to find ways to assure, consistent with its DTV channel allotment plan, that qualifying LPTV stations receive a frequency below 746 MHZ with which to continue their operations. 143 Cong. Rec. H6033 (adding new section 337(e)(2) to the Communications Act).

II. Minimum Service Requirements

The 1996 Act did not define any minimum service requirements for DTV licensees, but the FCC has mandated that a licensee:

Offer at least 1 free digital programming service that (1) operates during the same hours as the licensee's analog channel and (2) has at least the same resolution as the broadcaster's existing analog service.

Need not broadcast a specified amount of high definition television (HDTV) programming.

Need not, for the first 5 years of operations, simulcast any of their analog programming on their DTV channel. A 50% simulcasting obligation arises in year six, increases to 75% in year seven, and then to 100% in year eight and each subsequent year until the analog channel is terminated and returned for reallocation.

III. Ancillary and Supplemental Services

1996 Act required the FCC to allow DTV licensees to offer "ancillary and supplementary" services over their new facilities under several conditions (§ 336(b)):

Provision of ancillary services is consistent with the transmission technology or standard designated by the FCC for DTV.

Ancillary services may not derogate from any DTV or other advanced service that the FCC may require licensees to provide.

Those services must be subject to the same FCC regulations that apply to analogous services offered by non-broadcast providers (excluding "must carry" and the program access requirements of section 628 of the Communications Act).

The FCC may prescribe such other regulations as may be necessary for the protection of the public interest.

To the extent that licensees provide ancillary services, they must pay a spectrum fee designed by the FCC.

FCC gave DTV licensees flexibility to offer ancillary services that do not derogate from the free over-the-air service they must offer. (Fifth Report and Order, ¶¶ 27-36)

FCC defined "ancillary and supplementary" services to include everything except free, over-the-air services.

FCC will eventually initiate a rulemaking to determine the spectrum fee that will apply.

IV. Public Interest Requirement

1996 Act made clear that nothing in its DTV provisions relieves broadcasters from their obligation to serve the public interest. It required all broadcasters that offer ancillary services to demonstrate, during any license renewal, that all of their programming services are in the public interest. Finally, the 1996 Act specified that any violation of the FCC's rules governing ancillary services would reflect on a broadcaster's qualifications to remain a licensee. (§ 336(d))

FCC noted that although the business and technology of digital broadcasting may be different, broadcasters will remain public trustees of the public's airwaves. (Fifth Report and Order, ¶¶ 48-50)

FCC will initiate a rulemaking to collect all viewpoints and then determine the precise contours of a DTV licensee's public interest obligation.

FCC also placed broadcast licensees and the public on notice that the existing public interest obligations will continue to apply until it determines whether to adopt new public interest rules for digital television.

V. Construction Schedule

1996 Act did not provide specific guidance about the construction schedule that should apply to DTV stations.

In the absence of specific guidance from Congress, the FCC has established the following deadlines for the construction of DTV stations (Fifth Report and Order, ¶ 76):

ABC, NBC, CBS, and Fox affiliates in the top-10 television markets must construct their facilities by May 1, 1999.

ABC, NBC, CBS, and Fox affiliates in the television markets 11-30 must construct their facilities by November 1, 1999.

All other commercial stations must construct by May 1, 2002.

All noncommercial stations must construct by May 1, 2003.

VI. Return of Analog Spectrum

1996 Act required that broadcasters' agree to surrender one of their licenses as a condition of receiving a second DTV license. (§ 336(c))

FCC set 2006 as the target date for return of the analog license on which broadcasters currently operate. Fifth Report and Order, ¶ 99. It pledged, however, to monitor deployment of DTV and to modify the surrender deadline if necessary. (¶ 100)

The Balanced Budget Act specified that no analog broadcast license may be renewed beyond December 31, 2006. (143 Cong. Rec. H6032-H6033, adding new section 309(j)(14)(A) to the Communications Act). At the same time, Congress directed the FCC to extend that deadline in any television market:

if any ABC, NBC, CBS, or Fox affiliate in that market is not broadcasting a DTV signal, assuming that the FCC finds that the station has exercised "due diligence" in trying to deploy DTV;

if digital-to-analog converter technology is not generally available in the market; or

if 15 percent or more of the households in the market do not subscribe to a multichannel provider (e.g., cable, MMDS, DBS) that retransmits at least one digital programming service from each DTV station in that market and those households do not have a digital television set or digital-to-analog converter.