F. Ownership and Eligibility

57. Local and Cross Ownership. We see the increased opportunity for entry, enhanced diversity, and new program services as the principal benefits of a new low power service. These goals may be hard, if not impossible, to achieve if LPFM stations are made available to existing broadcasters, or if a number of the new LPFM facilities in an area are under common control. Accordingly, we tentatively conclude that strict local and cross-ownership restrictions would be appropriate for the low power radio service. First, we propose not to permit a person or entity with an attributable interest in a full power broadcast station to have any ownership interest in any LPFM (or microradio) station in any market, and to prohibit joint sales agreements, time brokerage agreements, local marketing or management agreements, and similar arrangements between full power broadcasters and low power radio entities. As a corollary to this proposal, we are not proposing to give an application preference to AM station licensees, as urged by Crusading Broadcasting Ministry, Inc. and Robert M. Stevens. We do seek further comment on this issue, and on whether we should permit AM licensees to file applications contingent on the divestiture of their AM station in the event they are successful in obtaining an LPFM station. In addition to this cross-ownership rule, we propose to limit multiple ownership by prohibiting any individual or entity from owning more than one LPFM (or microradio) station in the same community. These restrictions would seem to obviate any arguable benefit from the restriction urged by some commenters on the form of business entity that could be an LPFM licensee.⁷⁵ We have used various designations for applying our multiple ownership rules for full power radio services, including signal overlap, Designated Market Area, and markets designated by the commercial audience ratings services. We seek comment on the appropriate definition of "market" or "community" for purposes of the restriction proposed here, as well as on what other interests or relationships (if any) should be attributable in the context of low power radio.

58. We seek comment on whether the proposed cross-ownership restriction will unnecessarily prevent individuals and entities with valuable broadcast experience from contributing to the success of the service, or whether it is necessary to keep the service from being compromised or subsumed by existing stakeholders. Commenters should also address the alternative of permitting individuals and entities with attributable involvement in broadcasting to establish LPFM (or microradio) stations in communities where they do not have an attributable interest in a broadcast station. We also seek comment on whether the cross-ownership restriction should be extended to prevent common ownership of LPFM or microradio stations with newspapers, cable systems, or other mass media.

59. We are cognizant of the provisions of the Telecommunications Act of 1996, noted by some commenters, which permit significant local multiple ownership of existing full power stations. ⁷⁶ We tentatively believe, however, that those provisions would not apply to a service that did not exist in 1996. We also tentatively believe that Congress's intent, to enhance commercial efficiencies in the radio broadcast industry, does not sufficiently apply to the new classes of service we are contemplating. Commenters should address the applicability of the relevant provisions of the 1996 Act to these considerations. They should also address whether this one-station-per-market limitation unnecessarily restricts efficiencies for operators in any of the new classes of service being considered, as argued by some, or rather is indeed appropriate to enhance the availability of LPFM or microradio stations, as insisted by others. We also seek comment on possible cooperative arrangements (short of attributable interests such as discussed in paragraph 0, above) among LPFM licensees that might facilitate the new service's development without unduly diluting its benefits, a concern of many commenters.

60. National Ownership. With regard to national ownership, we do not see at this time a need to restrict as severely the number of LPFM (or microradio) stations an individual person or entity may own nationally. As with full power stations, we expect that economies of scale would allow licensees to improve their service to the listening public. We expect that the nature of the service LP100 and microradio facilities provide would attract primarily local or nearby residents. Operating a group of LP1000 stations may provide a licensee with essential broadcasting experience to assist potential new entrants in their attempts to acquire and operate full power stations. However, because competition and diversity have a greater impact on viewers on a local level than on a national scale,⁷⁷ we tentatively believe that these national efficiencies would likely outweigh the competition and diversity costs to viewers. With regard to all three classes of service considered, it may be that particular issues and needs that they might address recur throughout the country and can be effectively addressed, perhaps more effectively in some instances, by an operator with multiple facilities. Consistent with the proposals of a number of parties, we seek comment on whether a limit of five or ten stations nationally would provide a reasonable opportunity to attain efficiencies of operation while preserving the availability of these stations to a wide range of new applicants. Again, we are cognizant of the provisions of the 1996 Act, which eliminate national ownership restrictions for full power radio service,⁷⁸ and seek comment as to whether our proposals are consistent with those statutory provisions and Congress' underlying intent in adopting them.

61. Residency Requirements. Although urged on us by many commenters,79 we do not propose to establish a local residency or an "integration"⁸⁰ requirement for any LPFM stations. Regarding LP1000 stations, we have long recognized that full power stations require neither local residency nor integration between ownership and management to assess and address local needs and interests. Such a restriction would also frustrate any attempt at achieving certain efficiencies from national multiple ownership long recognized as beneficial for full-power stations. ⁸¹ Additionally, because the service areas for LP1000 stations will be relatively small, a potential new entrant may hold residency in a location where no LP1000 channels can be found, so that we might frustrate one of the significant potentials of LP1000 stations with such a requirement. The same rationale can be applied to LP100 and microradio stations. Moreover, as noted above, we expect the nature of the service provided by the two smaller class of stations would attract primarily local or nearby residents in any event. Given these suppositions, we do not believe that any benefits that might accrue from such restrictions would be sufficient to warrant the proof and enforcement efforts that they would entail. We seek public comment on these assumptions and the resulting proposal.

62. We also note the probable limitations on our discretion to adopt an integration requirement. In 1992, the Commission was directed to reexamine the integration of management and ownership criterion that it had traditionally used to evaluate competing applications in a comparative hearing for a new commercial broadcast station. Bechtel v. FCC, 957 F.2d 873 (D.C. Cir. 1992); see also Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993). The court determined that until the Commission could demonstrate that application of this criterion serves the public interest, its continued use would be arbitrary and capricious. The Commission's subsequent rule making proceeding addressing this issue was still pending when the Balanced Budget Act of 1997 mandated that future mutually exclusive full power commercial broadcast applications be resolved through auctions. Accordingly, the proceeding was terminated. First Report and Order in MM Docket 97-234, GC Docket 92-52, and Gen Docket No. 90-264, 13 FCC Rcd 15920 (1998) (Auctions R&O). As a result, given the court's holdings in the Bechtel cases, we believe that we would require a particularly compelling record indicating that listeners would be less well served by stations not managed by their owners before we could adopt an integration requirement that could withstand judicial scrutiny. We ask for comment on this analysis.

63. Another residency issue concerns alien ownership. As broadcast stations, all low power facilities would be subject to the statutory restrictions on alien ownership enumerated in Section 310(b) of the Communications Act. Thus, no license could be granted to a foreign government or a representative of a foreign government; an alien or representative of an alien; a corporation organized under the laws of a foreign government; or any corporation of which more than one-fifth of the capital stock is owned of record or voted by aliens or their representatives or by a foreign government or its representatives or by any corporation organized under the laws of a foreign country. 47 U.S.C. ' 310(a), (b)(1), (b)(2), and (b)(3). Additionally, pursuant to 47 U.S.C. ' 310(b)(4), no license could be granted to "any corporation directly or indirectly controlled by any other corporation of which more than one-fourth of the capital stock is owned of record or voted by aliens, their representatives, or by a foreign government or representative thereof, or by any corporation organized under the laws of a foreign country, if the Commission finds that the public interest will be served by the refusal or revocation of such license."

64. Character Qualifications and Unauthorized Broadcasters. We propose to apply the same standards for character qualifications requirements to all LPFM broadcasters as we do to full power broadcasters. See Policy Statement and Order, 5 FCC Rcd 3252 (1990), recon. granted in part and denied in part, 6 FCC Rcd 3448. See also Report, Order, and Policy Statement in Gen. Docket No. 81-500 and BC Docket No. 78-108, 102 FCC 2d 1179 (1986), recon. granted in part and denied in part, 1 FCC Rcd 421 (1986). We do not see any reason to distinguish between LPFM (or microradio) and other broadcast licensees for this purpose. Commenters believing otherwise are invited to explain the rationale for any distinction.

65. We note how this issue relates to the particular issue of previously and currently unlicensed operators. Unlicensed radio operators not only violate the longstanding statutory prohibition against unlicensed broadcasting82 and our present rules on unlicensed broadcasting,⁸³ but they also use equipment of unknown technical integrity. Such illegal radio transmissions raise a particular concern because of the potential for harmful interference to authorized radio operations, including public safety communications and aircraft frequencies. For example, in March, 1998, the Commission closed down an unlicensed radio operation in Sacramento, California, that had disrupted air traffic control communications on four separate occasions.⁸⁴ We have also shut down illegal broadcast operations that were causing harmful interference to air traffic control communications at the Miami and West Palm Beach, Florida, airports.⁸⁵

66. The Commission has repeatedly urged all unlicensed radio operators to cease broadcasting. When they have not, we have filed complaints in federal district courts to shut them down by seeking: (1) injunctive relief pursuant to 47 U.S.C. ' 401; (2) seizure and forfeiture of the radio station equipment pursuant to 47 U.S.C. ' 510; (3) monetary forfeitures pursuant to 47 U.S.C. ' 503; and/or (4) criminal penalties pursuant to 47 U.S.C. ' 501. In addition, we have issued cease and desist orders pursuant to 47 U.S.C. ' 312 to a number of unlicensed broadcasters. Nevertheless, despite repeated warnings by Commission officials and the Commission's successes in federal district court litigation, see United States v. Dunifer, 997 F.Supp. 1235 (N.D. Cal. 1998), appeal pending, No. 99-15035 (9th Cir. 1999) (injunction); United States v. Any and All Radio Station Transmission Equipment, 1998 WL 884468 (E.D. Mich. 1998), appeal pending, No. 98-2396 (6th Cir. 1999) (seizure and forfeiture of radio station equipment), some unlicensed broadcasters have persisted in their unlawful activity.

67. It is well established that the Commission is rightfully concerned with "misconduct which demonstrates the proclivity of an applicant or licensee to deal truthfully with the Commission and to comply with our rules and policies." Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179, 1190-91 (1986). Parties who persist in unlawful operation after the Commission has taken any of these enforcement actions could be deemed per se unqualified, and we seek comment as to the eligibility of such parties for a license in any new radio service. We seek comment on whether there are circumstances under which such a party could be considered rehabilitated. The reliability as licensees of parties who may have illegally operated for a time but have ceased operation after being advised of an enforcement action, however, is not necessarily as suspect. We seek comment on the propriety of accepting as licensees of low power (or microradio) licenses parties who may have broadcast illegally but have promptly ceased operation when advised by the Commission to do so,86 or who voluntarily cease operations within ten days of the publication of the summary of this Notice in the Federal Register.

Footnotes

75 We find unpersuasive the Leggett proposals, seconded by some commenters, that would restrict the personal or corporate wealth of an LPFM licensee. Neither an abundance nor absence of wealth affects an individual or entity's ability to provide a potentially valuable radio service to the public.

76 Section 202(b) of the 1996 Act significantly relaxed the Commission's restrictions on the number of radio stations a licensee could own in individual radio markets.

77 See, e.g., Further Notice of Proposed Rule Making in MM Docket Nos. 91-221 and 87-8, 10 FCC Rcd 3524, 3565 (1995) (TV Ownership Further Notice) (noting that broadcast and other outlets are viewed locally, rather than nationally).

78 Section 202(a) of the 1996 Act.

79 E.g., CRC Petition for Rule Making at 4-5.

80 Integration is involvement by the licensee in the day-to-day management of the station.

81 While we feel that these efficiencies are outweighed with respect to local multiple ownership restrictions, we do not feel there are benefits inherent in local residency or integration requirements sufficient to outweigh the efficiencies achievable through nonlocal multiple ownership.

82 47 U.S.C. ' 301.

83 See, e.g., Part 15 of the Commission's rules, 47 C.F.R. Part 15.

84 See News Release Report No. CI 98-3 (March 20, 1998).

85 See News Release Report No. CI 97-12 (October 24, 1997). 86 Of course, as authorized Commission licensees, LPFM broadcasters that violate Commission rules would be subject to the enforcement rules (including forfeiture amounts) that apply to other broadcasters, rather than those that now apply to unlicensed operators.