New rules restrict stations' ability to move from less populated areas to communities closer to Urbanized Areas.

As we reported previously, the Federal Communications Commission (FCC) issued a Notice of Proposed Rulemaking (NPRM) in 2009 which requested comment on a number of proposals to modify its allotment criteria. In particular, the NPRM sought to restrict the ability of rural radio stations to move into Urbanized Areas. The FCC has released its Order in the proceeding, adopting some of its proposals to limit rural stations' ability to move to larger communities, modifying its existing rules, and proposing new rules implementing a Tribal Priority.

Under Section 307(b) of the Communications Act, the FCC is required to ensure a "fair, efficient and equitable" distribution of radio services to the various states and communities in the country. In deciding where a new or modified radio station should be allotted under Section 307(b), the FCC uses a set of four standard "priorities," as well as a Tribal Priority for Native Nations operating largely on Tribal Lands. The four standard priorities are: (1) First fulltime aural (reception) service; (2) Second fulltime aural service; (3) First local (transmission) service; and (4) Other public interest matters. Priorities (2) and (3) are considered equal. Where the Tribal Priority applies, it is considered between Priorities (1) and (2).

In its Order, the FCC makes a number of adjustments to its Section 307(b) priorities in an effort to protect smaller and rural communities. It notes that there are increasingly fewer instances where an allotment decision is made based on Priority (1) or (2). That is, there are fewer areas of the country that receive no (Priority 1) or only one (Priority 2) radio service. As a result, most decisions are made on the basis of Priority (3) (first allotment to the named community) or Priority (4) (additional allotment to a community requiring additional service), which favor service to larger populations over smaller populations, thus encouraging migration of rural stations into more populated areas. To address this, the FCC has decided to de-emphasize population coverage as a principal metric in awarding Section 307(b) preferences. The Commission therefore adopted a rebuttable presumption that new AM stations, FM allotments, or community of license change proposals seeking to locate to a community in an Urbanized Area, or that would cover or could be modified to cover more than 50 percent of an Urbanized Area, are in fact proposing to serve the entire Urbanized Area, rather than the specific named community, which might have no other allotments (Priority 3), but is well-served by other stations in the Urbanized Area.

The new rules also make it more difficult to show that a proposed community is independent from the Urbanized Area for allotment purposes, places new restrictions on so-called "band-hopping", and adopts new AM auction technical standards. Finally, the Order proposes revisions to the Tribal Priority to permit more Native Nations to take advantage of it and to prevent Tribes seeking an allotment through the use of the Tribal Priority from having to compete at auction with commercial entities. Due to their complexity, the FCC's actions with respect to the Tribal Priority are addressed in a separate Client Advisory.

AM Facilities

According to the Order, the FCC will in the future restrict the award of dispositive Section 307(b) preferences among mutually exclusive AM applications to those situations where there is a significant difference between the proposals. With regard to proposals for first local transmission service under Priority (3), any new AM station proposal for a community located within an Urbanized Area that would place a daytime principal community signal over 50 percent or more of an Urbanized Area, or that could be modified to provide such coverage, will be presumed to be a proposal to serve the Urbanized Area rather than the named community. The Urbanized Area service presumption may be rebutted by a compelling showing (1) that the proposed community is truly independent of the Urbanized Area, (2) that the community' has a specific need for an outlet for local expression separate from the Urbanized Area and (3) that the proposed station can provide that outlet.

In addition, if a proposal does not qualify for a first local transmission preference under Priority (3), the FCC will no longer choose among proposals merely on the basis of a large population differential. Instead, a dispositive Priority (4) preference will only be awarded to a new AM applicant proposing to serve a community of license with two or fewer transmission services and provide no more than third, fourth, and/or fifth reception service to at least 25 percent of the population in the proposed station's primary service area. The FCC kept in place its policy that mutually exclusive application groups in which no applicant receives a Section 307(b) preference should result in a competitive bidding process.

It is important to note that the FCC has decided not to apply these new procedures to pending applications for new AM stations and major modifications to AM facilities filed in the 2004 AM filing window.

FM Allotments

With regard to Priority (3) preferences and FM allotments, the FCC adopts the same Urbanized Area service test that it did for AM proposals, namely, that any FM station proposal for a community located within an Urbanized Area, that would place a signal over 50 percent or more of an Urbanized Area, or that could be modified to provide such coverage, will be presumed to be a proposal to serve the Urbanized Area rather than the named community.

In addition, if a proposal does not qualify for a first local transmission service preference under Priority (3), the Commission will consider proposals to provide third, fourth, and/or fifth reception service to more than a de minimis population under Priority (4), consistent with current Commission practice. However, the Order specifically instructs Media Bureau staff to "give greater weight to service to underserved populations than to the differences in raw population totals." According to the FCC, "raw population total differentials should be considered only after other Priority (4) factors that a proponent might present, including the number of reception services available to the proposed communities and reception areas, population trends in the proposed communities of license/reception areas, and/or number of transmission services at the respective communities."

Similar to its treatment of AM facilities, the Commission has decided not to apply its new procedures to any FM allotment proceeding that is currently pending before the FCC.

Community of License Changes

In the case of community of license changes, the FCC adopts the same 50% coverage of Urbanized Area presumptions discussed above. If a proposal does not qualify for a first local transmission preference under Priority (3), the applicant can still make a Priority (4) showing, but the FCC will require it to provide a more detailed explanation of the claimed public interest benefits of the proposed community of license change.

Specifically, the Order imposes a total ban on any proposed facility modifications that would create white (no reception service) or gray (only a single reception service) areas and announces that the FCC will strongly disfavor any proposals that would result in the net loss of third, fourth, or fifth reception service to more than 15 percent of the population in the station's current protected contour. It will similarly disfavor proposals that would remove a second local service to communities with populations of 7,500 or greater. The FCC also announced a new policy of requiring applicants to provide data on the size of the populations that would gain and/or lose service under the proposal as well as the numbers of services those populations will receive if the application is granted. Applicants will also be required to submit an accompanying exhibit explaining how the proposal will satisfy the Order's new Section 307(b) priorities.

Finally, the Order states that the FCC will continue to allow applicants to provide any other information to the Commission that they believe will satisfy the public interest considerations of Priority (4).

The FCC indicated that these new procedures will apply to any applications to change a community of license that remain pending as of the release date of the Order.

"Band-Hopping" Applications

The Order also restricts so-called "band-hopping" by translators because, according to the FCC, it wastes staff resources and precludes the availability of frequencies for future FM translator filing windows. Prior to the Order, the FCC's rules allowed FM translators originally authorized in the non-reserved band to modify their authorizations to "hop" into the reserved portion of the FM band. The Commission states that it was particularly concerned that an applicant might file during a filing window and receive a non-reserved band permit and then "hop" to the reserved portion of the band to take advantage of the less restrictive reserved band rules. The new rules will continue to allow applications to change an FM translator's frequency from the non-reserved potion of the band to the reserved portion or vice versa, but such applications can only be filed by FM translators that have filed license applications or are licensed, and that have been operating for at least two years.

AM Auction Technical Standards

Finally, the Order adopts the FCC's proposal, stated in the NPRM, to apply the interference standards found in Section 73.182(k) of the Rules in determining nighttime mutual exclusivity between AM applications filed in the same window. Accordingly, two applications filed in the same window will be considered mutually exclusive if either enters the 25 percent root-sum-square (RSS) nighttime limit of the other. In such cases, applicants will be required to go to auction.

The FCC's new rural radio rules represent a significant departure from the allotment process under which the FCC has operated for many years. Applicants will need to take these changes into consideration when proposing new or modified station facilities.