On February 3, 2010, the Federal Communications Commission (FCC) released a First Report and Order (R&O) in the Rural Radio proceeding that contained several proposals for changes in the FCC's assignment and allotment procedures. The R&O adopts a number of proposals that the Commission believes will help it carry out its statutory goals under Section 307(b) of the Communications Act, which mandates the fair distribution of radio services throughout the country. Generally, the R&O (i) establishes a Section 307(b) priority for Native American and Alaska Native tribal groups serving tribal lands, and (ii) modifies the FCC's AM, FM, non-commercial educational (NCE) auction and window procedures. The R&O, however, does not adopt any rules to reduce or eliminate station moves and upgrades, which the Commission had proposed when it launched this proceeding. These rule changes are still being analyzed by the Commission and could be the subject of a later Report and Order.

Section 307(b) Priority for Native American and Alaska Native Tribal Groups

In the R&O, the FCC establishes a Section 307(b) priority for Native American and Alaska Native Tribal groups serving tribal lands. The Tribal Priority applies in FM allotment proceedings, AM filing windows and NCE filing windows under certain circumstances. This priority would not be preferred over a proposal to provide reception service to white area (Priority (1)). It would be preferred over a proposal to provide first local transmission service (Priority (3)) or a proposal to provide reception service to gray area (Priority (2)). In other words, it would be a new priority between Priority (1) and Priority (2). If an application is granted based on the Tribal Priority, it is generally subject to a 4-year holding period.

In the same document, the FCC also issued a Further Notice of Proposed Rule Making (FNPRM) requesting comment on (i) the implementation of a tribal bidding credit, and (ii) the extension of the Tribal Priority to tribes without tribal lands. Comments to the FNPRM are due 60 days after publication of the FNPRM in the Federal Register. Reply Comments are due 30 days thereafter.

Changes to Auction Rules

In the R&O, the FCC adopted the following changes to its auction rules:

  • An AM auction applicant that receives a 307(b) preference is prohibited from making significant changes to its facilities for four years from the date the station commences on-air operations. More specifically, an AM licensee or permittee may modify its facilities so long as it continues to provide the same priority service (i.e., Priority (1), Priority (2), or Priority (4)) to substantially the same number of persons who would have received such service under the initial (short form) proposal, even if the population is not the same population that would have received service under the initial proposal. The term "substantially" means that any proposed modification must not result in a decrease of more than 20 percent of any population figure that was a material factor in obtaining the dispositive Section 307(b) preference. Moreover, a licensee or permittee that has received a dispositive preference under Priority (3) will be prohibited from changing its community of license for the four year period.
  • All short form applications filed in an AM auction window must demonstrate compliance with certain technical rules when filed.[1] Specifically, each application must demonstrate compliance with the following rules: (1) community of license coverage (day or night); (2) or daytime or nighttime protection of existing AM facilities and prior-filed proposed AM facilities. Applicants will be given a one-time opportunity to amend if the Commission determines that a short-form application does not comply with these rules.
  • The R&O codifies the Media Bureau's established policy that has permitted non-universal technical amendments and settlements during filing windows so long as such amendments or settlements result in at least one grantable application.
  • The R&O delegates to the Media Bureau the authority to cap the number of applications that an entity and its affiliates may file in an AM auction window.
  • The R&O delegates to the Media Bureau the flexibility to set variable deadlines for filing post-auction long-form applications. The current rule provides that applications must be filed within 30 days of the close of the auction.
  • The R&O clarifies the following aspects of the new entrant bidding credit rule: (1) for purposes of determining if a proposed new FM auction allotment will overlap any commonly-owned stations and thus prohibit an applicant from using a bidding credit, the contour of the proposed new FM allotment is defined by the maximum class facilities at the allotment site (regardless of what site is specified by the applicant in the short-form); (2) an applicant's eligibility for a bidding credit is a continuing requirement from the Form 175 filing deadline to grant of the construction permit for which the credit was claimed (i.e., eligibility is not determined solely on the one-day Form 175 filing deadline); and (3)the unjust enrichment analysis that is applied when an auction station is transferred or assigned will be applied to voluntary Form 316 applications as well as Form 314 and 315 applications.