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Thursday, May 25, 2006

Allocation Streamlining -- On or Off Track?

It has been nearly one year since the FCC released its June 14, 2005 Notice of Proposed Rule Making seeking comments on proposed rule changes to its allocation and application procedures. At the time of its release, those in our industry referred to the item as "Allocation Streamlining." We were hoping for a quick turn-around on new rules.

Given the elapse of time, however, the proceeding appears to be anything but streamlined. One of the most asked questions of the FCC's Audio Division staff is: when will the Commission release its proposed allocation streamlining rule changes?

In the June 14, 2005 Notice of Proposed Rule Making, the FCC imposed a freeze on the filing of new petitions to amend the FM table of allotments. This freeze, while not significant in the short-term, has over time created a hardship for many licensees who would have otherwise used the Commission's allocation process to upgrade or move FM radio stations.

It is not anticipated that the freeze will be lifted until such time as the Commission releases its new rules. At least one broadcaster who recently obtained several new FM construction permits in FCC Auction No. 62 has reportedly been heavily lobbying the Commission to obtain a temporary or limited lifting of the freeze for FM auction applicants.

A detailed summary of the FCC's Allocation Streamlining proposals is available from Womble Carlyle.

The rule change that may prove most significant to broadcasters is to allow both AM and FM radio stations to change their licensed community of license by filing an application. This application process should be compared with the present procedure which, in the case of FM stations seeking a change in community must now proceed through a petition for rulemaking process in the FM Table of Allotments, and in the case of AM stations seeking a change in community must now await a major change filing window.

Under the proposed new rules, for both AM and FM stations a change in the community of license would be regarded as a minor change which would mean that no longer could another applicant, in the case of an FM move file a counterproposal, and in the case of an AM move file a conflicting application. Rather, the Commission's first-come/first-served rules would apply and the date of the application filing would cut-off any competing proposals.

The other changes proposed by the Commission are not likely to significantly impact broadcasters. The Commission is proposing that any proposals for new allotments be accompanied by a full application form and FCC filing fee payment. Assuming that a broadcaster has a legitimate interest in a new allotment, this should not create an impediment to a broadcaster seeking a new channel, but may go far in discouraging speculators who in the past have filed hundreds of proposals for new FM allotments.

The Commission is proposing to limit to five the number of FM station changes that may be proposed in a single rule making proceeding. This could impact some of the more creative changes broadcasters might propose. The number five, however, appears somewhat arbitrary and the FCC may not have a record upon which it can base a decision to limit such changes. Therefore, it will be interesting to see if this five change limitation is adopted by the FCC.

The FCC is proposing to accept allocation petitions for rulemaking and associated filings electronically, rather than requiring their submission on paper which is now the case. This change is long overdue and the Commission should be commended for moving forward with this.
Finally, the Commission is asking whether it should loosen its prohibition against removing the sole local radio station licensed to a community in favor of a change to a more deserving community. If there is one principle that is bedrock in allocation proceedings, it is that a proposal to remove the sole operating station in a community almost always fails. This may be the most problematic of the Commission's proposals and may not survive.

Informal inquiries to the FCC's staff yield the response that a possible release date of the new rules may be between the end of June and the end of August. Given that there are many FCC notices of proposed rulemaking that take significantly more time than one year to gel into new rules, having the allocation streamlining rules released in a little more than one year may be somewhat quick in the FCC's eyes. For those broadcasters who cannot file proposals because of the continuing freeze and cannot seek radio station improvements because the new rules have not yet been adopted, however, one year and counting will start to upset legitimate plans made by broadcasters to improve their facilities.

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