American radio is very capitalist, in the crude sense of the word: The industry is a busy bazaar, rife with deal making, speculation, and scrappy hustlers trying to get rich quick. It is also very socialist, in the crude sense of the word: It has long relied on the government to protect its biggest players, shore up their profits, and ensure that the competition doesn't get too unruly.
And so, when the National Association of Broadcasters (NAB) held its annual Radio Show in Seattle last October, the trading floor was abuzz with the sound of entrepreneurship. Salesfolk hawked prefabricated jingles, syndicated shows, new technologies, and more, creating a capitalistic din. Upstairs, experts lectured broadcasters on how best to get government off their backs, leading seminars with such titles as "Employment Law and Protected Groups" and "Running Successful Contests, Promotions and Casino Spots--Without Being Fined by the FCC."
Except once, on Thursday afternoon, when the talk turned to how best to get government onto certain broadcasters' backs, lest they hurt their competitors' bottom line. Up in Room 609, the conventioneers urged the Federal Communications Commission to crack down even harder on micro radio operators, those unruly, unprofessional populists who run their low-budget, low-power stations without permission from the government. And to please, please forget this notion that FCC Chairman William Kennard had been tossing around, this idea of actually creating a legal micro radio service.
Right now, you see, the FCC won't license new stations of less than 100 watts, a policy that reduces room for new broadcasters on the dial. What's more, to get a license, one must spend thousands of dollars maneuvering through the commission's bureaucracy. Over the last decade, a growing number of people have simply ignored these barriers and gone on the air anyway, to the displeasure of both the FCC and the NAB.
Meanwhile, mainstream American radio has operated on the assumption that bigger is better--that to survive, it must become a tight clan of consolidated chains offering formulaic formats. A series of buyouts has swept through the industry, with the number of station owners shrinking by more than 700 in less than three years, leaving four corporations in control of more than 1,000 stations nationwide. The trend is even more pronounced in the nation's largest markets, where it's not uncommon for a handful of companies to own almost all the commercial outlets in town. This being American radio, the wave of mergers reflects a combination of crude capitalism and crude socialism: People are making a lot of money, but in a way shaped by the state, which has eased restrictions on combinations while making it steadily harder for startup stations to challenge the chains.
This consolidation began as a desperate effort to stave off financial disaster. As the '90s began, more than half the radio stations in America were losing money. Many were going dark--the industry's poetic term for leaving the air. The conventional wisdom blamed this on Docket 80-90, a Reagan-era rule change that had loosened the restrictions on how many operations could co-exist in one market, opening the FM dial to 689 new outlets. With so many stations competing for advertisers, the price of airtime fell, and so did broadcasters' profits. Stations were dying, the argument went, because they couldn't handle all the competition; the solution was to license fewer stations and let existing owners consolidate their holdings.
So the FCC reversed itself: Rather than allow more stations to enter a market, it would allow existing station owners to own more stations within a market. (The notion of allowing both was never on the table: Few in the FCC are enamored with laissez faire.) In 1992, the commission legalized "duopolies"--that is, it allowed owners to control two stations in the same city. (This is an eccentric use of the word duopoly, but it is standard within the industry.) Further changes to the rules followed, culminating in the Telecommunications Act of 1996, which among other things allowed companies to own an unlimited number of stations nationwide and as many as eight in most markets.
The swelling chains began forcing advertisers into must-buy deals, whereby to get a plumb spot for a commercial on a popular station, an advertiser must also buy time on one of the chain's other outlets as well. Between that, increased automation, and the booming national economy, profits quickly rebounded, with revenues steadily increasing from 1992 on.
At the same time, paradoxically, listenership fell through the floor. According to the analysts at Duncan's American Radio, a leading industry newsletter, the percentage of people who actually listen to the radio has been steadily declining since 1989. There was a slight uptick in the early '90s, thanks largely, they suspect, to the boom in talk radio. But that soon reversed, and listenership has now hit a low unseen since 1981. The Duncan's analysts attribute the decline to the trend toward extreme format segmentation, the converse loss of several once-thriving niche formats, the decline in locally oriented programming, the increase in the number of commercials per hour, and the simple fact that, when two rival stations share an owner, they devote less effort to promoting themselves.
It can't be long before the admen start to figure out that they're paying more to reach fewer people, and start either demanding lower prices or taking their business elsewhere. Meanwhile, the radio mainstream will soon face competition from both the grassroots and the skies. On one side, the micro outlaws are offering everything that most radio no longer delivers: genuine localism, eclectic music, politically charged debates. On the other, a new satellite service is poised to take the standardized, placeless programming that dominates the AM and FM bands and do it better, with more options, more listening convenience, and no ads. In a few more years, Internet radio may start to do the same.
Oh, yes; there's one more thing. In the past, when serious competition threatened established broadcasters, the feds were able to hold off the hordes. FM was almost strangled in its infancy; cable TV was delayed for decades. And the government got away with it, because the constituency for a broadcast service that doesn't exist yet is, by definition, minuscule.
But this time, hundreds of micro radio stations have already gone on the air illegally, building audiences and inspiring other would-be broadcasters to do the same. They've become a full-fledged political movement, with a membership that ranges from Panthers to Promise Keepers, from rappers to honky-tonkers, from farmers in the Great Plains to Jamaican immigrants in Florida. Micro radio has a constituency, one that has gathered support from several city councils, a state legislature, at least 28 congressmen, and--in a limited but still astonishing way--from the chairman of the FCC itself.
In this atmosphere, the great radio chains--the empires of the air--will have to change themselves radically or die. American radio isn't just standing at a crossroads. It's standing there with a ton of bricks falling toward its head.
It is a matter of faith at the National Association of Broadcasters that the radio band is far too congested to allow new stations onto the air, that there is scarcely enough room for the signals already being beamed. Its engineers have devised some complicated arguments for this stance, but I suspect the doctrine's origins may be more cultural than technical. Wading through the mob at last year's Radio Show, I caught more carelessly swinging elbows, arms, and bags than I would in any ordinary crowd. These broadcasters can't even share a room without ramming into each other, I realized. No wonder they don't think they could share an electromagnetic spectrum.
In Room 609, attorney John Fiorini made the NAB's case against a legal micro radio service. It would create too many additional stations for the FCC to regulate, he argued, declaring that the agency was stretched thin as it was. What's more, the new stations might block the shift to digital radio, the new service in which broadcasters will use a lot more bandwidth to broadcast CD-quality signals to drivers, office workers, and other listeners in no position to notice the difference.
Above all, the stations would interfere with existing broadcasters' signals. "It simply cannot be done in the AM and FM bands," he declared, "without causing grave interference to existing stations. With 12,000 radio stations licensed in this country, broadcasters don't need to be told how congested the spectrum is."
There are, in fact, many ways to squeeze more stations onto the dial without causing more interference. We'll look at a few of those later. For now, let's pause a moment to flash back to 1922, to the first national radio conference organized by Secretary of Commerce Herbert Hoover. There, L.R. Krumm of Westinghouse complained that it was "perfectly possible to establish a so-called broadcasting station for about $500 or $1,000 initial investment." What's more, such outlets' programs consisted of "nothing but phonograph records, and that sort of station can interfere very disastrously with such a station as we are trying to operate." Krumm added, "I believe 12 good stations, certainly a maximum of 15, would supply most of the needs of the country."
Despite the NAB's objections, on January 28, 1999, the FCC went ahead and issued a Notice of Proposed Rulemaking on micro radio. In plain English, that means it drafted a proposal for a micro radio service and asked for public comments on it. All three Democratic commissioners voted for the notice, with one Republican joining them and another casting the lone dissenting vote.
Two years ago, this would have been unthinkable. But three things had happened in the meantime:
• The FCC's crackdown on unlicensed stations, which intensified in late 1997, brought more media attention to the micro movement, almost all of it positive. Meanwhile, the pirates defiantly declared that they'd put 10 more stations on the air for every one the government shut down. Not all the promised stations managed to materialize, but it was still clear that the feds were unable to snuff out piracy. (The FCC will periodically announce that there are only 80 unlicensed operations left in the country, or some similar number, but those figures are unreliable to the point of uselessness.)
• The FCC's new chairman, William Kennard, decided he liked the idea of micro radio. He still opposed unlicensed broadcasting, naturally--indeed, the current crackdown began on his watch--but, he reasoned, a new microbroadcasting service would counteract the recent trend toward consolidation. It might also reverse the decline in the number of black-owned stations, a concern important to Kennard, the FCC's first African-American chairman.
• The task of crafting the new service fell not to the Mass Media Bureau but to the Office of Engineering and Technology. The former is dominated by broadcast interests. The latter is run by engineers, and if it sometimes tends to be overly enamored with centralized management of the spectrum, it's also less beholden to companies seeking protection against competition.
Of course, there are other institutions in Washington of which that cannot be said. Already, one of the industry's best friends in Congress, House Telecommunications Subcommittee Chairman Billy Tauzin (R-La.), has asked Kennard to dump the proposal. "The policy, political, economic and budgetary ramifications of this undertaking are potentially staggering," he wrote the commissioner, adding that Kennard should not "proceed" without first "consulting with Congress." A day later, Tauzin reiterated his position in a speech before the NAB, arguing that the FCC has no power to create a micro radio service without congressional authorization--which isn't true--and, amusingly for a conservative Republican, that the new stations might eat into the audience for public radio.
The funny thing is, the proposal that inspired all this apoplexy isn't all that radical. Yes, it would allow as many as 4,000 new stations onto the air. Yes, it would spare them much of the red tape that larger broadcasters face. And yes--contrary to the NAB's refrain--it contains strong protections against interference with existing stations, with one significant exception that we'll examine in a moment.
But it poses some problems as well. Kennard's plan would create three new classes of stations, one operating at a maximum power of 1,000 watts, one at no more than 100 watts, and one--perhaps--at one to 10 watts. (The last category is more a tentative suggestion than a concrete proposal.) But only the first would be a "primary" service. The others, as "secondary" services, could be bumped by any new station that comes along.
This is especially problematic for the remnants of the FCC's last low-watt service, the Class D stations. These were noncommercial outlets run by schools and nonprofit groups; the FCC stopped issuing new Class D licenses in 1978 and in 1980 reduced the remaining stations to secondary status. A handful of them have survived to 1999. Now they could conceivably be pushed off the air by a wave of 1,000-watt interlopers, even though the old Class Ds have a much stronger claim to the title "micro radio."
Consider WBRS, Brandeis University's eclectic 25-watt station. Under the current rules, says former music director Ofer Inbar, "you can't get a license…that would significantly interfere with us that would not also significantly interfere with nearby commercial stations that do have protection. And with our transmitter altitude, we can cover a bunch of nearby towns. But it sounds like the new rule could kill us off, and we don't have the resources to do anything about it." Inbar likes the idea of a micro radio service but wants his station and other surviving Class Ds to be converted to the new licenses--and given primary status.
All this raises the question of whether the new service is not just too strict but, in some ways, too lax. There is nothing wrong with 1,000-watt stations in themselves, nor with owning more than one broadcast outlet. But it seems odd to refer to a chain of five stations, each transmitting 1,000 watts of power, as a microbroadcaster. If the FCC is going to relegalize low-power FM by creating a special micro radio service, that service should only license micro radio stations. Right?
Some in the micro radio community have already rejected the FCC's proposal. Stephen Dunifer--founder of Free Radio Berkeley, one of the country's most prominent unlicensed operations--calls the commission's plan a "bogus" scheme "designed to invoke the splitting of the movement to reclaim the airwaves." Others fear that commercial stations will squeeze out the listener-sponsored outlets that currently dominate the unlicensed micro radio community. The leftist National Lawyers Guild, which has defended several stations against the FCC, has already filed comments with the commission urging that the new service be entirely noncommercial; in this, they've been joined by two more pro-micro groups, the Prometheus Radio Project and the Micro Empowerment Coalition. (Privately, some of these activists admit that they'd just as soon have a certain percentage of micro radio licenses reserved for noncommercial broadcasters. But they worry that if they don't ask for everything, they'll end up with nothing.)
Another concern, shared more widely within the movement, involves the "character qualifications" for the new licensees. The FCC has suggested that a past in pirate broadcasting might disqualify one from becoming a licensed microbroadcaster, though it also seeks "comment on whether there are circumstances under which such a party could be considered rehabilitated," noting that 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…is not necessarily as suspect." It's easy to read that as a not-so-subtle suggestion that the commission will give licenses only to pirates who leave the air now and risk losing their audience before the FCC finally creates the service. It's also possible, however, that the language was included as a sop to the NAB and won't really be enforced.
All this would be merely a nuisance for the NAB were it not for the simultaneous challenge of the Direct Audio Radio Service, or DARS. Starting next year, a company called CD Radio will broadcast 100 channels of music, news, sports, and talk from three Loral satellites. Its programming will range from familiar formats (soft rock, hip hop, "smooth jazz," "modern country") to more specialized fare. There will be one channel for cumbia, one for merengue, one for boleros ("the great, timeless Latin standards of song from the '30s-'60s"). Jazz--real jazz, not that "smooth" impostor--will inhabit a channel or two; so will opera, club music, and Tex-Mex. Alternative rock will occupy two channels, one more alternative than the other; blues, reggae, and classic country will have territories too. There will be a children's channel, a gospel channel, a "world beat" channel. Plus 10 channels of news, 10 of sports, 10 in Spanish, and many more. You'll be able to pick up these signals--all of them--anywhere in the country. Without static.
And without commercials. For a $200 startup fee, customers will acquire a small satellite dish and a card allowing their car radios to receive the signals, and then they'll pay a subscription fee of $9.95 a month. CD Radio will thus accrue its profits by selling programming directly to its audiences, rather than by selling audiences to advertisers.
This has been a long time coming: The FCC started the process of allocating satellite-radio licenses back in 1990 but didn't actually get around to awarding them until 1997. Even now, it has devoted such a small portion of the spectrum to the new service that it awarded licenses to only two companies. (The other is XM Satellite Radio, which will offer 50 varied channels of its own, including five for Spanish-speakers, three for Christians, and one for C-SPAN junkies.) But even with such a limited, oligopolistic scope, the new service will be a serious challenge to traditional terrestrial stations, which fought hard against allowing any direct satellite radio at all. In 1994, the NAB released a report, ominously titled The Truth About Satellite Radio, arguing that competition from the heavens would put the industry into an economic "free fall." And that, it warned, would have "devastating effects" for local radio and the "community service" it provides.
The DARS companies replied that audiences would still listen to local stations for weather reports, local news, and other regionally specific information; the satellites would be a supplement, not a replacement, for the existing industry. What they didn't mention was just how little localism remains on the outlets they'll be "supplementing," for all the latter's caterwauling about threats to local radio. More and more stations are simply earthbound relayers for automated satellite feeds, and the "local" programming that remains relies heavily on outside consultants and specialized software to tell the DJs what records to play.
It is this trend, more than anything else, that has created a niche for micro radio. Micro stations have covered high school sports, broadcast city council meetings and church services, and given airtime to local musicians; they have trained teenagers and retirees to be broadcast engineers, sponsored concerts and parties, coordinated flood relief, and exposed local corruption and crime. Even the worst micro stations have a ragged vitality that most of their legal competitors can't touch.
The NAB has spewed a litany of "public interest" objections to micro radio, just as it did for satellite radio five years ago; one of its favorite arguments is that the new service would merely "duplicate" existing programming. The broadcasters should be careful what they say. If duplication were the real concern, a public-interest-minded FCC might just wipe out the NAB's outlets, let DARS deliver its nationwide variety packs, and give the entire AM and FM bands to the micro stations.
Little of this is inevitable. The FCC could conceivably reject the micro radio proposal, refuse to expand DARS, regulate Internet broadcasting out of existence, and step up the crackdown against unlicensed broadcasting. (Just this March, San Francisco Liberation Radio got a letter from the FCC threatening them with a $100,000 fine and/or a year in prison if they didn't go off the air within 10 days.) Even if the government adopts the Kennard plan, and even if that plan's benefits end up outweighing its drawbacks, there will still be much, much more that Washington could do--or, rather, stop doing--to allow lively radio to flourish. Ideally, it would forget the idea of a special micro "service" and instead radically reform how the FCC regulates the spectrum.
What would such a plan look like?
It would lower entry barriers. It would permit stations to broadcast at less than 100 watts and would remove the fees and paperwork that would-be broadcasters now must endure. It would also reform the FCC's expensive technical specifications, which were enacted to prevent interference with other signals. On the surface, that sounds sensible, but it's actually inefficient: It would make much more sense just to hold broadcasters liable for any interference they may cause and then, with that incentive in place, let them figure out how they're going to avoid stepping on other signals' toes. Among other things, this would fuel technical innovation, as low-budget engineers strive to build cheaper equipment that nonetheless gets the job done. The present system, by contrast, locks archaic technologies into place.
It would allow frequencies to subdivide. Suppose a station can be heard over, say, 100 square miles. That same area could be served by several stations on the same frequency, if they divided the region into smaller coverage areas with appropriate buffers between them. But under present law, while one can sell a signal, one cannot sell a piece of that signal.
That's not exactly accurate: Technically, the spectrum is government property, and you can't sell a signal you don't own. But one can, with relatively little trouble, sell a license to broadcast over a particular frequency. What one can't do is subdivide a frequency and sell off a chunk of it.
So if our hypothetical station (let's call it KBIG) decides to sell itself outright to a chain (let's call it KRAP), it can. But if it wants to reduce its wattage and let an entrepreneur or civic group take over part of its previous coverage area, it will somehow have to guarantee to the buyers that the FCC will allow them to transmit to the space it has emptied. There is, of course, no way to do this; and even if there were, the application process for the new station would still be long, stormy, and expensive. The risk for the buyers would be too high.
When a giant falls or falters, smaller outlets ought to be able to rush in and take pieces of the electromagnetic ground where he once stood. Instead, the law says he has to sell all his ethereal territory at once, meaning that only another giant can afford to buy it. So the law encourages consolidation, which in turn encourages centralized, automated, prefabricated programming.
It would allow stations to broadcast closer to one another. To avoid interference, there must be buffers between broadcasters. That is why, for example, there are no stations at 101.2 FM--the FCC won't risk interfering with the outlets at 101.1 and 101.3.
No one disputes the need for some policy of this kind. But the current rules are based on the technical standards of the 1950s; it's now possible for far more stations to fit onto the spectrum without interfering with one another. The FCC is already pragmatic enough to allow stations some leeway in bargaining with each other to set the actual boundaries of their coverage areas. It should let them actually sell interference easements, allowing both established and new broadcasters to set up shop at a close-by frequency if they pay for the privilege.
It would open up new spectrum. Anyone who keeps up with both broadcasting and point-to-point communications will soon note a strange contradiction. The broadcasters believe the airwaves are almost completely filled. The phone companies believe the available spectrum is actually expanding: As new technologies make it easier to divide the electromagnetic spectrum ever more finely, for all practical purposes we get more of it.
This conflict doesn't just reflect the fact that broadcast stations cannot compress or split up their frequencies. It reflects the fact that they are limited to two artificial reservations, the AM and FM bands. If the FCC would open more of the ether to broadcasting, manufacturers could sell downconverters--small devices that would attach to or sit near a radio and convert signals sent over other sections of the spectrum.
Such devices are not science fiction: The Philips Clevercast, used for converting data broadcast from satellites, works on a similar principle. So, for that matter, does DirecTV, which lets a TV set built to receive UHF and VHF signals pick up broadcasts made in the SHF band. But if you want to bring down the price of the converter, you'll need a highly integrated device without a high parts cost, and to get companies to invest in developing such a machine, you'll need a regulatory regime that will allow the product to be put to the use for which it was devised. In the pithy words of Bennett Kobb, author of the widely used SpectrumGuide: Radio Frequency Allocations in the United States, "Manufacturers will make just about any gizmo if they see a mass market." Until then, Kobb notes, "We're using a 60-year-old technology with FM, and it's creating an artificial scarcity, when we could accommodate for all practical purposes an unlimited class of stations."
The FCC hopes to come to a decision about the micro radio proposal later this year. The NAB and the state broadcasting associations have begun a concentrated lobbying effort to stop it--although there have been some defectors from the fold. On March 3, Radio World shocked its readers by editorializing on behalf of the Kennard plan. "Some broadcast supporters," it wrote, "including friends of the NAB on Capitol Hill, argue that new competition will damage the economic prospects of license-holders. Indeed it could, if existing stations don't serve their audiences well. But it's not the job of Congress to protect the economic interests of a certain group of existing broadcasters."
Even as Tauzin pushes Congress to stop the smallest steps toward opening the airwaves, other congressmen--Democrats, mostly--have supported Kennard's proposal. David Bonior (D-Mich.) and 27 other representatives recently sent the FCC a letter endorsing a micro radio service. Several city councils have passed pro-micro-radio resolutions, from towns as small as Salida, Colorado, to cities as big as Detroit. The Michigan legislature, too, has issued a call to start licensing low-power stations.
Perhaps the FCC will listen to these voices. If it doesn't, of course, the unlicensed stations will persist. And no matter what, the DARS broadcasters will soon be active, radically changing the economic face of radio.
"By adopting a licensed, advertiser-supported, limited-channel broadcasting system," the social theorist Ithiel de Sola Pool wrote in his 1983 book Technologies of Freedom, "America has penalized itself for half a century. It has undermined its tradition of free communication, and it has limited broadcasting to mass provision of the few most popular formats of entertainment." We may be--just maybe--on the edge of something better.