Changes Expected on ATSC 3.0 Order on 'In-Kind' Revenue Calculations

The final version of the draft order on ATSC 3.0 datacasting is expected to be changed from the draft version to be more palatable to the agency’s Democrats, FCC and broadcast industry officials told us. One other media item added recently to Thursday's agenda -- on a noncommercial educational station’s petition for reconsideration -- has already been voted on, and another on electronic Media Bureau fees isn’t considered controversial, an FCC official said.

The changes to the broadcast internet draft involve how the value of datacasting is calculated and the limits of authority over what happens to ancillary service fees, the officials said. If the edits are made, Commissioners Jessica Rosenworcel and Geoffrey Starks aren’t expected to oppose the item.

The final order is expected to eliminate or “gut” a provision in the draft that would exclude the value of “in-kind” facility improvements made or financed by third parties as part of the 3.0 transition from calculations of ancillary services gross revenue. Public Knowledge and NCTA said this provision could allow broadcasters to evade FCC fees on ancillary services (see 2012030040). Broadcasters say it would encourage 3.0 adoption. An industry official said removal of the provision isn’t considered a significant blow to broadcasters. Industry proponents of the order said there was added pressure to make the item tolerable to Democrats because of Congress’ request the agency avoid controversial items leading into the coming leadership turnover because pushback from commissioner offices could have led to the item being pulled.

NAB and PK supported the other expected major change of removing language saying funding consumer purchase of compatible devices from ancillary service fees is outside FCC authority (see 2012070054). PK said it would be premature for the agency to close off that option. In a filing with the public interest group, NAB didn’t object to the language being removed. A broadcast official compared the agreement between the two groups to hell “freezing over.” Rosenworcel repeatedly raised concerns about 3.0’s absence of backward compatibility, and did so again when at the NPRM stage.

Otherwise, the final order is expected to closely resemble the draft. Ancillary service fees could be based on the gross revenue of broadcasters rather than of the companies that lease their spectrum, retaining existing standards for broadcast service derogation, and adjusting the ancillary service fee portion for NCE stations to 2.5%. Commercial stations would still pay 5%.