By Editor In Chief Ed Ryan
The radio industry cheered when it became known that Ajit Pai would be elevated from FCC commissioner to the chairmanship thanks to President Trump’s 2017 designation. Pai has been a great friend and cheerleader for radio, and an advocate to fix the FCC’s archaic rules governing the industry.
Now we wait and see how long it will take for Pai and his colleagues to repair the ailing AM band, to dispose of burdensome and costly rules that make little sense anymore, and to further consolidate an industry competing for ad dollars with the likes of digital, which is all but completely unregulated.
Admittedly, there are other things on the chairman’s agenda, like broadband and the massive TV spectrum auction, but he’s made it clear that radio will not be swept under the rug as it has been by FCC chairmen in the recent past. Here is our special NAB 2017 issue interview with the new FCC Chairman Ajit Pai.
Radio Ink: What’s it like being the chairman after years as a commissioner?
Pai: It’s an incredible experience. Part of it is the pace of the job. It’s much faster — there are a lot of issues and much less time to handle each of those issues. The administrative part of the job has been a little bit different. It’s also exceptionally gratifying being able to set the agenda for the agency and work with the FCC’s tremendous staff.
I’m really happy we have a chance to effect some positive change here at the agency. We’ve already made some pretty significant progress in the area of process reform and agency transparency, as well as the more substantive items like AM revitalization. It’s been a tremendous honor, and I have not been able to catch my breath.
Pai: I never imagined this would be the case. To begin with, when I was growing up I never even imagined people like me, Indian-American, from a small town in Kansas, could be in positions like this. I never saw people who looked like me in positions of public responsibility, so that alone has been a change of pace.
Additionally, my parents were doctors, and most people in my family did something other than law and policy, and it wasn’t something that was even on my radar until well after law school. It’s been a pretty interesting ride throughout my career. I often call myself the Forrest Gump of the legal profession, having gone from job to job, and the next thing you know, here I am in the corner office.
It does make me humble to know there have been so many incredible people who have held this job in the past, and to know the aspirations of millions of Americans are riding in part on the decisions we make at the FCC. It has given me a great sense of responsibility and humility that I take very seriously.
Radio Ink: Describe what it’s like being under the hot lights in front of a Congressional committee.
Pai: It certainly is different than when I was a staffer on the Hill. I had the relative luxury of sitting on the back benches watching as the senators questioned witnesses about this or that issue. It’s much more difficult being in the hot seat and answering these questions as a witness. But I actually enjoy it. It’s an important part of the legislative function, exercising oversight of agencies, particularly independent agencies.
I think it’s critical for them to understand what our policies and priorities are, to impress upon us their priorities since they, after all, set out the terms of the agency’s authority. And to let the American people see that we are not an agency that labors in the dark, that we have congressional overseers interested in our operations.
I want the American people to see what we’re doing as well. That, by the way, is why I introduced some of the openness and transparency initiatives that I did so early on in my chairmanship. I want that principle to carry over into our internal operation. I want people to see what we are going to do and understand what we are going to do before we do it.
Radio Ink: You’re a big fan of radio. Do you believe that radio is doing what it should to serve the public interest?
Pai: I do. I have seen it in so many radio sta-tions across this country. Recently I was on the road in Pittsburgh, Youngstown, Cleveland, and Detroit, and in most of those places I was doing radio interviews, KDKA all the way to WJR in Detroit. The consistent thing I took away was that these radio broadcasters are so local, and so important to provide the social glue that holds communities together.
It’s inspiring that, despite some of the economic and technical challenges radio faces, you still have 93 percent of Americans each and every week who are above the age of 12 who tune into a radio station. That proves to me that even after a century-plus, the radio medium is something that continues to provide value. As a regulator of this industry, you want to help this industry to thrive, but frankly, as a listener, I’m proud of what the industry has accomplished in the face of an ever more crowded media marketplace.
Pai: Media-ownership rules — that’s an issue that’s important for the FCC to make sure the rules match the modern marketplace. As you know, a number of those rules reflected what existed back in 1970, so it’s incumbent upon the FCC to carefully consider whether any of these media-ownership rules should be modified or replaced based on current conditions.
For instance, it has been suggested by many that the newspaper-radio cross-ownership rule has no evidence in the record to support it and the FCC rule is not justified. I can’t get into the specific proposals at this time about where we might go in the future with respect to AM/FM sub-caps or the like, but I can say we are going to continue to work to make sure our rules match today’s realities.
Additionally, you want to take stock of other issues that might affect this, like foreign investment in U.S. broadcasting, something I’ve talked a lot about in the past.
Radio Ink: In some markets the unregulated Internet companies, such as Google and Facebook, are snatching up more ad dollars than all the radio stations combined. Is the playing field fair?
Pai: In terms of the ownership limits, that’s something I can’t comment on at this time, but I will say, zooming out a little bit, it underscores what I think is one of the central challenges for the FCC going forward. We need to make sure we have a holistic view of the marketplace, and the time when we could ignore competitive services and technologies and focus on the services and technologies that have existed for years is long past.
When it comes to advertising dollars, I hear consistently from radio stations, TV stations, that they are not only competing with each other, they are competing with new media entities that did not exist when these rules were formulated — and that’s part of the argument I’ve tried to make to my colleagues over the years. We can’t have restrictions on certain segments of the industry that don’t apply to others competing in that very same industry.
In this case, if it’s for advertising dollars, we need to make sure we are taking stock of every competitor competing for those ad dollars and make sure the regulatory framework does not artificially disadvantage one segment of the industry because of legacy regulations or inertia. Going forward, this agency is going to be focused on making sure the rules set a level playing field for everyone, to give a fair opportunity to compete and allow every company, big or small, old or new, to innovate in ways that will benefit the consumer.
Pai: That’s a great question, and I hate to cop out with the equivocating answer, but I would say yes and no. Yes in the sense that what radio does best, very few other entities can do, which is to provide local information in a way that is appealing to consumers and that is distributed in a way that is of tremendous interest to consumers. No in the sense there are some regulations that stand in the way of radio stations being able to recognize efficiencies and to stay in business and thrive as other sectors of the economy do.
For example, the newspaper-radio cross-ownership rule — we have heard there is no evidence in the record to justify the FCC restrictions on newspapers and radio stations in the local market collaborating to collect some of the news of local interest and then distributing it across multiple platforms.
That is the thing we’ve heard from a number of radio stations and newspapers — that you could allow them to compete more fairly and effectively with some of the others who are in the same market. Radio does bring a lot to the table, but it is important for them to have a level playing field to compete.
Radio Ink: You mentioned regulatory burdens. Do we really need the main studio rule anymore?
Pai: As part of the AM Revitalization Order, we put a Notice of Inquiry on this particular topic. I have not had a chance to thoroughly review the record, and we are going to do that in time and figure out the appropriate way forward, but again, the general principle I would apply in
every area, including this one, is that we need to make sure the rules on the books match the modern marketplace. I would say stay tuned to
see where things go from here.
Radio Ink: What about the quarterly issues list?
Pai: That’s another one where we’ve heard from a lot of people that say those requirements are outdated and need to be revisited. I would say
we are going to look at that part of the record as well and figure out the way forward.
Radio Ink: Do you think radio stations should be eligible for repack reimbursement funds when they incur costs from being co-located with a repacked TV station?
Pai: Yes, indeed, this is one of the issues that came up in the Senate Commerce hearing we had a couple of weeks ago. As I told the senators
then, the FCC has previously determined that the spectrum act of 2012 does not authorize reimbursing FM stations that incur costs as a result of TV stations’ channel relocation work on shared towers.
We are aware this could potentially be an issue and this is very important to radio broadcasters, so we are going to monitor it going forward. For what it’s worth, the commission did try to address this issue in 2014 by allowing TV stations that have existing reimbursement co-tenants, including radio stations, to submit for reimbursement any eligible expenses related to compensating those stations. That’s the best we can do, is our understanding, under the current legal constraints. If there are other ideas, we are obviously open to other approaches.
Radio Ink: Why can’t the FCC get rid of pirates?
Pai: Ugh! My gosh, this is an issue that really bugs me because you have a lot of broadcasters playing by the rules and relying on our enforcement
of those rules, and it feels to them, and us, that we are playing “whack-a-mole” with these pirates.
I had a chance to meet with our enforcement staff here in Washington, and I held a separate town hall with our terrific staff that are in the field offices. And the message I gave to each is that I want to make pirate radio a priority in terms of enforcement. We need to make sure that those operating as pirates are investigated and the appropriate action taken, because it is too common a problem that people in New York or Miami are facing issues of interference from folks with a stick moving from one place to another and evading our rules. I can say there are Enforcement Bureau initiatives that are being taken that I think will address this in short order.
Radio Ink: The FCC was asking Congress for additional help penalizing people who help pirates. Is that going anywhere?
Pai: I haven’t heard anything recently from members of Congress on this. I know there was some discussion about making it less profitable for the pirates to do what they do. I think the interest is still there. For example, members on the House Energy and Commerce Committee raised this as an issue when we had our oversight meeting. I stand ready with them to work out a solution if not to end this problem, then to mitigate it substantially.
Radio Ink: Do you have enough help at the commission to address the issue?
Pai: Yes and no. On one hand, we do have some terrific Enforcement Bureau staff in the field offices who are on top of this issue. As a result of the so-called Field Modernization Order that was issued a little while back, there has been restructuring to our field operations that in some cases has limited our ability to respond as aggressively as we could have in the past.
That said, we are doing the best with the resources we have to make sure the rules are enforced. That includes the efforts of those in the field. I’m hopeful we can make some waves with the resources we have.
Radio Ink: Do you think there is enough time to save AM radio?
Pai: I do. And if you look at my record over the last five years, since I first proposed an AM revitalization initiative, I have been optimistic about the band. That’s not to be naive. I know they have substantial technical, economic, and other challenges.
Some of the AM broadcasters I’ve had a chance to meet with, like WJR in Detroit, they continue to connect with their audiences in a way that few other communication services can claim to. I’m hopeful that AM broadcasters, aided by some of our rules regarding FM translators and the like, will be able to continue to provide information, news, and entertainment. It will be a differentiating factor in a busy media marketplace.
Radio Ink: What else can the FCC do to revitalize AM?
Pai: We’ve taken some substantial steps, and they have garnered a fair amount of interest. The FM translator window that was part of the AM Revitalization Order last year was fairly popular, and just last month we adopted a rule that would make it easier to site an FM translator. Obviously, translators are not the panacea for the AM band, and I have said that consistently. It is more a bridge to the future, as opposed to the future in itself.
We are thinking through some of the longer-term issues that were teed up during the Further Notice of Proposed Rulemaking the FCC adopted, and these are admittedly tougher issues, technical issues that the broadcast engineers are trying to hash out, and more complicated policy issues, such as revisiting skyway protection.
I recognize the industry is more divided on those issues, but hopefully, working together in good faith, we can reach some consensus on those that will allow us to adopt further reforms. At the end of the day, what most broadcasters recognize is that we are all in it together and want this medium to continue serving as many Americans as possible. If there are FCC reforms that can do that, let’s try to adopt the best regulatory framework we can for the marketplace conditions we have today.
Radio Ink: What else can broadcasters do to to save the AM band?
Pai: Part of it is continuing to tell your story. I’m constantly amazed at how much AM stations do for the community. Just think about what stations do in their communities each and every day that nobody else does, like the local food drive, or getting rid of commercials when there’s a public safety emergency, and broadcasting 24/7 information about where a storm is or where relief can be found. Things that form that social glue, that let people feel there’s something bigger than themselves. That’s something very few communication services can tout and be proud of.
I will continue to tell the AM band story as long as I have the privilege of being here. It’s an important and often overlooked part of the communications landscape. I come across as a cheerleading fan of the medium, but it is important to make sure it gets a fair shake along with the other terrific communications technologies that get a lot of the press.
Radio Ink: Do you think FM translators will ever be allowed to carry their own programming?
Pai: Under the current FCC rules, that’s not contemplated, and I don’t know if that would have majority support. Thus far we’ve been thinking of FM translators more as a bridge for the transmission of AM signals, as opposed to an independent source of programming.
Radio Ink: Are you pushing forward with the creation of the FM classification C4?
Pai: That’s one of the issues I teed up last year because I think it’s important to have a conversation right now. We’re meeting with the public to see what they think about it, and I have not had a chance to canvas our colleagues. I want to see if there is an appetite for tackling this issue and an interest in moving forward. If there is, we would like to move forward.
Radio Ink: Where do you see the FM chip going?
Pai: I’m optimistic. I think the percentage of smartphones that are shipped and sold within the U.S. with the FM chip enabled has gone up in recent years. It’s not where we want it to be. I understand it’s approximately 44 percent, which compares unfavorably to countries like Mexico, which has 80 percent.
I’m hopeful this will be a consumer-driven initiative and get a fair amount of traction. It’s a win-win. The consumer wins with access to radio programming that they like, and it enables that consumer to save on battery life and consume data that is exempt from data limits, and it’s a win for wireless companies, as they don’t have to overload their networks, so as a spectrum-management tool, it is useful to them.
It’s a great win for broadcasters. You notice as you walk around, people practically have smartphones surgically implanted somewhere on their body. It’s a device they have all the time. Radio broadcasters bring powerful architecture to that table, so the marriage of those two things is a compelling value proposition for broadcasters.
In the absence of a government mandate — which I have been candid about, in terms of my skepticism of the FCC’s authority to mandate — the market itself will solve this problem, hopefully sooner rather than later.
Radio Ink: If you had a room full of radio executives, what would you tell them you want them to do better?
Pai: I would take off my regulator hat and put on my listener hat and say, “Thank you.” Radio has been a friend to me my entire life. When I listened to KLKC on my transistor radio in my bedroom to now, when I drive in and listen to radio stations anywhere from Parsons, KS to Washington, DC, I know how difficult it is to manage profits and losses, try to recruit talent, and all the rest, but at the end of the day, listeners like me are the beneficiary of their efforts, and I am grateful I had a chance to work with them, learn from them, to visit with them and continue to listen to them.
Radio Ink: What else do you want to accomplish?
Pai: One of my top priorities is closing the digital divide, closing the gap between Americans who have access to the Internet and other modern technologies and those who don’t. I have outlined proposals that I hope will close that digital divide. That is critical if we want every American to have digital opportunities.
Secondly, I want to make the agency as open and transparent as possible. The second week in office, I rolled out reforms to our rules that essentially provided that, for every monthly meeting we have, I will publish at least three weeks in advance the exact text of what it is we are proposing to do, so everybody from lawyers here in DC and citizens in the countryside can see what we are doing.
For too long, the agency suggested they were going to do something, but they did not let people see the text of what it was was they were doing. If a senator enters legislation, you are able to see that immediately and debate it before Congress passes it. At the FCC, that wasn’t the case. You could only see it after the FCC voted on it. That’s just one of the basic, but I think profound, reforms I’ve instituted that I hope will give Americans a better sense of confidence that this regulator is being responsive and accountable to the American people.
Radio Ink: Do you think you will have a commission that will help you accomplish your agenda?
Pai: I hope we can work in a bipartisan way to move the ball on some of these issues. None of the priorities I have talked about are affiliated with a particular party or ideology. Closing the digital divide is something that benefits everyone, as is making the agency more open and transparent.
I would like my legacy to be one of moving forward on the basis of consensus, so we were able to make Americans better off. I think that will come down to the agency’s credit, not me or a particular party. That would be the essence of good government in the 21st century — people working across party lines to make American consumers better off.