Two hundred channels and nothing on – literally

Introduction

In 1982, the Federal Communications Commission created a new broadcast television service designed to provide local and niche programming to rural Americans and urbanites whose special-interest needs were not being met by existing broadcasters.

Since then low-power television service (LPTV) has grown to include 2,034 stations across the nation, and according to the FCC and the trade association that represents the industry it has been a tremendous success.

But an analysis by the Center for Public Integrity shows that the second-largest holder of LPTV licenses has not built even a single operational station. Mark Silberman, president of the Los Angeles-based MS Communications, LLC, told the Center he has never broadcast anything more than a test pattern, despite holding permits to operate 203 low-power TV stations. The State of Alaska tops the list with 220 low-power stations.

According to Silberman, he originally intended to build “wireless cable” networks in areas underserved by big broadcasters. But regulatory changes and other factors, he said, left him unable to get his business off the ground.

Silberman acquired most of his station permits since 2000, and actually began assembling his anticipated empire as early as 1992. FCC rules require an applicant to begin broadcasting within three years of receiving a license, but the commission, which does not specifically monitor programming, was unaware that MS Communications is not broadcasting in a single market.

It appears that MS Communications has kept its licenses active by successfully filing repeated requests with the FCC for extensions or modifications of those permits. The Center also identified 60 of Silberman’s licenses that have expired.

As a result of inquiries from the Center, the FCC wrote Silberman to ascertain whether his stations are in fact broadcasting. While there is no indication that Silberman or his company have done anything illegal, the original 1982 FCC order authorizing the creation of low-power TV service makes clear that the government sought to avoid issuing highly coveted slices of broadcast spectrum to potential broadcasters, only to have those resources lie dormant year after year.

As for the 72-year-old Silberman, he is hoping the impending conversion to digital broadcasting brings new and potentially lucrative business opportunities for LPTV licensees such as himself.

Home-grown television

The FCC officially approved the creation of the LPTV system as a way of delivering broadcast signals to rural areas beyond the reach of existing full-power stations and to urban enclaves in need of minority or non-English-language programming.

The intent was to grant licensees permission to build and operate low-power television stations to serve the interests of their respective communities, allowing them to secure the rights to a part of the electromagnetic spectrum. In return, licensees agreed to begin broadcasting within a set timeframe.

But for all their advantages, including relatively low start-up and operating costs (tens of thousands of dollars, compared to the millions required for a full-power station), LPTV stations have second-class status in the television world. For example, a low-power station may only use a fraction of the wattage of a conventional television transmitter (hence the name) and is limited in range to about 15 miles, compared to an average of about 50 miles for a full-power station.

When the FCC first began accepting LPTV license applications, it was inundated with as many as 40,000, according to one report. Applicants ranged from individuals new to the industry to major networks NBC and ABC. The sheer volume forced the agency to declare a freeze on additional applications. It also instituted a lottery system in an effort to more quickly process applications already received.

The LPTV application process begins with a request to construct a station in a specific area. After the license is granted, the station is constructed and another application is submitted for a “license to cover.” At this point, the station begins broadcasting—or is at least supposed to.

As of Dec. 31, 2004, there were 4,385 television stations in the United States authorized to broadcast programming, according to the FCC. (This does not include translators and boosters, which simulcast live transmissions of licensed stations.) Of this total, 1,366 are full-power commercial stations, while 2,034 are classified as low power. Rounding out the total are educational stations and “Class A” stations, which are also low power, but have more protection againsts signal interference than regular LPTV stations. Low-power television has no ownership limits for individuals or corporate entities, but those LPTV stations owned and operated by independent broadcasters with just one channel seem to best represent the purpose originally envisioned by the FCC. WWCI-TV10, for example, provides the only local news programming in Indian River County, on central Florida’s Atlantic Coast. When that area was hammered by two successive hurricanes last September, TV10 aired a daily commercial-free call-in program for more than a month so that residents could get information about emergency aid and rebuilding.

An unlikely media mogul

Silberman told the Center he saw significant potential in LPTV technology. Specifically, he envisioned wireless cable networks in small towns.

“I was looking for little cities where they had one or two channels,” he said. “I thought it would be a good idea to offer the people 10, 13 channels….The service would have been subscription based—if you lived in a town, you’d get 13 channels for $20. That was the business.”

Silberman said he initially acted as a go-between for acquaintances willing to invest in low-power television. Beginning in the early 1990s, he said, these acquaintances amassed hundreds of station licenses in markets across the nation, primarily in several areas of the Midwest. For example, 52 of the proposed stations are located in northern Michigan.

Wireless cable networks never took off as a viable service, however, and direct broadcast satellite television all but killed the original idea. In addition, the FCC announced the transition to digital television, which promised to affect all television broadcasters in the U.S., including LPTV owners. Their stations, already at a competitive disadvantage, faced an uncertain future.

Question marks notwithstanding, Silberman offered to buy the construction permits from the initial group he assembled in the hope of finding a profitable use for the channels. FCC records analyzed by the Center show that 183 low-power television station licenses were transferred to MS Communications, LLC, from 2000 to 2003, with three-quarters of those transactions taking place in 2000. Altogether, Silberman said, more than 200 of the original channels were sold to his company. Since that time, the entrepreneur has filed with the FCC modifications to the construction permits along with applications to move his channels. But nothing has ever been broadcast on his channels, he said, save for test patterns briefly generated in Petoskey, Mich., and in other markets.

Ghost TV

Nevertheless, the FCC has allowed Silberman’s company to maintain stewardship of those channels. When the Center queried the commission about MS Communications, an agency spokesperson replied in a written statement: “We can confirm that MS Communications is currently broadcasting over 201 LPTV licensed stations.” In fact, Silberman is not broadcasting programming on any of those stations.

In Meridian, Miss., for instance, where MS Communications holds licenses for 12 low-power stations, the Center confirmed that nothing is currently being broadcast over any of the assigned channels. When asked about this, the FCC spokesperson replied that, as a matter of practice: “We trust that the licensee has indicated through filings that they are broadcasting and if they go off the air…they have to apply for the authority to [do so]. The responsibility is in the licensee’s hands to notify the FCC when they are no longer broadcasting and the reasons for doing so.”

Yet FCC filings show that MS Communications has managed to keep its licenses active by producing paperwork in lieu of programming. This does not appear to violate agency regulations, although it’s clear that the FCC’s original intent in creating low-power television broadcasting—to bring programming to underserved areas—is not being served in this case. What’s more, the spectrum to which Silberman has rights may potentially have tremendous value for other uses, such as cellular telephone service and data transmission.

According to Greg Herman, president of the Community Broadcasters Association, a trade group that represents LPTV broadcasters, “It is atypical of our industry to see people not build stations.” Herman describes Silberman as a nice guy with good intentions who got caught up in regulatory changes, rather than a so-called “spectrum speculator” squatting on potentially lucrative public airwaves.

“He did not intend to be a guy with 200 channels with nothing on them,” Herman told the Center.

A digital payoff?

Since the first television broadcasts in the 1940s, the nation’s publicly owned airwaves have become more and more crowded. In addition to television and radio stations, cellular telephone companies—with more than 160 million customers—are all fighting for limited space on the nation’s airwaves.

The old technology for broadcasting is known as “analog.” Dramatic advances have made it possible to instead broadcast digitally, thereby making it possible to utilize the limited spectrum in a far more efficient way. The FCC is requiring full-power, commercial television broadcasters to relinquish their existing spectrum and move to new digital channels by the end of 2006, although that timetable depends on a critical mass of U.S. households with television sets able to receive those digital signals.

The FCC has decided, for now, that low-power stations will follow a transition to digital similar to that of full-power television stations, although they may lag by a few years. Existing LPTV license holders will be allowed to apply for a second, digital channel, and begin using it before relinquishing their original analog channels. Because digital technology is a far more efficient use of spectrum, a licensee could broadcast a television signal on a small part of its frequency, and then lease the rest to a cellular phone carrier, for example.

In short, reallocation of the spectrum and the transition to digital could provide significant financial windfalls for MS Communications and others that control portions of the spectrum. But for an LPTV operator to lease its space, it must broadcast at least one channel of programming. Silberman estimates he invested more than $3 million in the business initially, and he further spent thousands of dollars more each year on permit filing and maintenance fees. And he’s not done yet: according to the FCC, Silberman’s company currently has eight new construction permits, “none of which have gone over the three-year deadline” that requires those awarded permits to begin broadcasting or risk losing their licenses.

To finally make his licenses profitable he’ll need a financial angel, possibly in the guise of a cellular telephone company. “Hopefully,” he said, “there’s going to be someone who needs my channels.”

John Dunbar, Mike Baxter and Katie Mills contributed to this report.