THE COMMUNICATIONS ACT OF 1979 WEDNESDAY, JUNE 27, 1979 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The committee met, pursuant to notice, at 9:35 a.m., in room 2322, Rayburn House Office Building, Hon. Lionel Van Deerlin, chairman, presiding. Mr. VAN DEERLIN. The subcommittee will resume its hearings on the public broadcasting sections of the proposed H.R. 3333. We have this morning, making his fourth appearance in this series of hearings, Mr. Henry Geller, Assistant Secretary of Commerce, Director of the National Telecommunications and Information Administration, accompanied, I understand, by Mr. William A. Lucas, the Associate Administrator. Good morning, Mr. Geller. Mr. GELLER. Good morning, Mr. Chairman. STATEMENTS OF HENRY GELLER, ASSISTANT SECRETARY FOR COMMUNICATIONS AND INFORMATION, NATIONAL TELECOMMUNICATIONS AND INFORMATION ADMINISTRATION, DEPARTMENT OF COMMERCE; AND WILLIAM A. LUCAS, ASSOCIATE ADMINISTRATOR FOR TELECOMMUNICATIONS APPLICATIONS Mr. GELLER. This is the final round of testimony on H.R. 3333. Mr. VAN DEERLIN. I certainly hope so. Mr. GELLER. I did want to say, however, that while public broadcasting, or public telecommunications, is coming at the end, we regard it of very great importance because of the contribution it can make to diversity, both today and, in an even greater way, tomorrow. I thought I would make just a very few introductory remarks and then turn to Mr. Lucas; but I will be available to answer any questions you might have. We do not think there is a need for a comprehensive, detailed legislation in this area for two reasons. One, just last year you passed rather detailed legislation. Second, under the very able leadership of Robben Fleming, the Corporation for Public Broadcasting is moving to reorganize itself in a way which we think is very sound and commendable. And, we note, so is PBS. However, there is a need to examine the area, we agree, and there is a need for some legislative change. The areas of possible change are few but they are important, and Mr. Lucas will discuss them. Generally, we agree with the thrust of the changes in a number of respects in your bill. That is all I will say as an introduction, except that just as I made clear about commercial broadcasting, I don't think this should take precedence over domestic common carrier legislation and should not delay enactment of any legislation so urgently needed in that area. But having said that, I stress again, as you will see from our statement and from what Mr. Lucas will say, we do think it is an area which deserves consideration and it does merit some legislative changes. Mr. VAN DEERLIN. Thank you. Mr. Lucas. STATEMENT OF WILLIAM A. LUCAS Mr. LUCAS. Mr. Chairman, it is a privilege to testify before the committee on public broadcasting provisions of H.R. 3333. Let me make a personal note. It is a very different feeling appearing here as a Federal official instead of an expert from an outside research corporation. I have more sympathy with some of your problems, perhaps, talking from this vantage point. Mr. VAN DEERLIN. And you are better treated when you are from the outside. Mr. LUCAS. I assume that is the case. Mr. GELLER. Not true. Mr. LUCAS. Not true. We have a prepared statement. With your permission, I would like to submit it for the record. [See p. 290.] As you know, the administration is deeply committed to building a strong public broadcasting system. One of President Carter's first proposals to Congress was a new authorization for public broadcasting. The Public Telecommunications Financing Act of 1978 put into law several important principles which we heartily supported. As we all recognized then, however, the bill had several important gaps. The new proposals found in H.R. 3333 have been very refreshing. They are marked departures from previous practices which have led us in a healthy way to think through our assumptions. You are to be commended for the fresh thinking both of the subcommittee and the staff represented in that particular part of the bill. I would like to touch upon several of the broad policy questions raised in the legislation. As Henry has already mentioned, we do not believe detailed legislation is needed in public broadcasting this year. Rather, we feel a few simple amendments to the 1978 act are all that is necessary. Indeed, if you consider thoroughly the possible implications of a few modest amendments, they could have a rather decisive and healthy impact on the industry. As outlined in our prepared statement, these amendments would clear the way for restructuring proposals currently being considered in the industry, and hopefully would allow those proposals to have full effect. If these efforts fail, more sweeping changes should be considered when the current CPB authorization expires in fiscal year 1983. We strongly endorse the underlying objectives of the proposed restructuring of the Corporation for Public Broadcasting which are now underway. We agree that the Federal support for public broadcasting should be focused primarily on programs and services, which is exactly what they are moving toward, and that significantly more funds should be pooled for this purpose at the national level. While orginally CPB allocated some 15 percent of its budget for public support, as we all know, now it is moving close to 60 percent for community service grants. One result of the shift is neither CPB nor the system as a whole has the kind of concentrated, aggregated funds to allow for decisive management of a programing service and to develop what we believe is the necessary highquality national programing this system needs. Another reason we support this emphasis and trend in CPB is that it takes into account important trends going on in the cable industry and elsewhere in technology. With consumers increasingly likely to rely on cable, video cassettes, disks, and the like, we are looking forward to important alternative uses of public broadcasting programing. However, while we agree that Federal funds should be used mainly for programing and most of these should be dispensed on the basis of merit, we do not agree CPB needs to be abolished to realize these goals. With far less sweeping changes, CPB could be reorganized along the lines of a program endowment. Under the leadership of Robben Fleming, CPB has already started moving in this direction by approving a plan for separate management and programing units within the Corporation and increasing the percentage of appropriations spent directly on programing. We think these are significant first steps and we believe there is great potential for CPB to take further steps in the direction of H.R. 3333 and the direction that you are charting for the endowment. Thus, rather than abolishing CPB and creating a totally new organization, we would recommend a limited set of amendments which would give latitude and support for these forces of internal change in the public broadcasting community. The two which stand out are, first, the clause concerning CPB's role in establishing the interconnection system. The reallocation of that money is a very important part in the Robben Fleming plan. We feel management there should be given more latitude. Second, the requirement for a 50 percent passthrough of funds for stations could be altered. There was considerable concern in this committee when the 1978 act came up that 50 percent should be the minimum amount of funds that would be passed through for community service grants. We feel that view should be revisited and that by dropping it to a one-third floor, that is, not requiring only one-third but giving CPB the latitude to drop it to one-third over time, that would move substantially in the direction you are trying to move now with H.R. 3333. Should the committee continue with a comprehensive approach, there are a few problem areas we would like to highlight. As I am sure you have already heard from many station managers, the H.R. 3333 allocation formula would create serious inequities. We simply recommend that the formula be modified, but we do not see that as being something to focus in on the details here of that particular formula, as perhaps it would be distracting. The formulas could be worked out. This particular one clearly needs work. Second, H.R. 3333 would abolish the facilities program after fiscal year 1983. As you know, we are the stewards of that program. We share your view that the facilities program as it now exists should not continue indefinitely, but we do not think it appropriate to make a determination at this time as to when the program should end. The 1978 act required NTIA, in consultation with CPB and others, to develop a long-range national plan, a 5-year plan. Work is underway on that plan and we aim to have it completed by December 31 in compliance with the law. If termination in fiscal year 1983 is a foregone conclusion, the 5-year planning effort is largely wasted. Given the historically low level of facilities funding, it is hard to imagine that service extension goals of the 1978 act will be met by fiscal year 1983. It may be that the program should take on a broader purpose, supporting delivery of a wide range of telecommunications services at some future time. We feel it is important to note that money cannot accelerate some kinds of problems. If organizations are not ready to form stations in many rural areas, no amount of money will accelerate that process. We feel there are substantial problems in outreach and community development which must go on before we can complete the system. A third area is we are not in agreement with the proposed method of funding public broadcasting. After reviewing the various alternatives put forward several times for long-range funding, we have concluded the best approach is for Congress to provide 5-year authorization and 5-year advance appropriation for public broadcasting. A permanent authorization of $1.50 per capita will not remove the need for periodic oversight, and it is not likely to change the annual appropriations process for public broadcasting. It is unfortunate, but we do not perceive any real benefits deriving from the idea of a permanent authorization. In fact, it might shift the oversight from this committee to the Appropriations Committee when we feel in many ways some of the views here with this committee are more sympathetic-certainly, wishing to offer more leadership in this particular area. As to the question of eliminating the matching principle, we are not convinced that this mechanism is responsible for what some regard as excessive on air fundraising appeals. It may serve to increase the attractiveness of contributing funds. A decision to eliminate the match should, we feel, turn on the weight of testimony offered by public broadcasters. If, in fact, the match does create a strong incentive for local fundraising, we feel it should be retained. Fourth, our analysis of the concept of limited advertising and public broadcasting leads us to conclude that the potential disadvantages of this proposal outweigh the possible benefits. There is much uncertainty in this area as to the amount of revenue the device would generate, its impact on traditional sources of non Federal revenue, particularly subscriber contributions and program underwriting, and the application of such cluster underwriting to public radio. Further, we fear inevitably the introduction of advertising with its concurrent impetus for maximizing audience would have an unhealthy effect on the system's programing focus. We do not feel that the cluster advertising experience in Europe is necessarily applicable to the United States, and based upon what we have been able to find, we would have to oppose allowing noncommercial public stations to employ advertising. Last, H.R. 3333 would reduce the size of the proposed endowment board and would provide for a new approach to the nomination and selection of board appointments. We think efforts to enhance the political insulation and independence of the board are important, and in general we support the approach taken in the legislation. We find the concept of a nominating panel as outlined in H.R. 3333 to be sound; however, we do not believe the two-step appointment process proposed is necessarily workable. On reconsideration of the latter issue, we agree with the criticism that any appointment process which creates two classes of board members, one class appointed by the President and confirmed by the Senate, and another class not, is to be avoided. In some ways this is the criticism that you leveled against the proposal we came in with 1 year ago, and on review, we think it is a very sound criticism. Therefore, you might consider use of an outside nominating panel but have the President appoint and the Senate confirm all board members. While this method would not guarantee total insulation, it would add yet another layer of protection. Together with CPB's own reorganization to remove the board from direct programing decisions, this change would add, we think, considerably to the protection from political influence of the CPB board. We support the proposals to reduce the size of the board to nine members and to limit board service to one full 6-year term. We think there are competing considerations on the proposal to reduce the size of the board, but we can support the proposed reduction as a reasonable striking of a balance. Mr. Chairman, that concludes our statement. I and, I hope, Henry Geller will be happy to respond to questions. [Testimony resumes on p. 313.] [Mr. Lucas' prepared statement follows:] |