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FCC cuts radio

Bonus proposal draws ire from legislator

Posted: Thursday, June 26, 2003

A Federal Communications Commission administrative law judge has revoked two FM full-power radio station licenses held by Peninsula Communications Inc., ruling that the stations' operator had willfully disobeyed for more than a year an FCC order to terminate operation of a network of seven translators whose signals were fed by the full-power stations.

Those low-power translators ceased operations in August 2002, but the termination order had been issued in May 2001. Under the "initial decision" released June 19, Peninsula Communications Pres-ident David Becker loses the licenses for Homer station KWVV-FM, often called "K-Wave," and Soldotna station KPEN-FM, stations that had fed the network of translators.

Their loss represents only part of the punishment meted out by the FCC. Peninsula Communications also faces a $140,000 fine, a separate issue currently in litigation.

The judge's decision takes effect 50 days after its release -- Aug. 8 -- if exceptions are not filed within 30 days, or unless the FCC decides to review the case on it own motion.

Becker, of Homer, said Wednes-day he fully intends to file exceptions.

"Obviously, we think the judge reached the wrong conclusions," Becker said.

Becker did not forfeit his remaining licenses. Station licenses for KGTL-AM in Homer and KXBA-FM in Nikiski remain in effect, as do licenses covering FM translators K292ED in Kachemak City, K285DU in Homer, and K285EG and K272DG serving Seward.

Revocation of KPEN's license could have an impact on the Kenai Peninsula Borough, which contracts with Peninsula Communica-tions to broadcast borough assembly meetings across the peninsula. Borough Clerk Linda Murphy said the borough is talking with KBBI Public Radio in Homer about possibly taking over those broadcasts, if necessary, but KBBI is in the process of hiring a new general manager and has yet to make a decision.

Becker said the appeals process could take some time, considering it's already been under consideration and in and out of courts for seven years. Meanwhile KWVV and KPEN are continuing to broadcast, he said, and likely would through the appeal process.

According to Administrative Law Judge Richard L. Sippel, Becker willfully continued broadcasting over seven unauthorized translators after being ordered on May 19, 2001, to cease operations. Without justification, PCI committed a clear breach of duty to obey the "unambiguous termination order," Sippel said.

Becker defended his action by arguing he had "an absolute right" to continue while the termination order was appealed. That defense was rejected. Becker also argued that tougher regulations regarding translators adopted by the FCC in 1990 were never intended to apply in Alaska.

Becker continued broadcasting over the seven translators until Aug. 28, 2002, when, facing an October 2001 injunction issued by the U.S. District Court for Alaska that was affirmed later by the Ninth Circuit Court of Appeals, PCI finally stopped operating the translators.

The network of translators had served the communities of Kenai, Soldotna, Anchor Point, Kachemak City, Homer and Kodiak. Some locations were served by more than one translator.

Already facing the prospect of paying the $140,000 fine, Becker called the additional punishment of losing the licenses excessive and senseless.

"I'm qualified to be a licensee," he said, adding that was made clear when the ruling did not strip him of all his broadcast licenses. "Either I'm qualified or I'm not. If I am, that should be the end of it. I don't think the additional penalties he is trying to apply on top of what already has been assessed is reasonable or fair."

Sippel's ruling said Becker actions were motivated by profit.

"Through a carefully crafted 'network' PCI captured revenues that otherwise would have gone to competing full-service licensees operating properly within their assigned service areas," the ruling said. "Through the seven offending translators, PCI placed its own economic interests ahead of the commission's regulatory scheme and the public interest in having honest competition."

The issues that eventually led to the decision have a long history.

Becker formed PCI in 1978 and began broadcasting in September 1979 over KGTL-FM (now KWVV-FM). The station became Homer's first commercial FM venture. PCI added KPEN-FM in 1984, providing Soldotna with full-service radio.

By the 1980s, PCI had built its network of FM translators enabling the broadcast corporation to reach customers in competition with full-power stations operating without supplemental translators. In other words, advertisers would find advantage in buying airtime on the PCI's network, which was able to reach more listeners on the Kenai Peninsula and Kodiak Island than could Anchorage stations.

"Therefore, there was a clear economic incentive for PCI to keep its low-cost translator 'network' operating for as long as possible," Sippel said. "PCI's income was almost 40 percent derived from ad sales in Anchorage which was outside PCI's primary FM coverage areas," he said.

In 1990, the FCC strengthened the rules governing ownership and financial conditions for translators. The stricter standards were meant to protect existing FM stations from the "adverse, anticompetitive effects of translators." Waivers could be granted for translators broadcasting into areas not covered by primary stations. That was the FCC's practice for Alaska where so-called "white areas" receiving no radio signals were common because of terrain.

Stations that had operated prior to March 1, 1991, were permitted to continue through March 1, 1994, including translators owned by full-service stations that had signals reaching beyond authorized zones. After March 1994, however, the new rules applied to all broadcasters.

PCI, which actually lacked formal waivers for its network prior to June 1991, continued operating without them, according to the FCC. In November 1995, the company filed renewal applications for its translators. Through that year and into 1996, PCI thought it had the necessary waivers to operate its translators, believing the FCC's earlier approval of initial construction permits and licenses for translators sufficed.

"At the time, there did not appear to be any rigid application or strict observance of the waiver rules," Sippel said.

In March 1996, PCI was informed by letter that it might be in violation of the commission's 1990 FM translator rules and likely would have to demonstrate that its translators served only areas unable to get other radio signals. Meanwhile, competitors filed petitions to deny PCI's renewal applications, arguing that the translators were rebroadcasting KPEN's and KWVV's signals "beyond their respective authorized contours."

On Sept. 11, 1996, an FCC division chief notified Becker he had no valid waivers for the translators. PCI was, however, given the benefit of the doubt. FCC staffers concluded, Sippel said, that PCI "could have reasonably, but mistakenly, believed staff had implicitly waived" the rules.

PCI was granted 60 days to file applications to assign the nine licenses then in question to unaffiliated parties. License renewal was made contingent on those assignments.

An attempt was made to assign the translators to Coastal Broad-casting Communications Inc., owned by David and Judy Buchanan, Becker's long-time acquaintances. That deal included a number of relationships between the two companies, including financing to be provided by Becker, a condition that ultimately doomed the transaction. The FCC ruled such financing left a connection to primary stations owned by PCI.

In 1997, the two companies re-filed their application without the financing aspect. There followed a couple of years during which PCI continued to utilize the translators under license renewals and temporary waivers granted because of the prospect of eventual assignment. But the deal was never consummated and by March 1, 2000, the assignment was dead.

Complicating matters for Becker was the fact that the translators were losing value. Four translators had become worthless after Kodiak translators had been denied satellite waivers and could not receive primary station signals. Seward translators would lose value whenever a full-service station went on the air covering the same area. With the assignment option dead, PCI unsuccessfully sought stays from the commission and from the Washing-ton, D.C., Circuit Court.

On Feb. 14, 2000, the commission dismissed PCI's petition for reconsideration and a motion for stay. In March 2000, in what Sippel called "a last ditch effort," PCI filed a pleading rejecting conditional renewals it was granted in 1997 and 1998, theorizing that such a rejection would require the FCC to set the translator renewal applications for a hearing.

A little over a year later, on May 18, 2001, the commission dismissed PCI's rejection argument as untimely and rescinded the company's conditional renewals and assignment grants.

The commission deleted the call signs for translators serving Kenai, Kenai-Soldotna, Anchor Point, Homer, Kachemak City and the two translators on Kodiak and order PCI to cease operations. PCI appealed, seeking a stay from the D.C. Circuit Court.

That appeal was denied.

Nevertheless, PCI would continue to operate unlawfully for 15 months, the FCC said, prompting the U.S. Attorney for Alaska to seek a court order in July 2001 to enforce the termination order.

A few weeks later, the commission threatened PCI's licenses if it continued using the translators. A U.S. District Court (Alaska) ruling against Becker and PCI followed in October, backed up by the Ninth Circuit's affirmation in April 2002.

On Feb. 6, 2002, the commission issued a forfeiture order, finding PCI had "willfully and repeatedly" failed to comply. A fine of $140,000 was handed down.

On July 3, 2002, the Ninth Circuit denied a PCI petition for rehearing, and on Aug. 13, 2002, the D.C. Circuit Court denied PCI's last request for a stay of the termination order.

On Aug. 28, 2002, PCI finally shut down the seven FM translators, announcing that it was a temporary move while the legality of the termination order was decided by the D.C. court. The court upheld the order.

While Becker had bucked the FCC at nearly every turn, he had used the process legally, the judge said. He also had not demonstrated any intention to defraud. Those factors led the judge to rule that while he must forfeit the two full-service stations that had fed the translator network, Becker could keep licenses not associated with that network. The commission has a general policy to revoke only offending licenses. The company had already paid "a heavy price" with the loss of the seven translators, Sippel said, and likely would pay still more when and if the fine was upheld.

"PCI's conduct was seriously misguided, bordered on contemptuous, and was deserving of those sanctions, in addition to revocation of two full-service FM stations that were use to operate the network," he said. However, that misconduct was not so cavalier, he added, that Becker should lose unrelated licenses.

Becker said the judge was "cutting the baby in half like Solomon" by revoking the licenses. He said the fine was the maximum permitted.

"Enough is enough," he said.

The judge's action can be appealed to the full FCC and from there to the Washington, D.C., Court of Appeals, Becker said. How long that might take is anybody's guess.

"You can't put a time table on this stuff," he said.



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