The FCC is seeking comments on the economic impact that low power FM stations (“LPFM”) may have on full-service commercial stations.  These comments will form the basis of a report that the FCC must submit to the Congress as required by the Local Community Radio Act of 2010 (“LCRA”). The LCRA relaxed technical restrictions on LPFM stations in an effort to help grow LPFM service.  For example, the LCRA requires the FCC to eliminate the third-adjacent channel protection that full-service FM stations now enjoy from LPFM stations, FM translator stations and FM booster stations.  The LCRA also allows the FCC to grant LPFM stations a waiver of second-adjacent channel protections to full-service FM stations.  These changes when taken together could allow a significant increase in new LPFM stations, possibly to the detriment of full-service FM stations; hence the necessity and importance of the FCC report to the Congress. 

The FCC wants comments from the public on the current and potential economic impact that the addition of new LPFM stations could have on full-service FM stations.  The FCC left unanswered whether the agency will include the potential economic effect in its report.  The FCC also wants comments on the appropriate measurement for the economic impact; the effect of LPFM stations on audience ratings or advertising revenue. 

This approach has three problems.  The first is the difficulty for the FCC to develop any meaningful metrics that measure the effect of LPFM stations on full service stations with regard to advertising revenue.  LPFM stations compete indirectly with full-service FM stations.  LPFM stations must operate as noncommercial stations, financed through underwriting and listener support.  Full-service FM stations sell advertising time based on ratings.  It will be challenging for the FCC to compare the noncommercial economics of LPFM to the commercial economics of full-service stations. 

Second, Congress seeks information on the effect LPFM stations will have on full service FM stations only.  The LCRA, however, would make it possible for FM translator stations and FM booster stations to relocate closer to urban markets or for the FCC to license new stations.  FM translator and booster stations extend the reach of full-service stations, presumably with some economic impact on other full service stations.  In addition, FM translator stations can now rebroadcast AM stations, extending the reach of those stations. 

Third, the FCC will not consider the potential economic impact on full-service stations due to interference from LPFM stations.  LPFM stations are prohibited from causing interference to full-service FM stations, and there are also practical limitations to such LPFM station interference. In the event interference does occur, it is more likely that full-service stations will cause interference to LPFM stations than the reverse.  Such prohibitions and practical considerations do not assure that such interference may not occur; accordingly, for the report to the Congress to be meaningful, it must account for the economic impact associated with such interference, if any. 

Comments in this proceeding (MB Docket No. 11-83) are due on June 24, 2011, and replies are due on July 25, 2011.