WASHINGTON, D.C. -- Representative Edward J. Markey (D-MA), chairman of the House Subcommittee on Telecommunications and the Internet, today held a hearing to examine the radio industry’s power and potential, as part of the subcommittee’s series on assessing the digital future of the United States. Recognizing the powerful democratizing force of radio, Chairman Markey voiced the need to enhance the role of non-commercial voices through low power radio, assess public interest obligations of broadcasters, evaluate marketplace impacts of consolidation, redress the low rate of minority and women-owned broadcast licenses, discuss the hike in royalty rates for Internet radio providers and consider the impacts of the proposed XM-Sirius satellite merger.

Rep. Markey said, “In light of the dramatic consolidation of radio ownership in the U.S. terrestrial radio marketplace in the wake of the Telecommunications Act of 1996, I believe that the all aspects of the industry in the digital and satellite era must be assessed with an eye toward its effect on consumers of pay radio, and its effects on the broader goals of ensuring diversity, localism, and innovation.”

Chairman Markey’s prepared statement follows below:

Good Afternoon.  This is the second in a series of oversight hearings on the Digital Future of the United States that began with testimony last week from inventor of the World Wide Web, Sir Timothy Berners-Lee. 

Today, we examine the radio industry and assess its power and promise and we have a diverse panel of witnesses before us to illuminate many of the issues in the radio field.  Radio has a long history of democratizing access to information.  It is a medium that reaches virtually every area of the country and radio stations are powerful communications assets for the communities they serve.

Non-commercial low power and full power radio, in particular, help reach underserved areas, airs niche programming formats, and provide local information of value to diverse community segments.  I hope that we can continue to protect and enhance the role of non-commercial voices through low power radio.  Moreover, as the FCC prepares to open an application window for new full power non-commercial stations, it is vital to ensure that adequate notice is given to the public about opportunities to obtain licenses to ensure that aspirants for such licenses may broadly represent the great diversity and richness of the country.  

In the area of commercial, over-the-air radio, more than one thousand radio stations are already broadcasting digital content. Digital technologies allow free over-the-air radio broadcasters of providing upgraded audio quality as well as the ability to multicast their signal into multiple feeds.  These multiple audio feeds may permit, for example, a radio broadcaster to air news, sports, weather, traffic, and talk on one feed, while two others simultaneously broadcast music from distinct musical genres

As we move further into the digital era, we must also assess the public interest obligations of broadcasters and the effects of marketplace consolidation.  The Commission is in the midst of reviewing its media ownership rules and this review will analyze the effect of this consolidation on competition, localism, and diversity of viewpoints, among many issues. 

In addition, I am very concerned about the abysmal lack of broadcast licenses that are held by minority-owned and women-owned businesses.  While many licenses were obviously given out to original licensees decades ago, it is important to remember that half the country is women and approximately 35% are minorities.  Yet women and minorities today reportedly hold less than 4 percent of FCC broadcast licenses.  This is something that this Congress and the FCC should find creative ways to remedy and the Commission can take an important first step by developing accurate data on current minority and women ownership levels, which today is not readily available information.

I also want to note the recent decision by the Copyright Royalty Board to hike royalty rates.  Previously, small Internet radio providers were able to pay a percentage of revenues to cover royalty payments.  The decision by the Copyright Royalty Board now sets rates, on a per-song, per-listener basis, effective retroactively to 2006.  This represents a body blow to many nascent Internet radio broadcasters and further exacerbates the marketplace imbalance between what different industries pay.  It makes little sense to me for the smallest players to pay proportionately the largest royalty fee.  This decision runs the risk of hurting not only fledgling entrepreneurs, but also the online radio services of public broadcasters and smaller, commercial stations. 

Finally, I want to briefly address the satellite radio industry.  Obviously, XM and Sirius radio have stated their desire to merge.  This merger raises several public interest issues that this hearing will help to illuminate.  Among these issues are the merger’s potential effect on consumer prices and consumer equipment, its effect on content and content providers, its effect on localism and the ability of listeners of both pay and free radio services to obtain information that is local in nature, and its impact on competition broadly.  The merger may also impact telecommunications policy goals related to spectrum efficiency and the prospects for new competitive entry and innovation.

I want to thank all of our witnesses for their willingness to testify this afternoon.  Thank you.