FCC Says AM Stereo’s Fate Best Left to Market Forces

The Federal Communications Commission on Thursday declined to choose a single AM stereo radio system as the industry standard, saying such a move was neither appropriate nor necessary.

The FCC said it would continue to allow market forces to determine the development of AM stereo broadcasting, though the feature’s growth has been slow in the AM industry.

The FCC also reinstated policies designed to increase the opportunities for women and minorities to own radio and television stations.

The action was taken in response to an order from Congress, which added language to the massive 1987 spending bill telling the FCC to end its review of the policies and put them back in place.

The commission’s statement on AM stereo follows years of uncertainty among broadcasters. FCC Chairman Dennis Patrick noted that, in the five years since AM stereo was introduced, the number of competing systems has narrowed from five to two. Of the two systems, 70% of radio stations broadcasting in AM stereo are using the Motorola C-Quam system, he said.

If the FCC chose one of the systems as the standard, the other would probably go to court, which would hinder development of the industry, he said.

Single Standard Requested

Commissioner James Quello said that, while he had wanted the FCC to choose an industry standard at the outset, he said he would go along with the commission’s decision not to intervene because broadcasters are “moving to a de facto selection of a single system.

“Maybe the marketplace will make the determination I wanted to make five years ago,” he said.

The FCC had been asked to select a single AM stereo standard to encourage the development of the feature, which they say will enhance the future of AM radio.

Proponents of an industry standard say the existence of two incompatible systems is limiting the growth of AM stereo because stations are reluctant to invest in stereo, fearing they may be choosing the wrong system.

In turn, manufacturers are reluctant to produce AM stereo receivers because of weak consumer demand, due to few stations broadcasting in stereo, the proponents say.

Chuck Sengstock, a Motorola spokesman, said the company was pleased the FCC decided not to interfere in the market.

“It’s our observation as well that the market is making its decision and that, by any way you measure it, C-Quam is the emerging standard,” he said.

He said 442 of the nation’s 4,900 radio stations are using the C-Quam system and that 12 million C-Quam receivers have been sold.

More than 100 stations use a system made by Kahn Communications Inc.

Minority Ownership Policies

The FCC had put its minority ownership policies on hold in December, 1986, when it launched an inquiry to determine whether the policies are constitutional.

Commissioner Patricia Diaz Dennis said the policies deserved close scrutiny but “we are bending to the will of Congress.”

One of the policies allows broadcasters in danger of losing their licenses to sell their stations to minority-controlled interests for up to 75% of fair market value.

The other policies give women and minorities preference over otherwise qualified white males in awarding licenses and grant tax breaks to owners who sell their stations to minorities.