FCC Seeks to Halt Abuse of Broadcast Licensing Process : Media: Regulators blame a surge in applications by people seeking settlements to withdraw them. Such payments will now be cut.

The Federal Communications Commission took steps Thursday to end widespread abuses of the broadcast licensing process by applicants interested only in receiving substantial settlement payoffs.

In unanimous votes, the commission restricted settlement payments to verifiable expenses incurred by applicants who challenge existing radio and TV licenses, and it initiated proceedings to impose the same limits on applications for new licenses.

License applications have ballooned in recent years, and FCC staff members blame much of the increase on people seeking windfall payoffs from other applicants in exchange for withdrawing their applications.

Before Thursday’s action, settlement payments were unrestricted and often reached hundreds of thousands of dollars. One pending FCC case involves proposed payments totaling $4.5 million.

Roy J. Stewart, chief of the FCC mass media bureau, said the new restrictions should limit the license selection process to bona fide applicants. He estimated that they would cut the number of applications by 75%.

During the Ronald Reagan Administration, the commission was guided by a philosophy that the marketplace should regulate the broadcast industry. That philosophy led to a number of policy changes, including removal of the ceiling on settlement payments.

The five-member commission now is dominated by four appointees of President Bush, including its chairman, Alfred C. Sikes. The new members appear inclined to reregulate some areas.

In addition to limiting settlement payoffs, the commission rejected a proposal to award radio and TV licenses through a lottery system. The concept, developed during the Reagan years, would have scrapped the current hearing process in which the FCC weighs the attributes of competing applicants.

The lottery had been opposed by communications lawyers and a number of public-interest groups, who argued that comparative hearings are necessary to determine that licenses go to the most qualified people.

Ervin S. Duggan, the newest Bush appointee, left no doubt about his feelings on the proposal, saying: “I not only applaud the burial of the lottery idea, I would like to drive a stake through its vile heart.”

Perhaps the most far-reaching expression of reregulation philosophy was demonstrated in the commission’s unanimous vote to toughen character qualifications for people who own broadcast licenses.

In 1986, the commission adopted a character policy stating that criminal convictions would not be held against a license owner or applicant unless they were directly related to commission rules. The policy specifically excluded unrelated felonies, such as murder.

The narrow interpretation had been attacked in Congress, particularly by Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee. Earlier this year, Dingell asked Sikes to review the character policy.

On Thursday, the FCC said complying with the law in general is relevant to a licensee’s qualifications. It adopted a new policy broadening the range of misconduct that will be considered to include all felony convictions and, in some circumstances, misdemeanors. The commission said it also will consider violations of antitrust and anti-competitive laws.

“We have to have reasonable standards to hold broadcasting licenses,” Sikes said.

According to two people familiar with the internal debate, the new character policy is weaker than some FCC insiders had sought. For instance, it excludes consideration of consent decrees, under which businesses settle accusations by paying a fine and agreeing to stop specific practices without admitting wrongdoing.

Robert Petit, FCC general counsel, said there had been a “lively discussion” of the new policy, but he refused to say whether the final result was less than had been proposed.