Voice of America: Station Modernization Projects Need to Be Justified (Letter Report, 01/24/94, GAO/NSIAD-94-69). The end of the Cold War, technological advances, and organizational changes in U.S. foreign broadcasting programs may render some of the Voice of America's (VOA) shortwave modernization projects obsolete before they are finished. Democracy is spreading in many parts of the world, host country media have become more reliable broadcast sources, and VOA and Radio Free Europe/Radio Liberty audiences have shrunk. By the turn of the century, direct satellite broadcasts involving high-quality signals may be available. Despite these trends, VOA plans to continue to build new shortwave stations and modernize existing ones. More than half of the $900 million VOA plans to spend on modernization through 2003 is for shortwave projects that have not yet begun. The planned shortwave modernization projects are not supported by cost-benefit analyses. --------------------------- Indexing Terms ----------------------------- REPORTNUM: NSIAD-94-69 TITLE: Voice of America: Station Modernization Projects Need to Be Justified DATE: 01/24/94 SUBJECT: Radio broadcasting Cost effectiveness analysis Construction costs International relations Cultural exchange programs Information dissemination operations Interagency relations Federal agency reorganization Public diplomacy Microwave radio broadcasting IDENTIFIER: Sri Lanka Tinian Europe Commonwealth of Independent States Latin America Thailand Africa Persian Gulf War Bahrain Liberia Morocco ************************************************************************** * This file contains an ASCII representation of the text of a GAO * * report. Delineations within the text indicating chapter titles, * * headings, and bullets are preserved. 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We are unable to accept electronic orders * * for printed documents at this time. * ************************************************************************** Cover ================================================================ COVER Report to Congressional Requesters January 1994 VOICE OF AMERICA - STATION MODERNIZATION PROJECTS NEED TO BE JUSTIFIED GAO/NSIAD-94-69 Voice of America Abbreviations =============================================================== ABBREV NASA - National Aeronautics and Space Administration RFE/RL - Radio Free Europe/Radio Liberty USIA - U.S. Information Agency VOA - Voice of America Letter =============================================================== LETTER B-255840 January 24, 1994 The Honorable Lee H. Hamilton Chairman, Committee on Foreign Affairs House of Representatives The Honorable Neal Smith Chairman, Subcommittee on Commerce, Justice, State, the Judiciary, and Related Agencies Committee on Appropriations House of Representatives Because of your continuing interest in the Voice of America's (VOA) radio construction program, we are sending you this report on the need for VOA to justify its modernization plan. Shortly after the President's February 1993 announcement of his intentions to consolidate U.S. international broadcasting activities, we began a review of the costs and issues associated with consolidating Radio Free Europe/Radio Liberty (RFE/RL) and VOA within the U.S. Information Agency's (USIA) Bureau of Broadcasting. Our objectives were to determine whether VOA had (1) adequately considered changing world conditions and new technology in its plans to build new stations and modernize existing ones and (2) supported its modernization projects with fully documented cost-benefit analyses. BACKGROUND ------------------------------------------------------------ Letter :1 VOA's broadcasts originate in Washington, D.C., and are sent to 29 leased and owned relay stations worldwide via satellite channels. These stations rebroadcast the VOA programs in shortwave and medium wave. Shortwave is the primary signal used in international broadcasting because it can be transmitted thousands of miles and is the only way to reach certain VOA audiences. The key drawback to shortwave broadcasts is the variable signal, which can at times result in poor sound quality or an inaudible broadcast. In 1982, VOA embarked on an estimated $1.3 billion network modernization program. The modernization program was intended to increase the reliability and strength of the broadcast signal into areas of political importance and defeat the jamming of VOA's shortwave broadcasts. In 1983, VOA developed a plan to achieve this goal by refurbishing existing relay stations and constructing new ones. This plan has been changed and delayed often in response to changing circumstances, and much of the modernization program has not yet begun. In 1992, we reported on VOA--specifically, its station modernization efforts, audience research, foreign language broadcasts, and the changing world environment.\1 In that report, we noted that as technology improves and local broadcast media become more reliable, the incentive for people to tune to shortwave broadcasts declines. -------------------- \1 Voice of America: Management Actions Needed to Adjust to a Changing Environment (GAO/NSIAD-92-150, July 24, 1992). RESULTS IN BRIEF ------------------------------------------------------------ Letter :2 Major political changes, advances in communications technology, and organizational changes in U.S. government international broadcasting may render some of VOA's planned shortwave modernization projects obsolete before they are finished. Democracy is spreading in many parts of the world; host country media have become more reliable broadcast sources; and VOA and RFE/RL audiences have declined. In response to the President's plan to consolidate broadcasting, VOA and RFE/RL cut back their direct broadcast hours and are planning to eliminate redundant language broadcasts. In several locations, they are using alternatives (such as providing programs to local stations for rebroadcast) to supplement or replace direct broadcasts. By the turn of the century, direct broadcasts from satellites delivering high-quality signals may be available. Despite these changes and the fact that fewer people in target audiences are listening to shortwave broadcasts, VOA plans to continue to construct new shortwave stations and modernize existing ones. Over half of the $900 million VOA plans to spend on modernization between 1994 and 2003 is for shortwave projects that have not yet begun. The planned shortwave modernization projects are not supported by cost-benefit analyses. In 1992, we recommended that VOA analyze the costs and benefits of its new construction projects. Although VOA agreed to do so for new projects, it did not make this analysis for the existing shortwave modernization projects, asserting that they were previously approved and justified in other planning documents. However, the proposed consolidation of VOA and RFE/RL and the changing political and technological environment present different circumstances than when earlier approvals were granted. IMPACT OF POLITICAL, TECHNOLOGICAL, AND ORGANIZATIONAL CHANGES ON VOA'S MODERNIZATION PLANS ------------------------------------------------------------ Letter :3 VOA continues to implement a plan to modernize existing facilities and build new shortwave broadcasting facilities. VOA's plan has been delayed and changed since 1983 due to budget restrictions and delays in negotiating operating agreements with foreign governments for new stations. Therefore, many of these modernization efforts are taking longer to complete. For example, VOA's plan to expand facilities in Sri Lanka was approved in December 1983. However, reduced funding delayed its construction. The new station, which has been redesigned in response to changing circumstances and moved to a different location, is now scheduled for completion in June 1995. Construction has not started on a proposed station in Tinian, and the station will not be ready for broadcasting until 1997. Planned modernization has not begun at many existing stations. In the meantime, political changes, advances in communications technology, and impending organizational changes have created a dramatically different environment for U.S. government international broadcasting. What follows are descriptions of these changes. POLITICAL CHANGES ---------------------------------------------------------- Letter :3.1 Countries that VOA has broadcast to have changed politically and are now open to a freer flow of information. Both RFE/RL and VOA are providing more programs to local broadcasters for rebroadcast in Eastern Europe and the Commonwealth of Independent States and reducing the number of direct shortwave broadcasts. Although VOA now broadcasts in two more languages than in 1991, its direct broadcasts have decreased by about 10 percent (113 hours a week), due primarily to placement of its programs. VOA has allocated increased resources to place its programs on local stations and networks and established new offices to implement the placement program. In the past 2 years, VOA has placed its programming on more national networks and local stations than ever before. For example, in the 17 Spanish speaking countries of Latin America, hundreds of local commercial stations and networks broadcast segments of VOA's 20 weekly hours of Spanish programming. In Thailand, VOA sends programming segments each week to scores of networks and local stations. Some VOA programming is broadcast on a majority of African countries' official networks and on several large regional stations. Similar examples exist in other regions of the world. According to a VOA report, the trend in Eastern Europe and some parts of the Commonwealth of Independent States is toward Western listening and viewing habits--direct international radio listening drops off to single digit percentages when there are more than six choices of local programs available. However, in countries where the pace of democratic change is measured or uncertain, VOA believes that the retention of its crisis shortwave broadcast capability is vital to U.S. national interests. It is important to note, however, that there are other, less expensive alternatives to building or maintaining large shortwave stations to respond to crisis situations. For example, after its Liberia station was taken over by rebels, VOA built a mobile shortwave facility. In response to the Persian Gulf crisis, VOA established a new broadcast capability within 4 months of its agreement with Bahrain. ADVANCES IN TECHNOLOGY ---------------------------------------------------------- Letter :3.2 According to a VOA study, direct broadcasts via satellite will emerge for limited application before the end of the decade and will ultimately revolutionize radio program delivery. Satellite radio is the most promising emerging technology for international radio broadcasting. As currently envisioned, VOA would lease satellite channels from system operators. As time goes on, VOA might augment its shortwave and medium wave delivery in certain parts of the world with satellite radio transmissions. The pace of availability will differ among various regions of the world. In some places, these transmissions may eventually replace traditional shortwave broadcasting methods, depending on characteristics, such as the availability of inexpensive receivers. In 1992, delegates at a world conference allocated frequencies for satellite radio and, as a delegate, VOA favored this action. A VOA report states that VOA may want to lease a few experimental circuits as early as 1995. However, VOA does not believe full-scale use of satellite radio by international broadcasters will occur any earlier than near the end of the decade. VOA has been working with the National Aeronautics and Space Administration (NASA) to develop a prototype satellite radio receiver. It hopes to give designs for the prototype to industry to encourage companies to manufacture the radios. In June 1993, using a prototype indoor radio, VOA successfully demonstrated reception of a stereo quality signal from a NASA satellite. According to a VOA report, in some parts of the world, by 1995, digital radio receivers compatible with satellite broadcasts are expected to be available for sale. Therefore, according to a VOA plan, there could be an incentive to lease a few experimental satellite circuits as early as 1995. The widespread use of satellites to beam radio and television across national borders directly into homes is expected near the end of the decade. According to a USIA research report, inexpensive transistorized electronics and the widespread use of communications satellites have given much of the world access to more and more broadcast programming. Much of it is televised to the world's 1 billion plus television sets. Most USIA surveys show that, where it is available, television has become the primary source of news. ORGANIZATIONAL CHANGES ---------------------------------------------------------- Letter :3.3 The President's proposed consolidation of RFE/RL and VOA includes the merger of 35 owned and leased relay stations worldwide. According to a VOA consolidation study, elimination of all head-to-head competition, updated assessments of audience needs, and overall budget constraints dictate that the combined radios broadcast fewer total hours than the sum of today's schedules. VOA and RFE/RL are already cooperating in the delivery of their programs. For example, facilities are jointly leased to supplement the coverage provided by owned and operated stations. As a result, RFE/RL has allowed VOA to lease excess capacity on its owned shortwave transmitters at one of its six European relay stations. In February 1993, the U.S. Advisory Commission on Public Diplomacy reported the potential benefits of consolidation,\2 including efficiencies in the use of transmitters, broadcast frequencies, staff, and facilities. The Commission noted that the United States does not need two government-funded radio stations competing for the same audiences, placement opportunities, frequencies, and scarce resources. -------------------- \2 The U.S. Advisory Commission on Public Diplomacy, a bipartisan commission created by the Congress, oversees international broadcasting, public affairs, and educational exchange activities. VOA HAS NOT CONDUCTED NEEDED COST-BENEFIT ANALYSES ------------------------------------------------------------ Letter :4 Our 1992 report recommended that USIA require fully documented cost-benefit analyses before approving any future VOA modernization project proposals. We recommended that these analyses consider (1) project alternatives, including no action, refurbishment, replacement, expansion, and new construction; (2) the potential audience improvement that could be achieved by each project alternative based on audience research data; and (3) the risks to project completion, such as political unrest and future funding shortfalls. In response to our recommendation, VOA developed what it referred to as a project alternatives assessment process to be used in the development of any new project. This process included analyses of (1) broadcast requirements, (2) audience data, (3) existing facilities, (4) the threats to potential new locations, and (5) project costs and alternatives. The intent was to ensure that VOA use the most cost-effective method of fulfilling its mission. VOA has not applied this analytical technique to any of its existing construction projects, asserting that they were approved and justified before the technique was developed and reviewed in annual planning reports. However, five shortwave modernization projects planned between 1994 and 2003 and costing about $500 million have not yet begun.\3 Although earlier approvals had been granted, cost benefit analyses could now produce different plans considering the proposed consolidation of VOA and RFE/RL and other changes. A VOA official told us of his concerns about the cost of doing needed audience research in support of the assessment process. We recognize that research will add to VOA's costs. However, audience research costs little (about $650,000 in fiscal year 1993) relative to the construction of new stations. For example, VOA's new Morocco station cost over $200 million. Other international broadcasters spend between 1 percent and 2 percent of their total budget on audience research. A July 1993 VOA report suggests that it should have a budget of $2 million a year for audience research. -------------------- \3 VOA had planned to build a $144-million station in Kuwait. This station has been withdrawn from the executive branch's budget. However, VOA believes another station will be needed to satisfy this shortwave broadcasting requirement. RECOMMENDATIONS ------------------------------------------------------------ Letter :5 In light of the changes in world conditions, technology, and the organization of U.S. government broadcasting, we recommend that the Director of USIA direct the Associate Director, Bureau of Broadcasting, to require fully documented cost-benefit analyses for all VOA shortwave modernization projects where construction has not yet begun. We further recommend that USIA use the project alternatives assessment process developed in response to our 1992 report. AGENCY COMMENTS AND OUR EVALUATION ------------------------------------------------------------ Letter :6 USIA provided written comments on a draft of this report and generally agreed with its contents (see app. I). However, detailed comments suggested that we recommend that VOA perform cost analyses of their modernization projects rather than cost-benefit analyses. We did not make this change and believe that cost-benefit analyses are needed. Without such analyses, VOA lacks any reasonable assurance that (1) after spending millions of dollars on new and upgraded facilities its audience will increase or (2) given the variety of methods VOA uses to deliver programs to target audiences, such as program placement, that the planned modernization is the best, most effective, and efficient way to achieve its objectives. SCOPE AND METHODOLOGY ------------------------------------------------------------ Letter :7 We performed our work at VOA and the Bureau for International Broadcasting headquarters in Washington, D.C., and at overseas facilities. We interviewed officials at VOA, USIA, and USIA's Office of the Inspector General and reviewed VOA plans, reports, and studies. We interviewed officials and reviewed documents at VOA's relay station in Ismaning, Germany, and its Marketing Office in Munich, Germany. We interviewed officials and obtained documents from RFE/RL in Munich, Germany, and from relay stations in Biblis, Lampertheim, and Holzkirchen, Germany. We performed our work between April and November 1993 in accordance with generally accepted government auditing standards. ---------------------------------------------------------- Letter :7.1 We are sending copies of this report to the Director, U.S. Information Agency; the Director, Office of Management and Budget; and other interested congressional committees. Copies will also be made available to others upon request. Please contact me on (202) 512-4128 if you or your staff have any questions concerning this report. Major contributors to this report are listed in appendix II. Joseph E. Kelley Director in Charge International Affairs Issues (See figure in printed edition.)Appendix I COMMENTS FROM THE U.S. INFORMATION AGENCY ============================================================== Letter (See figure in printed edition.) (See figure in printed edition.) GAO COMMENTS ------------------------------------------------------------ Letter :8 1. We have not reprinted USIA's line-by-line changes and clarifications. However, we have made suggested editorial changes and clarifications throughout the report, as appropriate. 2. USIA's line-by-line comments suggested deleting the word "benefit" from our recommendation and the discussion here refers only to cost analyses. As discussed in this report, we believe cost-benefit analyses are needed. The project alternatives assessment process developed in response to our 1992 recommendation provides for the analysis of audience data as a measure of the potential benefits of modernization projects. 3. Our report does not address VOA's upgrade of its medium wave stations. However, USIA research indicates that listeners prefer medium wave over shortwave broadcasts. MAJOR CONTRIBUTORS TO THIS REPORT ========================================================== Appendix II NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION, WASHINGTON, D.C. -------------------------------------------------------- Appendix II:1 Charles A. Schuler, Assistant Director John A. Butcher, Evaluator in Charge Joan Slowitsky, Adviser Jean Fox, Evaluator Julie Hirshen, Evaluator EUROPEAN OFFICE -------------------------------------------------------- Appendix II:2 Cherie Starck, Evaluator Jose Pena, Evaluator