Some of the Major Provisions of the Telecommunications Act of 1996
Purpose of the Act: "To promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies."
Deregulatory Measures
1. Allow local Bell Operating Companies to compete with the major long distance carriers (AT&T, MCI, Sprint, etc.) in the area of providing long distance service and allow the major long distance carriers to enter the local market.
2. Allow telephone companies to provide video services and cable operators to provide telephone services. However, there is still a provision preventing a single owner of both cable and telephone companies in the same local market. Telephone and cable companies can buy into each other only up to 10%.
3. Eliminate cable rate regulation (except for the basic tier). This provision ends March 31, 1999.
*4. Raise the cap on the number of broadcast stations that any one entity can own (TV: from 25% of the national audience to 35%; radio: from 20 AM and 20 FM to no cap).
5. Raises the number of radio stations a single entity can own in a local market.
Market Size // Single Ownership Allowed for:
More than 45// 8
30-44 // 7
15-29 // 6
up to 14 // 5 or 50% of total
6. Broadcast licenses granted for 8 year terms and are not subject to comparative review upon renewal. (The FCC may not consider whether an alternative broadcaster would better serve the public interest.)
Content Regulation
1. TV programs are to be rated by the industry. New sets are to be manufactured with a V-Chip, allowing the parent/guardian to block violent programming. Government-Industry agreement.
2. Indecency transmitted on the internet to minors is subject to criminal prosecution. Held unconstitutional by the United States Supreme Court in Reno v. ACLU.
The Telecomm Act allowed for:
Horizontal Integration--
ownership of multiple forms of media
Vertical Integration--
ownership of production/distribution/exhibition/sale
Synergy--
combined force of horizontal/vertical integration
horizontally and vertically integrated system has a large number of media outlets to which it can give special preference; cross promotion:
Nicholas Johnson: "synergy is actually the annihilation of competition. . . . When you contract with an author to write a book and sell it in the stores you own, produce the movie in the studio you own and run it in the theatres you own, make it into a video and distribute it through the stores you own, then put it on the cable system you own and the broadcast stations you own, promote it on the TV network you own, and write it up in the entertainment magazine you own, that's pretty tough to compete with."
7. Mandated Review of Ownership Rules (every 2 years) section 202(h)
are the rules "necessary in the public interest"?
"repeal or modify any regulations it (FCC) determines to be no longer in the public interest"
Fox TV Stations, Inc. v. FCC (D.C.Cir. Feb. 19, 2002)
Directed the FCC to reconsider the 35% national limit on the number of households that can be reached by broadcast stations owned by a networks.
At issue:
Viacom's acquisition of CBS (41% market share of national audience)
Fox acquisition of Chris-Craft Industries (40% share of national audience)
* * * * * * * * * * * * * * * * * * * * * * * *
NEW MEDIA OWNERSHIP RULES (6/2/03): response to 202(h): Review of Ownership Rules
DUAL NETWORK RULE
Retained:. 2 of the top 4 netwoks cannot merge
LOCAL TV MULTIPLE OWNERSHIP RULE
Modified: In markets with 5+ stations--limit of 2
In markets with 18+ stations--limit of 3
NATIONAL TV OWNERSHIP LIMIT
Raised the cap from 35% to 45%
LOCAL RADIO OWNERSHIP LIMIT
Retained the limits set by the Telecommunications Act of 1996:
Markets with 45+ stations--limit of 8 (5 in one class)
Markets with 30-44 stations--limit of 7 (4 in one class)
Markets with 15-29 stations--limit of 6 (4 in one class)
Markets with 14 or less--limit of 5 (3 in one class).
CROSS MEDIA OWNERSHIP LIMIT
Markets with 1 to 3 TV stations--no cross ownership
Markets with 9+ TV stations--no limits
Markets with 4 to 8 TV stations:
Daily newspaper, one TV station, 1/2 of radio limit
OR
Daily newspaper, limit of radio stations
OR
2 TV stations, limit of radio for the market
More developments
CONGRESS set the limit for national TV ownership at 39%
The U.S. Court of Appeals for the 3d Cir. has stayed enforcement of the rules.
Prometheus Radio Project v. F.C.C. (3d Cir 2004)
Cross-Ownership Rule: The specific limits chosen by the FCC are NOT supported by a reasoned analysis: "The abundance on non-broadcast media does not render the broadcast spectrum any less scarce."
Local Television Ownership Rule: NOT supported by the evidence submitted
Local Radio Ownership Rule: The decision to retain the "8" limit (already in effect) is NOT supported.
"All [of these rules] have the same essential flaw: an unjustified assumption that media outlets of the same type make an equal contribution to diversity and competition in local markets."