Third Commons

U.S. Communications Policy Legislation

The Telecommunications Act of 1996, the first successful attempt to rewrite the sixty-two year old Communications act of 1934, was passed on 1 February 1996. The act refocuses federal communications policymaking after years of confused, multi-agency and intergovernmental attempts to regulate and make sense of a burgeoning telecommunications industry. The bill relies on increased competition for development of new services in broadcasting and cable, telecommunications, information and video services while it reasserts Congress’ leadership role as the dominant communications policymaker.

Radio and Television Broadcasting

The act incorporates numerous changes to the rules dealing with radio and television ownership under the Communications Act of 1934. Notably broadcasters have substantial regulatory relief from old and sometimes outmoded federal restrictions on station ownership requirements. Broadcast ownership limits on television stations have been lifted. Group owners can now purchase television stations with a maximum service area cap of 35% of the U. S. population, up from the previous limit of 25% established in 1985. Limits on the number of the radio stations that may be commonly owned have been completely lifted, though the bill does provide limits on the number of licenses that may be owned within specific markets or geographical areas. Also amended are previous restrictions on foreign ownership of stations.

Terms of license for both radio and television have been increased to eight years and previous rules allowing competing applications for license renewals have been dramatically altered in favor of incumbent licensees. New provisions under the act prevent the filing of a competing application at license renewal time unless the FCC first finds that a station has not served the public interest or has committed other serious violations of agency or federal rules. This provision will make it increasingly difficult for citizen’s groups to mount a license challenge against a broadcast station. The act requires licensees to file a summary of comments and suggestions received from the public while prohibiting the Commission from requiring licensees to file information not directly pertinent to the renewal question. However, the bill gives the FCC no guidance as to how it should interpret service in the “public interest” in light of the new legislative mandates. Public interest groups who oppose relaxing ownership provisions claim that the combined effect of the new rules will be to accelerate current trends toward increased control of most media outlets by a few communications conglomerates.

The Telecommunications Act of 1996 makes significant changes in FCC rules regarding station affiliations and cross-ownership restrictions. Stations may choose affiliation with more than one network. Though broadcasting networks are barred from merging or buying out other networks, they may start new program services. For the first time, broadcasters will be allowed to own cable television systems, but television licensees are still prohibited from owning newspapers in the same market. The act affirms the continuation of local marketing agreements (LMAs) and waives the previous restrictions on common control of radio and television stations in the top fifty markets, the one-to-a-market rule.

While broadcasters won new freedoms in licensing and ownership, the act mandates that the industry develop a ratings system to identify violent, sexual and indecent or otherwise objectionable programming. The Communications Decency Act of 1996, embedded in the Telecommunications Act, requires the FCC to devise a rating system if the industry fails to develop such a system within one year of passage of the act. However, early indicators appear to signal a desire on the part of the industry to develop its own ratings system rather than allow government to define program standards. Although development of a ratings system is required under the act, application of the system is voluntary. In conjunction with the establishment of a ratings system, the Telecommunications Act requires television set manufacturers to install a blocking device, called the V-chip, in television receivers larger than 13 inches in screen size by 1998. Recognizing the potential for constitutional challenges of these provisions, the act allows for accelerated judicial review by a special three-judge federal district court panel. Other provisions of the Communication Decency Act require programmers to limit minors’ exposure to objectionable material by scrambling channels depicting explicit sexual behavior and blocking access channels that might contain offensive material.

Perhaps the biggest concession to the broadcast industry centers around provisions for allowing, but not mandating, the FCC to allocate extra spectrum for the creation of advanced television (ATV) and ancillary services. Eligibility for advanced television licenses is limited to existing television licensees, insuring current broadcasters a future in providing digital and enhanced television services. However, Senate Majority Leader Robert Dole,(R, Kansas), expressed reservations about giving broadcasters extra spectrum without requiring payment for the new spectrum. Thus, the bill includes a provision that allows Congress to revisit this issue before the FCC awards any digital licenses. Broadcasters vehemently oppose the notion of paying for spectrum, but the act includes provisions that would allow the Commission to impose spectrum fees for any ancillary (non-broadcast) services that broadcasters may provide with these new allocations.

Generally, though the act provides for new possibilities for broadcasters and calls for the FCC to eliminate unnecessary oversight rules, a substantial portion of regulation implemented since the passage of the 1934 Act remains. Thus, while FCC Chairman Reed Hundt issued a statement that claimed that the ubiquitous world of telecommunications had changed forever, analysts and industry experts, remind us that the act amends, but does not replace, the Communications Act of 1934.

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