Bo Bayles
Cobb
English 4
27 November 2003
The Federal Communications Commission (FCC) is a government agency responsible for managing communications and issues relating to communications in the United States. Entities in its regulatory sphere include consumer devices like radios, televisions, telephones, cellular phones, and content providers for all four; even microwaves, alarm clocks, and CD players are regulated by the FCC. Since its creation, the Commission has grown in size and scope, in response to changes in technology and political environments. However, its growth and role have been (and continue) to be questioned, especially its policies regarding radio spectrum allocation.
The FCC's official responsibility is to regulate "interstate and international communications by radio, television, wire, satellite and cable" in U.S. territories (FCC, About the FCC). The first item on that list, radio, has been the FCC's primary responsibility. To understand how radio is managed, it's necessary to understand how it works. The "radio" signals that AM and FM tuners receive are really not much different from other forms of electromagnetic radiation, like sunlight or X-rays. All three are created when electrons move through space by absorbing or releasing energy in the form of photons. The difference between the forms is in the "frequency" of the radiation, or how many times per second the energy level changes. Frequency is measured in units called "hertz", and different frequencies can travel and penetrate different distances. Simply, a radio transmitter converts data, such as voice or music, into electric pulses at certain frequencies, which travel as radio waves. A radio receiver sensitive to that collection of frequencies converts the pulses back into the usable data (Brain, "How Radio Works"). Receivers work by electromagnetic "induction"- when electromagnetic waves encounter an electrical conductor, they "induce" an electrical current in it.
The set of frequencies of electromagnetic radiation is referred to as the "spectrum." Different technologies use different groups of frequencies, called "bands". The band of frequencies used for wireless communications is the "Radio Frequency Spectrum," or "RF Spectrum". AM and FM radio both have specific bands in which they operate, as do TV signals, cellular phones, satellite communications, and other technologies (Brain, "How Radio Spectrum Works").
Interference results when a receiver gets transmissions from more than one source; the combination of signals makes the transmitted data incoherent. A very sensitive receiver might only jumble signals from very similar frequencies, but less accurate ones might get interfering transmissions from neighboring bands. Interfering signals register on a receiver as random sounds like static and whistles, or "snow" visually. When a receiver gets multiple signals from one frequency, the closer, more powerful signal "captures" the receiver. Electrical sources like lightning or sparks interfere with many receivers, since they are powerful and spread across a large band (Monmouth County Local Interference Committee). Interference with most home appliances, according to the FCC, is "normally caused by the actual design of the (interfered-with) equipment itself," since many times unshielded wires inside the device act as antennae, picking up RF signals from the air. Many common forms of interference can be remedied by using higher quality equipment, or installing filters that block unwanted signals (FCC Consumer, Interference).
Since interference can hinder communications, including emergency services and business transactions, the Commission considers interference-free communications to be in the public's interest. The FCC's goal in regulation is to promote the "public interest, convenience, [and] necessity" (Hazlett, "Rationality" 138). The FCC's official definition of interference is "the effect of unwanted energy due to one or a combination of emissions, radiations, or inductions upon reception in a radiocommunication system, manifested by any performance degradation, misinterpretation, or loss of information which could be extracted in the absence of such unwanted energy" ("FCC 03-39"). However, it can't possibly eliminate all interference in that definition - natural electrical disturbances like lightning will interrupt equipment whether or not the spectrum is regulated. It can help prevent interference from human transmissions, though, and it tries to achieve this by assigning different spectrum bands to different technologies, then portions of those bands to individual broadcasters. For example, FM radio uses the frequencies from 88 to 108 megahertz. The FCC assigns radio station frequencies only in odd numbers (such as 96.7 or 105.5). The even numbered frequencies in between are "buffers", so receivers don't pick up adjacent broadcasts (FCC Audio Division). Since electric current generates an RF signal, virtually every electronic device in the United States legally must comply with the FCC's "Part 15" rules. To be certified, the device must meet certain quality and usage standards. "Class B" devices include computers, alarm clocks, and cell phones; "Class A" licenses are usually used in industrial environments (American Radio Relay).
The U.S. government owns and controls the broadcast spectrum in the United States. In order to (legally) broadcast over the spectrum in the U.S., one must have an FCC-issued, time-limited license. The license authorizes the holder to use a certain slice of spectrum for a specific use. At the end of the term, the FCC can choose to renew or revoke a license, based on how the licensee "served the public interest." To obtain a radio station license, one must to file an application (with the appropriate application fee) for a currently unused frequency (or one coming up for renewal). In general, station licenses are given to U.S. citizens, or "entities controlled by American citizens", who demonstrate a financial ability to maintain the station. Media corporations also have to conform to other rules regarding ownership of TV stations, newspapers, or radio stations in one area. Because there are a limited number of licenses available in a specific area, broadcasters often end up competing with each other or trying to unseat the current license-holder. The FCC renews licenses in most cases, but if there have been "public service" complaints, FCC rule violations, or a significant demand for the license by other broadcasters, an incumbent may be ruled against. To encourage diversity in broadcasting, the FCC gives special consideration to organizations controlled by minorities (Epstein). Notably, making the financial commitments to obtain a license, start broadcasting, and maintain services does not give a licensee any property rights over your spectrum band. They generally aren't allowed to sell licenses to someone else without FCC approval, or to sell parts of your band to low power broadcasters (Huber 41). Since the Telecommunications Act of 1996 was passed, licenses are valid for 8 years, but more recent Commission actions have challenged the time limits, ownership regulations, and diversity preferences (Cole).
The FCC was formed in 1934 by the Communications Act, which brought together the regulatory bodies for the telephone industry and radio communications industry. Since then, it's grown as communication technologies have grown. Today, it's a government agency independent of the executive branch, managed by legislation from Congress. Five commissioners, selected by the president and confirmed by Congress, head FCC's six bureaus. To ensure balance, only three of the commissioners can be from the same political party, and none can work in the communications industry, but many former commissioners get jobs in that sector after working for the FCC. The six bureaus deal with enforcing Commission rules, working with foreign governments, regulating broadcast media, regulating "landline" and cellular phone services, and dealing with consumers and lawmakers. There are 10 smaller divisions, the Staff Offices, which conduct policy hearings, engineering and technology studies, and act as ambassadors to Congress and to the media, among other activities (FCC Consumer, "About the FCC" 1-6).
Communications regulation started with the telephone networks in the United States. Telephone inventor Alexander Graham Bell started the Bell Telephone Company to promote his invention. In the late 1800's, American Telephone and Telegraph (AT&T) acquired Bell, earning AT&T the nickname "Ma Bell." Bell established a stronghold in the telephone equipment and service markets; however, other companies provided strong competition. Phone companies often served customers in one area, and then made connection-sharing agreements with companies in other areas to provide long-distance service. After Theodore Vail took over as president of Bell, he instituted aggressive price competition, restrictive equipment licensing, and a policy that prevented other phone networks from buying licenses to connect with Bell's system. Many rivals merged with Bell or were bought out, unable to provide connections outside their own networks. (Huber 25).
During World War I, the United States government nationalized U.S. railroads, plus all the telegraph and telephone networks, placing them under the control of the Postal Service. After the war, Bell president Vail persuaded Congress to pass legislation to regulate telephone networks. He lobbied in order "to protect a corporation striving to serve the whole community... from aggressive competition." The Mann-Elkins act was eventually passed, establishing regulation, and in effect isolating Bell from competition (Huber 25-27).
Radio regulation effectively started in the early 1910's, with the Wireless Ship Act. It didn't regulate the spectrum, but required ocean liners to have radio equipment onboard. At the time, "ham" (short for "amateur") operators and a handful of commercial broadcasters did most radio communication. Not fond of the amateurs, the U.S. Navy had lobbied for a takeover of the spectrum for several years, but was unsuccessful until 1912. After the Titanic sank, press coverage highlighted communications failures associated with the sinking, turning public sentiment against the ham radio community, which occasionally had pranksters broadcast fake distress calls (Walker, Rebels 20-21). The new act introduced mandatory spectrum licensing and set off large bands for government and military use, although it was rarely enforced until 1917.
Along with railroads and telephone lines, the U.S. Government took over most labor concerns, rationed food, and cracked down on "unpatriotic" speech during World War I. The Navy seized control of all broadcast bands for use in war communication, and defiant ham radio operators had their equipment destroyed. All radio stations and radio equipment manufacturing facilities were taken over for the war effort, and patents were dissolved (Walker, Rebels 26). The government restored the assets of U.S. broadcasters and manufacturers after the war, but kept patents seized from German and Italian companies and began exerting influence over industry. It pressured U.S. branch of the British controlled Marconi Company into selling its assets to an American company- General Electric (GE). GE formed the new Radio Corporation of America (RCA) to take over the Marconi company, which was a major player in the broadcast and equipment businesses. RCA and GE entered agreements with the government to pool patents, giving RCA a major economic advantage over competition. Later, another radio industry player, Westinghouse, joined GE in ownership of RCA. With control of key foreign and domestic patents and ownership of a large percentage of broadcast stations, RCA became a government sanctioned virtual monopoly ("RCA").
Portions of the spectrum were made available for licensing again following the war, and modern news and entertainment radio stations took off. A key difference between that era and today is that broadcast rights could be sold or transferred in whole or in part. Stations set up agreements with each other to share time, and schedules for lower power stations to power down and let long distance signals come through. At that time, the government only allocated one channel for non-government broadcasting, and when its time slots were filled across the country, Commerce Secretary Herbert Hoover refused to issue more licenses. He was challenged in court; Hoover v. Intercity's ruling stated that Hoover could assign channels, but not deny licenses on free speech grounds. In 1923, the Commerce Department opened up more spectrum for broadcasting. Broadcasters were assigned new channels; the larger stations, owned mostly by RCA, AT&T, or GE getting clearer frequencies and permits for higher power transmissions. The rationality for that policy was that the larger stations were better able to serve the "public interest", since they had more programming and resources than smaller ones (Hazlett, "Rationality" 146).
Hoover again declared the spectrum to be full, but was again met with court challenge. The decision in United States v. Zenith Radio Corporation stated that the U.S. government did not have any legal backing to declare spectrum rights. As a result, licensing was still in effect, but licensees could broadcast at any frequency or power level in any area. The months following are popularly remembered as a period of interference anarchy, but research in the early 1990's shows that a model for "common law" management of the spectrum was emerging. In Tribune Co. v. Oak Leaves Broadcasting Station, the Chicago Tribune's radio network, WGN filed a suit against Oak Leaves for interfering with its signal. The ruling established a precedent for treating spectrum interference as a tort, much like trespassing. In his book "Law and Disorder in Cyberspace", Peter Huber examines how further development of a common law approach to the spectrum management would be a sensible alternative to the existing bureaucratic regulation. However, in response to the "bedlam", Congress passed the Radio Act of 1927, which gave it proper legal backing to establish the Federal Radio Commission (FRC) to license and regulate. The FRC became the Federal Communications Commission in 1934, when the Communications Act joined radio regulation with telephone regulation (Hazlett, "Rationality" 141-146).
New technologies ushered in new forms of regulation. When television started to emerge in the '40's, it required licenses to use spectrum. Delivering video along with audio requires more bandwidth than AM or FM radio, so there was debate on how to allocate the spectrum licenses. Established radio networks like NBC, its spin-off ABC, and CBS began to add television programming to their schedules. In 1941, the FCC required all television broadcasts to use the NTSC standard, a format for transmitting video, which is still widely used today (FCC Internet Services Staff, Wired). World War II put the development of the medium on hold, leaving many major cities and areas without any television stations. After the war, more smaller companies applied for television broadcast licenses. The flood of applications prompted the FCC to put licensing on hold during the "Freeze of 1948." Those who already had licenses could broadcast, but no new ones would be issued (Hazlett, Wireless Craze 51). At the time of the freeze, there were only 108 TV stations in the country, and still many areas had none. The freeze was scheduled to last 6 months, but actually stayed in effect until 1952. During that time, the FCC concerned itself with addressing interference between adjacent stations, establishing a standard for color TV, and making more spectrum available for TV licenses. Limits on broadcast power and distance between transmitters were instituted to take care of interference. CBS and RCA both had technologies for transmitting color TV signals. The FCC initially approved CBS's, which used a spinning "color wheel" and was "backward compatible" with old television sets (the new TVs could receive black and white signals, but the old ones couldn't receive color signals), but reversed its position in 1950. TV manufacturers were divided on the issue; consumers would buy new sets when they wanted to see new channels, but the CBS standard was expensive to implement. In the end, RCA's standard, which was fully compatible with the old system (black and white TVs just ignore the color part of the signal) got the Commission's blessing. At the end of the freeze there were also new rules for channels to be set aside for noncommercial "educational" channels (Massey).
As new TV technologies emerged, the FCC started regulating them, acquiring legal authority from Congress when necessary. In 1962, all television sets were required to include tuners to accept signals from the UHF band, which was opened for TV broadcasts (FCC Internet Services Staff, Wired). The original cable systems were "Community Antenna Television" (CATV) providers- a centralized antenna collected broadcasts, and distributed them over coaxial cable to individual viewers, extending the reach of the programming beyond broadcast barriers. In 1962, the Carter Mountain company of Wyoming applied for a license to broadcast TV programming to CATV outlets in three small towns. Fearing competition from the CATV-provided channels, a local TV station, KWRB, petitioned the FCC to deny the license. The FCC complied, stating that although licensing Carter Mountain "would permit the rendition of better service" in the communities, doing so would put KWRB-TV in the "economically disadvantageous position of finding it more difficult to sell its advertising." The decision established a precedent, according to media scholar Thomas Hazlett, leading to rules designed to "protect broadcasters from audience 'siphoning'" (Wireless Craze 55-59). According the the FCC's Consumer and Governmental Affairs Bureau, these rules include "mandatory carriage of television broadcast signals", regulate "program access [and] over-the-air reception devices," and promote "the accessibility of closed captioning" (Television and Cable FAQs).
A major issue that faces the FCC is freedom of speech. Most people have heard about stations airing Howard Stern or Opie and Anthony being fined for indecent content, and Eminem complains about how the FCC won't let him be, but what is behind those decisions? According to communications policy analyst Peter Huber, one of the first challenges to free speech in telecommunications was an 1885 lawsuit, in which a phone company dropped a subscriber's service because he said "damned" over their phone lines (165). The Federal Radio Commission, FCC's predecessor, banned profanity, indecency, and obscenity from radio broadcasts.
In 1929, the FRC introduced what would become "Fairness Doctrine." Under the Fairness Doctrine, broadcasters had to make sure that if they covered "controversial issue of public importance," they gave other viewpoints on the issue. Radio stations were to "air rebuttals of [their] editorials... [or] write the rebuttals themselves, if no one else would" (Huber 146-47). The Doctrine was formalized as FCC policy in 1949, but gave no definition of "controversial," nor did it spell out how many opposing viewpoints were to have airtime. As a result, enforcement was spotty and case-by-case; many stations refrained from airing controversial stories altogether. Over time, some provisional rules developed, and at license renewal time, stations had to document their "efforts to seek out and address issues of concern to the community" (Limburg). The Fairness Doctrine played into the hands of incumbent politicians- if the mass media wouldn't address controversy for fear of being punished, it'd be harder for challengers to unseat them. The Kennedy and Nixon administrations both used the policy to force broadcasters to air rebuttals to criticism of policies and the Vietnam War (Walker, Rebels 85). The Fairness Doctrine lost steam under the Reagan administration's FCC, which opposed it. It was struck down by the Supreme Court's 1987 decision in Meredith v. FCC, which stated that the FCC could abandon policies not required by Congress. In response, both houses of Congress passed a bill that would restore the Fairness Doctrine, but Ronald Reagan vetoed it. Congress tried again under Bush, but faced another veto (Limburg). Without opposition, politically oriented programming took off. Talk radio became a top radio format in the 1990's.
The 1934 Communications Act continued the ban on the broadcast of indecency and obscenity, and the regulations are still there today. The Act, and several Court rulings affirm that the FCC can't officially censor broadcasts, but may "revoke a station license, impose a monetary forfeiture, or issue a warning" in response to illegal material. There's a subtle, but important difference between what's "obscene" and what's "indecent." The Supreme Court has ruled that obscenity is not protected by the First Amendment, and set up definitions that the FCC uses in its regulation. Notably, what's obscene in one place might not be obscene in another. The definition depends on the "average person's" perception of the material in question, using "contemporary community standards" to decide whether it appeals to "prurient interests" or describes "sexual conduct" in a "patently offensive way". Obscene broadcasts must be deemed to "lack serious literary, artistic, political, or scientific value" (FCC Common Carrier Bureau). Indecent material, however, is protected by the First Amendment, so it can't be banned directly. Indecent material "depicts or describes, in terms patently offensive as measured by contemporary community broadcast standards for the broadcast medium, sexual or excretory organs or activities." Although the FCC can't restrict free speech directly, it can impose fines upon or choose not to renew the licenses of stations that don't serve the "public interest". Congress has made several attempts to restrict the time periods in which the FCC can allow indecent broadcasts, but was challenged in court. In 1995, the courts determined that allowing indecent material to be aired only from 10 P.M. to 6 A.M. was constitutional, in that it was in Congress's "compelling interest in the welfare of children" ("FCC EB-00-IH-0089"). The FCC adopted the ruling, and imposed $99,400 on broadcasters who violated the "safe harbor" timeframe in 2002. Although the FCC can regulate cable television, it doesn't restrict indecency to specific times on basic-plus cable subscriptions (FCC Common Carrier Bureau).
The impositions on free speech by Congress and the courts are frequently criticized by rappers to radio hosts to legal scholars. However, the FCC has a lot of support for its regulation, especially by church and community groups, who often organize complaint petitions in response to offensive TV or radio shows. There are procedures for filing complaints against stations; forms can be requested by phone, mail, or the Internet. Today, the FCC gets thousands of letters, ranging from official complaints to general comments on programming. Court TV's "The Smoking Gun" web site, frequently files Freedom Of Information Act requests to obtain copies of correspondence. It did so after CBS aired the "Victoria's Secret Fashion Show" in November of 2002, and posted 20 letters to the FCC, both in support and vehement opposition to program's content. According to the site, there were about 6 times as many complaints as positive comments, ranging from accusations that CBS was harming people with a "pornography addiction" to letters from confused people who thought it was the FCC that chose to the air the program, not CBS (Bastone 11).
Calls for FCC reform are coming from surprisingly different groups. One particularly vocal group is advocating for the creation of Low Power FM stations, which would serve individual communities. The FCC made plans to license small stations in early 2000, but was opposed by the National Association of Broadcasters (NAB), a coalition of large broadcast companies. National Public Radio, a government-supported entity, also vocally opposed the licensing of rival stations. Both lobbied Congress, and later in 2000, a bill passed "To prohibit the Federal Communications Commission from establishing rules authorizing the operation of new, low power FM radio stations," until interference concerns could be studied. To date, only a handful of LPFM stations have been established, out of the 1,000+ the original plan called for (Hazlett, Wireless Craze 70).
LPFM supporters say that the NAB's success demonstrates how big broadcasters continue to have the FCC and Congress "in [their] pockets". Even LPFM advocates are a diverse bunch. The Prometheus Radio project promotes a fairly liberal viewpoint- its outreach program is headlined "We're Looking for a few Good Progressives". It calls for all new LPFM stations to be owned by non-profit organizations (Tridesh and Redden). On the opposite side of the aisle are the "religious right" broadcasters, like churches that currently buy time from commercial stations to air services or fund raisers- LPFM could give them their own station. Other micro-radio organizations want the freedom to sell airtime to advertisers or local institutions, and the option to carry syndicated programs.
Libertarian and capitalist organizations have opposed FCC policy for many years. In 1959, economist Ronald Coase penned a groundbreaking article in the Journal of Law and Economics called "The Federal Communications Commission." In it, he criticized the history of FCC spectrum and telecommunications policy, proposing an alternate path for the Commission. Coase demonstrated how the privatization of the spectrum through market actions and clearly defined property rights for spectrum users would be more socially and economically efficient than governmental regulation. Coase's studies of the FCC and broadcasting led to his "Coase Theorem" in economics, for which he later won a Nobel Prize ("Looking For Results"). The Coase Theorem applies principles from the "game theory" (a relatively new branch of mathematics), and is seen as a solution to the economic "Problem of Externalities." The Coase Theorem shows how the economic "tragedy of the commons" can be avoided by defining and protecting private property rights. It's been applied to responsibility for air and noise pollution and RF interference (Friedman). Following Coase's article, leading libertarian philosopher Ayn Rand wrote a philosophical case for property rights for spectrum users, saying that "it is the government's responsibility to [identify] the application of individual rights... to define, not to create, invent, donate, or expropriate" (Rand 62). Coase, Rand, their followers, and many others concluded that spectrum allocation should be left to the markets, with the FCC auctioning off bands, and allowing businesses and individuals to do with their property what they please. That plan makes the wireless spectrum like the real estate market- owners can sell their property in whole or in part, to individuals or companies.
Despite their different backgrounds, the critics share a common point. The FCC, they say, has hidden behind the "public interest" standard to give monopolies to businesses seeking handouts, protect political incumbents by restricting speech, and use its clout to promote the content it wants to hear. From granting Bell a natural monopoly in telephone, to handing over foreign patents to RCA, to blocking FM technology to preserve AM, the examples of corporate welfare go on. Although the FCC's new trend is "deregulation", even today, established companies still seem to be able to use the FCC to stamp out competition. In October of 2003, the National Association of Broadcasters met at their annual trade show. One of the show's presentations included NAB president Eddie Fritt's call for the FCC to block satellite radio providers (XM and Sirrus) from providing local content, including weather, traffic, and community news for subscribers. "We're not against competition," said Fritts. "But satellite radio was authorized as a national programming service only! It is past time for the FCC to issue a final rule barring satellite companies from delivering locally oriented programming." Columnist and author Jesse Walker writes that "We're not against competition, but..." should be the NAB's slogan- it's clear they are against new players in their market, and would rather outlaw competition than address it (Walker, "Mummers and the Media").
In response, many want reform to allow small-time broadcasters on the air. The most radical of the proposals is by the Open Spectrum (OS) movement. Under an OS, market forces, without government intervention, would manage the spectrum. According to the "Open Spectrum FAQ," OS "would permit anyone to send signals across any range of spectrum without permission, with the minimum set of rules required to enable the success of a 'wireless commons'." (Weinberger) OS proponents contend that the current spectrum policy has ignored technological improvements, and creates artificial spectrum scarcity with obsolete regulations. According to the OS movement, interference is only a consequence using poor receivers - today's technology allows for better filtering and processing of signals in "noisy" environments. For example "mesh network" technology utilizes more available transmitters and receivers; "spread spectrum" technology, in which a signal "hops" over multiple frequencies ("Freeing the Airwaves"). Both, along with "ultra-wide band" and other innovations, can help avoid interference. Further, all communications (from military use, to subscription based TV or radio, and all others) could be as secure as the broadcasters want them to be. By using computers to encrypt signals on one end and having digital signal processors translate on the other, it's reasonably safe to assume the wrong person didn't hear a transmission (Weinberger). A particularly interesting application of these ideas is Software Defined Radio (SDR). In 2003, prototype handheld SDRs debuted at trade shows. SDR doesn't rely on frequency-specific hardware, like AM or FM radios do. Instead, an SDR's antenna picks up a whole range of spectrum, and then uses computer processors to decode the useful part of the signal. By using already standard computer parts, upgrading an SDR-based device to a new type of signal is as simple as updating its software (Hammersley).
In its defense, the FCC has at least acknowledged the dissatisfaction. In the 1990's, it followed the suggestions proposed in the '50's and started auctioning off spectrum licenses. The auctions have been fairly successful; they are more expedient than comparative hearings. They can be at least partially credited with the explosion in popularity of cellular phones throughout the '90's. However, critics point out that the technology had been available for decades, and that FCC practices have inhibited innovation since then. The Telecommunications Act of 1996 was widely billed as a "deregulatory" measure, intended to promote competition in telephone and spectrum markets. It succeeded in removing some outdated provisions still in force from the 1934 Communications Act, and eased restrictions on market-based ownership of telecommunications companies. Response to the Act's passage was mixed. In general, liberal groups feared that the eased restrictions would lead to consolidation of media companies, edging out small companies and dumbing down content to appeal to the "lowest common denominator." Supporting evidence is the growth of media companies like Clear Channel. Before 1996, it owned a few dozen stations; today it owns hundreds around the country. Others saw the measure as too little, too late; that overbearing regulation had already cost the country billions by stifling innovation and promoting inefficiency (Gasman). Free speech proponents were wary of the Act's provision for television ratings. Still others classified the Act as "re-regulation", not deregulation. Indeed, some parts of the bill are more complicated and vague, and force large companies like AT&T to give competitors reduced-rate access to their infrastructure. One part requires all new television sets to include a "V-Chip", to let parents restrict children's access to shows rated "mature" (Cole). Did the FCC intentionally drive up the cost of TV sets and give a windfall to V-chip manufacturers? Another example of FCC-sanctioned "windfalls" is the Commission's next-generation "DTV" policy. In the mid-1990's, it decided to "upgrade" the nation's TV broadcasting with a digital TV standard, and mandated that all new TV sets be equipped with DTV-receivers by 2006. The TV networks then lobbied Congress and the FCC to issue spectrum on which to "simul-cast" analog and digital signals during the transition. The FCC complied, and issued over-the-air TV networks an additional 6 MHz for free- spectrum that would have otherwise been auctioned off to the networks' competitors, protecting the dominance of the "big 4" for another 10 years (Theier, "Telecommunications and Broadcast Policy" 426-27).
Advocates of true de-regulation point out that the "unlicensed" bands; portions of unmanaged spectrum set aside for home users have been wildly successful. One example is the "Wi-Fi" boom. The Wi-Fi group, a consortium of private companies, agreed on standards for wireless-internet devices utilizing the unlicensed 2.4GHz band. The result was spectacular- by 2001, wireless internet device sales totaled billions of dollars. Wi-Fi compatible devices, distributed by a number of competing manufacturers, work with each other, are easy to set up, and getting cheaper and cheaper. To overcome interference, the wireless access cards, access points, routers, and etc. utilize sophisticated technology to ensure connectivity. Other 2.4GHz devices, like cellular phones, can cause interference problems, but manufacturers have been able to solve some of these by releasing updates to the hardware's base-software (called "firmware"), which users can apply without having to switch equipment. These updates also help protect users from hackers; when a security flaw is discovered, a firmware update can be made available to correct it. Today, wireless internet gadgets can be purchased at local Wal-Marts, laptop makers include Wi-Fi support, and companies like Starbucks offer wireless internet inside their restaurants (Anderson). Another example of success-without-regulation is screen resolution (picture quality). The FCC mandated in 1941 that U.S. TVs use the NTSC standard resolution of 640 by 480 pixels. Today, NTSC is still the most used, as HDTV systems are much more expensive. However, computer monitors, which are not technologically different from TVs, have rapidly increased supported resolutions. In the late '80's, modern PC video cards and monitors could display 640x480. By the mid-'90's, 800x600 was the widley supported resolution, and now monitors offer upwards of 1600x1200 resolution, and are cheaper than ever ("Computer Display Standard"). Has regulation stifled TV picture quality?
Events in 2003 again put the FCC in the spotlight. In late 2002, an FCC commissioned task force concluded "To increase opportunities for technologically innovative and economically efficient spectrum use, spectrum policy must evolve towards more flexible and market-oriented regulatory models," and recommended sweeping change in telecommunications law. The task force report recommended Open Spectrum-like policy, and proposed methods of transition (Kolodzy, et al. 3). In the late spring of 2003, the FCC adopted new "deregulatory" media ownership restriction rules to massive opposition by members of both political parties. The new rules would allow a TV network to potentially reach 45% of U.S. televisions; the previous restriction was 35%. Under the new rules, newspaper-owned companies are able to own broadcast stations, and small businesses get more regulatory leeway. Critics contend that the new rules would allow big businesses to keep a choke-hold on the market and filter content as they see fit (Hazlett, "Wrestling"). Supporters point out that the hundreds of content providers (digital cable and satellite TV have hundreds of channels) and convergence with computers make the emergence of a monopoly impossible (Thierer, "What Media Monopolies?"). Others contend that the new rules are more "re-regulatuon"; one of the proposed rules was "In a given TV market, one company may own two stations if there are at least five in total, or may own three if there are least 18. Only one station, in either case, can be among the top four (by audience ratings)", which is even more complicated than the previous rule (Hazlett, "Wrestling"). The critics won out in the short term, however; after bills in Congress to prevent the rules from going into effect, a federal judge postponed their implementation in September (Morgan).
Electronic communications have played a key role in shaping today's economic and cultural environment, a fact that hasn't been lost on businesses or the government. Communications entrepreneurs have given consumers radio, television, computers, and now wireless Internet, and the government has been there to regulate at each step. When businesses and government are able to manipulate the market for political or monopolistic agendas, however, the result is never good for consumers. The FCC has apparently committed itself to reform, but it's too early to tell whether or not the policy changes will help remove barriers to innovation. The issue won't go away, though, so consumers should stay tuned.