Electronic Media Regulation

Overview

Electronic media regulation is the governmental oversight of wired and wireless communications technologies and the industries that engage in these activities. The term "electronic" may seem somewhat dated as it traditionally refers to what many would think of as analog broadcasting technologies—most commonly radio and television. However, in its widest and current definition, the term refers to devices that operate through the use of transistors or microchips that are activated by or powered by electric current (electricity.) Therefore, electronic media is a term that denotes analog and digital wired and wireless technologies and the ancillary issues and actions that affect these processes, industries, and actions. In practical terms, electronic media encompasses everything from point-to-point emergency personnel radio communications systems to telephone services to broadcast, cable or satellite delivered radio and television to the Internet and the wires or wireless transmission technologies, companies and industries that create, distribute, and manage the content and signals. Regulation is the implementation and enforcement of the laws that pertain to these media as well as the creation and management of new policies and actions to accommodate new developments in technology, usage, industry practices, and political exigencies that may arise.

In the United States, the governmental body in charge of electronic media regulation is the Federal Communications Commission (FCC), an independent regulatory agency of the federal government. The FCC was created by the Communications Act of 1934 and replaced the Federal Radio Commission (FRC), the first electronic media regulation entity in the U.S., which was created by the 1927 Radio Act. Both the FRC and the FCC were established with the goal of providing government oversight and guidance to the developing radio broadcast industry, which was just beginning to establish national networks through which it provided advertiser-supported entertainment and informational content directly to listeners.

The contemporary FCC is composed of five members serving staggered five-year terms (no more than two members of the FCC are ever up for replacement at the same time). Commissioners are appointed by the president and confirmed by the Senate. In an effort to maintain political parity and avoid partisanship no more than three of the five commissioners can be from the same party. The President appoints the chairperson of the FCC, and the FCC chairperson is often the agenda setter for the commission, determining which media issues are of most importance and what regulatory disputes or actions are most pressing for the Commission to take up. The FCC comprises seven bureaus (media, wireline competition, consumer and governmental affairs, international, enforcement, wireless telecommunications, public safety and homeland security), by which one can see the scope of regulatory issues that the FCC addresses and the responsibilities with which it is tasked.

The primary regulatory activities of the FCC can be broadly categorized as actions that control, enable or ration access to media and communication markets, audiences, or services and the majority of their decision-making and regulatory initiatives address these areas across multiple industries or actors. It should be noted that while the FCC regulates a great number of communications technologies and activities, the ones that the general public are most affected by pertain to the regulation of radio and television (in their broadcast, cable, and satellite delivered forms); Internet service and net neutrality; and wireless phone technology. Among the most common regulatory topics and actions in the traditional areas of broadcasting/cablecasting are spectrum licensing, ownership caps, and merger decisions. As an increasing number of consumers have turned to Internet service providers (ISPs) for content they previously received through broadcast, cable, or satellite, regulatory debates and actions concerning net neutrality have occupied the FCC.

The two major legislative acts that govern and guide the activities of the FCC are the Communications Act of 1934 and the 1996 Telecommunications Act. The Communications Act of 1934 established the FCC as well as the major tenets of U.S. media regulation and policy. Localism and diversity are the guiding tenets of broadcast regulation, according to the act, and decisions and policy are to be made "consistent with the public interest, convenience and necessity." The purpose of the act's direction in this respect is to ensure that broadcast (or now, media) regulation supports equal access of U.S. citizens to media content, fair and reasonable competition among pay services, and that media messaging is not controlled by any one special interest, company, or entity to the exclusion of the fair airing of other voices.

The electromagnetic spectrum (on which all wireless signals are carried) is a naturally occurring phenomenon of the earth and not a human-made creation, although the technologies that use it are. According to U.S. law, the spectrum is defined as "a public good utilized by private interests." As a public good, the electromagnetic spectrum is owned by the people of the United States. In order to make use of the spectrum, the FCC licenses the exclusive use of a specified part, or frequency, of the spectrum (called a spectrum allocation) to a private entity (such as a radio or television broadcaster or a cell phone service provider) for a particular period of time. As a condition of the license, spectrum licensees must operate in a way that serves the public, even if they require consumers to pay to gain access to or use the wireless spectrum allocation to which the FCC has granted them temporary exclusive use. (For example: all cell phones are capable of calling 9-1-1 regardless of whether the phone is currently enrolled in a contract with a cell phone provider or the owner of the cell phone's service is paid up.) Part of public interest is also the preservation of market choice and competition, although this is where the political influence of the administration that has appointed the sitting FCC commissioners is most easily observed.

Spectrum is not merely a finite resource; it is also geographically constrained by broadcast technology, which has discrete broadcast footprints that are bound to particular areas of reception. Therefore, television and radio stations are licensed to and serve communities although they do, through affiliation agreements with networks, carry content that has a nationwide reach. What is important is that all broadcast areas be served by more than one media companies' signals and stations. Therefore, because spectrum is a finite resource, the FCC is charged with ensuring that there is a diversity of voices and ownership in its granting of wireless licenses. To ensure that the scarce spectrum is fairly and evenly distributed in a way that ensures a diversity of voices is available in every local broadcast area, the FCC has established "ownership caps," which state the percentage of homes or market that any one company or conglomerate is allowed to exclusively reach in a particular area. At present, no one media owning company may own or control broadcast or ISP services that exclusively serve more than 35 percent of the country.

The Telecommunications Act of 1996, while heralded as a major overhaul of the 1934 Communications Act, left the majority of the 1934 act in place in terms of the public interest requirements of broadcasters, first amendment implications, localism, and diversity. Its lasting contributions to the regulatory landscape of the United States are in its response to and accommodation of convergence, the rise of the Internet, and competition among television content, ISP, and phone companies. Convergence is best characterized as the erasure of boundaries between traditional technologies and their combination into single technologies that serve multiple functions previously provided by stand-alone devices or platforms. The most illustrative example of this is the smartphone, which combines (or in which are converged) computer technologies (e-mail, document editing, spreadsheets), entertainment consumption (video and music storage, retrieval, and viewing), media creation (video and audio recording and editing), interactive entertainment (video games), and voice communication. The challenge for regulators is that many of these converged technologies are the products of traditional media industries that were regulated under previously separate categories of rules, and mergers created situations in which content creators (such as NBC Universal) were now owned by a cable multiple-service operator (MSO; e.g., Comcast). The Telecommunications Act of 1996 can be viewed as having encouraged oligopolistic practices by media companies in creating new opportunities for competition in the area of pay television and voice phone service by allowing cable companies to offer voice telephone service and telephone companies to add television content to their offerings.

Further Insights

Among the most contentious regulatory issues introduced by the Internet is net neutrality. Under the leadership of Chairperson Tom Wheeler, the FCC released the report "Protecting and Promoting the Open Internet" in February of 2015. This ruling classified broadband Internet as a common carrier under Title II of the Communications Act of 1934, which means that Internet service providers (ISPs) could not block or throttle (i.e., cause to load extremely slowly) particular websites or web services that its subscribers were trying to access. Nor could they use throttling to discriminate against certain high-traffic websites (such as Netflix) unless the owner of the site paid the ISP for "prioritization" (Yoo, 2017). This was seen as a victory for web-based media companies such as Netflix, Amazon Instant Video, YouTube, and Vimeo, which rely upon fast and unfettered broadband service to deliver uninterrupted video streams to their subscribers. Because most U.S. homes get their broadband service from their local cable, phone, or satellite company, most consumers' ISP's are also their television providers. Following the mergers and conglomerations of the 2000s, many of these providers are also financially related to content suppliers (e.g., NBC/Comcast). As a result, it may behoove a large cable MSO to make Internet video viewing via a third party an unpleasant experience for its subscribers and thus encourage more viewing of cable content.

Under the Donald Trump administration, FCC Chairperson Ajit Pai proposed to remove net neutrality provisions and protections. Positioned as "Internet freedom," Pai argued that reclassification of the Internet as an information service (as it was previously defined from 2002–2015), rather than a common carrier, will allow for healthier competition in the realm of Internet service provision. However, when Joe Biden won the presidency in 2020, Jessica Rosenworcel became chair of the FCC. Rosenworcel supports net neutrality.

Issues

A variety of issues can affect the regulatory actions of the FCC, some of which are structural and some are created by the way in which the industries that the FCC regulates have behaved toward FCC commissioners before and after their service. Structurally, because the five FCC commissioners are appointed by the sitting president, the most obvious issue that affects the regulatory actions of the FCC is that the political ethos, bias, and policy inclinations of the party of the president and/or the president him- or herself are injected into the FCC by the president's appointments. Historically, media deregulation has generally occurred under Republican administrations, such as the Reagan administration, and the introduction or tightening of regulatory controls, like ownership caps, under Democratic administrations. The staggered term structure of the commission tempers some of this and is intended to build stability into the commission's knowledgebase and decision-making.

Another factor in the way in which media regulation occurs in the U.S. is the relationship of past and sitting FCC commissioners to the lobbying arms or executive management of major companies in the industries they regulate. Crawford (2013) details how the majority of FCC commissioners take very high positions within media companies or industry lobbying organizations after their terms are up. In 2011, President Clinton appointee Michael Powell (who served as FCC Chairperson from 2001–2005) took a position as CEO and president of the National Cable Television Association (NCTA), the major lobbying organization for the cable industry. Meredith Atwell-Baker, appointed by President Obama in 2009 left the commission for a new position as senior vice president of governmental affairs at NBC Universal in 2011—four months after the FCC approved the Comcast/NBC Universal merger. President Obama's last FCC chairperson, Tom Wheeler, came to the FCC after serving as president of both the NCTA and the Cellular Telecommunications & Internet Association (CTIA), the lobbying organization of the wireless industry. Atwell-Baker became president of the CTIA in 2014 after leaving NBC Universal. As is customary, Wheeler resigned on January 20, 2017, when the new administration took office. Donald Trump appointed Ajit Pai, an Obama-nominated Republican FCC commissioner four years into a term that began in 2012, to be Wheeler's replacement. Pai, an advocate of minimizing regulation, is an attorney with a background in public service and policy as well as a stint as associate general counsel at Verizon. Pai was replaced by Jessica Rosenworcel in 2021 as chair of the FCC. She strongly supports net neutrality, stating that she believes the net neturality principles of 2015 were a strong foundation for the internet economy.

Yoo (2017) notes that the majority of FCC regulatory issues of the past forty years have ultimately turned on the question of whether to regulate access to media or the networks that carry them or to rely upon "facilities-based" competition. This acknowledges a feature of media industries that has been present since the first days of commercial radio in the 1920s. Media technologies rely upon substantial capital expenditures to build the initial networks and "facilities" through which content is delivered, or, in the case of the Internet, on which commerce, innovation, and collaboration take place. Media industries tend toward natural monopolies or oligopolies because of the scale of the facilities, and thus when regulators are faced with new regulatory conundrums, they may often, separate from any political pressures or partisan inclinations, discover that there is already an entrenched system controlled by one or more established companies.

Regulatory decisions may be more efficiently made in ways that protect the status quo. One challenge to this is Internet, which, while using land-bound wired and wireless technology as its platform is, by its very nature, a global platform without boundaries. Savin (2017) writes that technology companies whose work is entirely net-based are increasingly turning to international standard setting organizations, such as the Internet Engineering Task Force and the World Wide Web Consortium, and supranational organizations such as the United Nations Internet Governance Forum and the European Union's Working Group on Internet Governance for guidance and structure, separate from nation-specific regulator structures.

Bibliography

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Crawford, S. (2013). Captive audience: The telecom industry and monopoly power in the new gilded age. New Haven, CT: Yale UP.

A fair and open Internet. (2018). Consumer Reports, 83(6), 5. Retrieved May 23, 2018 from EBSCO Online Database Academic Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=asn&AN=129136404&site=ehost-live

Kwerel, E., Sanyal, P., Seim, K., Stancill, M., & Sun, P. (2017). Economics at the FCC, 2016-2017: Auction designs for spectrum repurposing and universal service subsidies. Review of Industrial Organization, 51(4), 451–486. doi:10.1007/s11151-017-9597-5

McCarthy, Mark. (2022, Nov. 1). Transparency is essential for effective social media regulation. Brookings,www.brookings.edu/articles/transparency-is-essential-for-effective-social-media-regulation/

Net neutrality law: An overview. (2022, May 27). Congressional Research Service, crsreports.congress.gov/product/pdf/R/R46973

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