John Padilla

UNIV 2350

            It was the year 1927.  Antennas sprang from the rooftops of countless homes.  Beaming from them were the chatter and noise of hundreds of “radio stations.”  Nearly every neighborhood had a short-wave radio transmitter.  Anyone who had the equipment to transmit a signal could do so.  Talk and pre-recorded music shot through the air creating a traffic jam within the radio spectrum.  The overlapping signals created a mishmash of noise that could hardly be deciphered.  Receiving a clean signal usually meant having to be near the source of the signal.  Even the top broadcasting companies had to fight through the clutter. Even so, the federal government was preparing to deal with the unorganized nature of broadcasting.  The year 1927 would also be the year when the Federal Radio Commission would be created.  The commission was charged with the responsibility of regulating the airwaves.  No longer would individuals be able to freely broadcast without following the regulations set by the commission.  It would forever change the way the airwaves would be utilized.   Two major overhauls to the regulations would follow, the first in 1934 and again in 1996.   The overhaul in 1996 profoundly changed the economic structure of the telecommunications and media industries.  It was touted as being a positive change that would benefit both providers and consumers.  The 1996 Telecommunications Act primarily focused on the business aspect of the industry, however its passage has had a profound impact on society.  Not only has the 1996 act negatively affected the industry as a whole, but lawmakers also did not realize the negative impact that the overhaul would have on American society. 

            The Federal Radio Commission was charged with regulating the radio industry from 1927-1933.  In 1934 Congress, at the request of President Franklin Roosevelt, passed the first major overhaul of the telecommunication regulations.  The Federal Communications Commission was created as a government agency independent of the Executive Branch, but directly responsible to Congress.  The FCC was given authority over “…all services affected to be all those which rely on wires, cables or radio as a mean of transmission.” (FCC Zone)  This greatly expanded the scope of responsibility that the FCC would have as a regulatory agency.  Unlike the Federal Radio Commission, the FCC would be able to regulate all services that transmitted a signal.

            The FCC is lead by five commissioners who are appointed by the President. One of the commissioners is chosen as the acting Chairperson.  The commissioners have an incredible amount of responsibility.  They oversee a commission that is divided into six operating Bureaus and ten Staff offices.  Each section has a different task, ranging from the processing of license applications to the investigation of complaints. (FCC About)  The FCC has influence over nearly every component of the telecommunications industry.  The bureaus and offices within the FCC not only watch over the technical aspects of the telecommunications industry, but they also influence the way technology is utilized by the public.  They can determine how and when new technology is employed.  The FCC can directly influence society's use of new technology.  At the same time, the commission allows for public input in their decision making process.  This could be viewed as a safeguard for the public interest. Unfortunately, studies have shown that the FCC is more apt to consider the advice provided by the industry.  One such study, conducted by Jan Linker, determined "…that intervention by citizen groups was unlikely to change the close relationship between the broadcasting industry and the FCC." (Kanayama 186)  Despite the safeguards built into the FCC's policy making process, the public is subject to any decision made by the commission.  Decisions that seemingly only concern technology or business can still have an adverse affect of society.

            Sixty-two years after the 1934 Act, the Telecommunications Act of 1996 would be the second major overhaul of telecommunications law. (FCC Telecom)  President Clinton, with the overwhelming support of Congress, signed the bill into law on February 8, 1996.   To gain support from the public, the Act was touted as being the key to enhancing the level of competition, within the telecomm and media industries.  The rhetoric in the support of the bill is best described by what Vice President Al Gore said; "The Berlin walls of the telecom industry are going to be brought down as this legislation is implemented…” (Levy 42)  The Act would improve competition by deregulating the industry.  Deregulation would be the overriding theme within the 1996 Act.  All this was supposed to result in a market that was favorable to consumers.  More choices would be available and the resulting competition would drive down prices.  All types of services from telephones to the internet would improve.  Business would boom.  But again, as with so many of the FCC's decisions, the 1996 Act was intended to focus primarily on the business aspects of the industry.  The impact of the Act on society had not been foreseen.  In addition, the economic models instituted by the new regulations did not have the positive impact that deregulation was expected to have.  Instead, consumers and citizens, alike, were adversely affected by the new policies.  Surprisingly, the FCC not only failed society, but it failed the industry to which it is so closely connected.

            There was one provision in the Telecom Act of 1996 that was immediately recognized as having an impact on society.  The Common Decency Act would make it possible to prosecute anyone found to be transmitting "indecent" materials particularly to minors.   Its intention was to regulate what had been a previously unregulated industry: the Internet.  However, the act was vague in its definition of "indecency".   The CDA defined indecency "as 'any comment, request, suggestion, proposal, image or other communication that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs.'" (St. Lifer 14)  Legislators felt the CDA was written in a way that would only apply to wrong-doing, such as the distribution of child pornography.  Free-speech advocates, however, felt the language was too broad.  The American Civil Liberties Union and 50 other groups immediately filed suit after the 1996 Act was signed into law. (Hernandez 22)  At the time of its passage, the CDA considered abortion material to be indecent.  This alarmed not only pro-choice advocates, but also free speech groups.  The amendment to the 1996 act was considered especially threatening to librarians.  They would be held responsible if, for instance, if a minor downloaded "indecent" material on a library's computer.  This vague definition of indecency is what prompted the U.S. Court of Appeals for the 3rd circuit to strike down the CDA as unconstitutional.  The Supreme Court would later uphold the ruling.  In this particular instance, the social implications of the 1996 Act were clearly recognized.  However, many of the negative aspects were yet to be realized. 

            Another provision of the 1996 Telecom Act that has had a negative impact on society is one that deals with the disabled. It is an example of the FCC siding with the industry over the well-being of society.  Specifically, it refers to Section 255 of the Act. It attempts to create a mandate for the industry to provide "universal service" to people with disabilities.  That is, to incorporate technology that, for example, would allow for a blind person to use a public telephone.  Originally the FCC enacted the Telecommunications for the Disabled Act of 1982, however in 1993 it suspended portions of the rules.  (Kanayama 187).   The FCC has had a history of going back and forth on issues concerning people with disabilities.  The commission has at times passed measures favorable to people with disabilities only to weaken the impact of the regulations later on.  Eventually the FCC did reinstate the rules which it suspended in 1993, however it left the enforcement of the regulations to the state public commissions.  This substantially weakened the effect of the regulations.  Likewise, the FCC has balked at establishing requirements for the implementation of technology that would assist the disabled.  Too often the FCC will allow the industry to exclude the retrofitting of telephones that are already in place.  In addition, the FCC often includes loopholes that are related to technical issues and cost.  This was the case with Section 255.  Although it mandates an accessibility goal, it does not mandate the means to achieve it.  Instead, the commission provides can escape clause.  It states, "Our rules give service providers and manufacturers a great deal of flexibility in determining how to best deploy their resources to carry out the statutory mandate, as long as they do all that is readily achievable and make modest changes to every product where it is easy to do so." (Kanayama 185)  "Readily achievable" and "easy to do so" allows the industry to avoid making any improvements to equipment if companies feel that it would be too expensive.  As a result, people with disabilities still do not have universal access.  This was a situation were the FCC had an opportunity to make a positive impact on society, but instead chose not to do so.  As a result, the 1996 Telecom Act is weak in its mandate for universal access.

            Society was also adversely affected from an industry standpoint.  Congress did not anticipate the negative impact of the Act on the telecommunications industry.   After all, this was the sector of the industry that was supposed to benefit the most from deregulation.  After years of having a "…core policy of maintaining telephone companies as regulated monopolies," (Haber 35), the new regulations were supposed to open the market to competition.  Long-distance carriers were going to be able to offer local services and vice versa.  At the core of the overhaul was the idea that local phone companies would be required to "unbundle" parts of the their networks and then lease them to competitors.  The idea was to create competition without requiring the upstarts to first construct massive networks.  The competitors would then be able to sell the new service below wholesale prices.  The Baby Bells cried foul.  They argued that because the competition could undercut their prices, while using Bell equipment, the Bells no longer felt it was economically feasible to invest in their infrastructure.  "SBC CEO Ed Witarce, said, '… [Unbundling] relies on subsidies, invest nothing, builds nothing, an ultimately hurts everyone's ability to raise capital and invest.'" (Malik 19)  On the other hand, rivals complained that the Bells weren't keeping their end of things.  Competitors argued that not enough of the networks were being unbundled.  Part of the problem was that the FCC didn't specify how much unbundling would be required.  All in all, critics have been less than favorable of the results.  Economist Alfred E. Kahn "…argued that the supposedly free-market Telecom Act caused an awful reaction when it was combined with consumer-protection policies from the monopoly era." (Rosenbush, 1)  Likewise, a slew of the competitors have since filed for bankruptcy and the long-distance industry is in disarray especially after the fall of WorldCom. (Rosenbush 1).  Despite this the Bells, claim to be working against heavy competition.  Although the Bells have lost customers, "[t]heir actual losses, however, are subject to debate." (Malik 19).  Eight years after the Act significant competition within the telecom industry has yet to materialize. The promises that were made to consumers have not been met.  Arguably, consumers have yet to benefit from the new economic model.   The prospect of the 1996 Act having a positive change within the industry is still questionable. 

            Not only has the Act failed consumers of the telecom industry, but it has adversely affected society via deregulation of the media industry.   The new regulations greatly relaxed the number of TV and radio stations a single company could own.  For example, Clear Channel Communications owned 40 radio stations prior to 1996.  It now owns over 1200 stations.  That is 30 times greater than the pre-1996 limit.  (Toomey 28) It is now the case that 90% of the small market radio stations are controlled by the four largest companies.  Likewise, the six largest cable operators control 70% of the national cable market. (Landay 38).  Concentration of the various media outlets was created by the new economic model instituted by the 1996 Telecom Act.  The idea of the few controlling the vast majority of media outlets has troubling implications.  It delves deeper than what songs are played on the radio or what television programs are aired.  It directly relates to freedom of speech and the ability for the average citizen to participate in democracy.  Due to consolidation, media outlets are less accountable to the local community.  The diversity of the voices heard over the airwaves is threatened.  The changes in the regulations create an environment that suppresses “… opportunities for independent companies to produce programming of varying perspectives.”  (Media Ownership 225)  In addition, the Telecommunications Act of 1996 “… drove station prices to lofty heights, putting them out of the reach for the typical entrepreneur…” (Polgreen 10)   Independent media outlets are fewer and farther in between.  Supporters of the 1996 Act again failed to foresee the consequences that would result from the new regulations.  While, the Act created new opportunities for companies to acquire more holdings, the FCC did not take into consideration the negative aspects of media consolidation.  Fewer voices and opinions are being heard.  As a result, dissenting opinions are less likely to be acknowledged.  Only the views similar to the ones held by those who control the media outlets will be presented.  Although media outlets are supposed to serve the public interests, it seems that the public is becoming excluded from the process.  There is a greater lack of diversity over the airwaves since the passage of the 1996 Act.  The FCC’s decision to deregulate media outlets has had a detrimental effect on democracy. 

            It is clear that the Telecommunications Act of 1996 has had an impact on society.  The FCC and those who supported the bill did not realize that the impact would largely be negative.  Surprisingly, the Telecom Act did not settle the issue of competition within the telecommunications industry.  The Act was supposed to end the dominance of the monopolies in several areas.  Instead the new regulations created further concentration and consolidation.  Consumers were left wondering about the lower prices they were initially promised.  It is easy to understand the desire to update the regulations.  It had been sixty-two since they were overhauled.  However, the framers of the new legislation should have been better aware of the consequences lurking within the pages of the new regulations.  Their carelessness is jeopardizing the very structure of democracy.  If the FCC could not insure that citizens from all walks of life could benefit from the legislation, then why recommend it?  Eight years since its passage, it would be quite possible to say that America was better off without the 1996 Telecommunications Act.