It is said that Congressional debates over telecommunications issues are more economic than political — typically pitting the very wealthy against the extremely rich.
But the recent elections have produced a new dynamic, one in which the Democratic majority may perceive both a need and an opportunity to take an aggressive stance on two controversial telecom issues, namely multiple ownership limits and net neutrality. These issues have a populist flavor that could appeal to the party's core constituency. These are also issues that could help position the party heading into the presidential election season.
Multiple Ownership
Not so many years ago, any one broadcaster was limited to owning no more than seven AM, seven FM and seven TV stations nationwide. Following FCC decisions relaxing the rules, Congress followed suit. In the 1996 Telecommunications Act, national ownership limits for radio were eliminated entirely, and local limits for radio were relaxed such that a broadcaster could own as many as eight radio stations in the largest markets (those with 45 or more radio stations).
Relying on the new law, a number of group broadcasters went public and acquired many additional stations. Clear Channel, for example, currently owns over 1,150 radio stations and 42 television stations.
In 2003, the FCC voted to further relax local ownership limits for television and to allow the combined ownership of newspapers and broadcast stations, and radio and television stations in larger markets. This decision was adopted over the bitter opposition of the two Democratic Commissioners, who held a series of field hearings designed to stimulate comment on the proposals. Citizens' groups and others challenged the new rules, and the U.S. Court of Appeals in Philadelphia ultimately remanded the FCC's decision for further proceedings. The Commission is now in the process of seeking additional comment on the issues raised by the Court of Appeals.
The two Democratic Commissioners, Michael Copps and Jonathan Adelstein, remain on the FCC. The Chairman, Republican Kevin Martin, has already signaled to Capitol Hill that he will consult with the Democratic leadership on major issues before the agency.
Media ownership limits represent a hot-button issue for many Democratic party loyalists. They have long argued that consolidation has detrimental effects on diversity in programming, minority employment, and minority ownership. It is to be expected that media ownership limits will be the subject of much attention on the Hill in the next two years.
Net Neutrality
Net neutrality means different things to different people. To the FCC it means that Internet users have a right to attach equipment of their choice to the network as long as that equipment threatens no harm, a right to access lawful Internet content of their choice, a right to run applications of their choice and a right to competition among providers.
To others it means that the companies owning the underlying transmission facilities used for the Internet (facilities such as DSL and cable modem service) may not discriminate between and among Internet service providers. In particular, it means to Internet service providers that the large cable television and telephone companies not be allowed to favor their own Internet access service by providing faster connections than the connections provided to others, or charge other ISPs for faster service. In this respect, net neutrality resembles a form of common carrier regulation that the FCC has eschewed for cable modem and broadband services like DSL.
Earlier this year an effort was made to attach net neutrality requirements to legislation that looked toward national franchising for cable TV. That effort was defeated, but the cable franchise legislation itself ultimately stalled with the net neutrality issue playing a central role in Democratic opposition to the bill.
Net neutrality remains an issue for many members of the new majority, including Congressman John Dingell (D-MI), likely Chairman of the House Energy and Commerce Committee in the new Congress. Whether it will have the support needed to pass is another matter.
While net neutrality has populist appeal, the identity question remains: As noted above, there is no common understanding of exactly what it means.
Moreover, opponents have argued that to this point there is no pattern of market failures that might justify the imposition of a new common carrier-type regulatory regime.
Finally, net neutrality collides with another Democratic priority, namely the spread of broadband access, especially in rural areas. The argument here is that, unless the firms seeking to deploy high-speed facilities are able to fully realize the profit from the enormous investment required, they will have reduced incentive to field such facilities in the first place. The father of deregulation, Democrat Alfred Kahn, has argued this point strongly. Thus, it remains to be seen whether the new leadership on Capitol Hill may perceive more problems than benefits in pursuing net neutrality legislation.
This Alert points to two telecom issues that are likely to be focal points of attention in the 110th Congress. If you have any questions about this Alert or would like more information, please contact any of the attorneys in our Information Technologies and Telecom Practice Group.
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