regulation of media industries regulation generally speaking, why does the government regulate...
Post on 22-Dec-2015
224 views
TRANSCRIPT
Regulation of Media Industries
Regulation
• Generally speaking, why does the government regulate businesses and industries?
• Ensure free markets
Regulation of media
• How are media regulations different from those of most other businesses?
• Public interest provisions
Early Regulation
Radio Act of 1927• Created Federal Radio Commission (FRC)
with power to grant federal licenses to stations for broadcasting over airwaves
• Required stations to serve the public interest, convenience and necessity
• Licenses given to for-profit broadcasters (not educational institutions)
FRC continued
• FRC classified stations & assigned frequencies
• made rules to prevent interference
• established power and location of transmitters
• established coverage areas
Communications Act of 1934
• Created Federal Communications Commission (FCC) to replace FRC
• Recodified many features of earlier radio act
• Left “public interest” undefined
• Directed FCC to provide: rapid, efficient communication service adequate facilities at reasonable charges distribution of service to all states and
communities
• 1983 new section encouraged provision of new technologies and favoring more competition in the marketplace to “serve the public good”
Examples of Media Regulation
• Anti-trust action FTC, Justice Department, FCC – e.g. break up of motion picture monopoly in the 1940s
• Fairness Doctrine (1949-1987) – required commitment to “different opposing positions on public issues of interest and importance”
• Provision of children’s programming
• “Fin-syn” rules (1970-1993) – prevented television stations owning their own programming
Key concepts
• common carrier
• natural monopoly
• public interest regulation
Common Carrier
• Akin to a “public utility”
• access to communication should be non-discriminatory
• rates should be just and reasonable
Natural Monopoly
• One firm can provide product/service at lower cost than 2 or more
• A result of: economies of scale single technology specifications cheaper to achieve universal service
Problems with “Natural” Monopoly
• Rural areas often served by small independents, which lose access
• Natural monopoly often outcome of special interest & predatory policies: 1880s: Western Union & Bell 1926: ATT & General Electric, Western
Union etc.
Public interest
• Vaguely defined by regulators
• Over time, increasingly defined, informally, as economic interest
• E.g., what’s good for media industries is good for the public
1996 Telecommunication Act
BROADCAST
• Broadcasters may add to existing licensed spectrum to develop digital service,
• Spectrum taken away from low-power TV license holders, land mobile services and other small broadcasters.
• Broadcasters get their additional spectrum for free. But have to spend millions to outfit for digital
• Analog spectrum must eventually be returned.
Radio
• All national ownership restrictions removed
• Local ownership restrictions relaxed according to the size of the market
• One owner cannot own more than half the local radio spectrum
TV
• Single owner may buy stations that reach up to 35% of the national audience
• In 50 largest markets: may own more than one TV station or
a radio and a TV station
may own a TV station and a cable TV system in the same place
may own more than one network (except biggest existing networks).
Cable
• Incentives for establishing cross-platform competition among services
• e.g. cable into telephony, phone companies into video service
• All rate regulation for non-basic tier services is abolished
• This benefits large existing cable companies.
• Encourages competition among existing large players; does not encourage entrants.
Cable still has public interest obligations
required local carriage of local broadcast signalsfranchise obligations imposed by local authorities.
Some Outcomes
• Local telephone markets quickly consolidated from 7 to only 4
• E.g., CA has only 2 major providers of local land lines: SBC and Verizon
• Little choice of cable provider• Cable rates have increased significantly faster
than consumer price index
• Satellite still controls only a small segment of the market
• Satellite by only 2 companies, one of which is News Corp.
Outcomes cont.
• Triggered a wave of mergers, mainly to protect against competition
• Greater concentration in radio:
• In cable, the top 10 account for 75% of the industry
• Greater commercialism: many radio stations offer no local news at all.
• In some markets not a single station offers public affairs programming
• Overall, public affairs programming accounts for far less than 1% of content.
• Decline in minority ownership by ~ 15%
June 2003 FCC ruling
Regulations Relaxed• Newspaper/television Cross-Ownership• Natl television Ownership Cap (35% to 45%)
2003 changes currently on hold • Citizen complaints• Congressional scrutiny• Cases currently in the courts
Concerns about recent FCC rulings
• Lead to greater consolidation
• Monopolies non-competitive
• Mergers limit number of independent voices in media
• Localism & community
• Corporate accountability
• Facilitates censorship
Public Concerns About FCC
• Public input into FCC decisions generally lacking
• Few public hearings, poorly advertised
• Current controversy over “hidden” reports & “packed” meetings
• Activist groups continue to pressure Congress and FCC