1934-1996: FCC in the Public Interest

An attempt at finding changes in the definition of Public Interest in the 1934 and 1996 Communications Acts

12/08/09 Communications Law and Policy Seminar (T504) Professor: M. McGregor; Student: P.Blank; ID 0002434541

Abstract This paper tries to bring some coherence in the notion of public interest as deployed by the FCC over time. It does so through comparing contexts in which the public interest are applied in the Communications Act of 1934 and the Telecommunications Act of 1996. Before that, it provides historical analysis of two public interest concerns today. The results show that the likely shift in ideals over a period of more than 60 years notably from regulated diversity to free marketplace also shifted the way in which the U.S. government thinks in the public interest. The 1996 Act speaks more terms of restricting FCC power and granting power to other parties.

Content I Introduction II Literature review III Method IV Results and Conclusion V Discussion Bibliography 3 6 10 13 15

The First Amendment to the United States Constitution states, "Congress shall make no law abridging the freedom of speech ". Despite this apparently absolutist statement, the United States Supreme Court has recognized that the right to speak is not equal at all times and in all places.1

I Introduction Any discussion about the public interest must begin with a definition of who or what comprises the public and what constitutes the term public interest. The public interest standard has been much criticized as a vague, shifting standard that has not done much to Actually promote the publics interest. For instance, many researchers into the matter have been unable to find concrete benefits for children so far (Minow & Lamay, 1995; Duke, 1996; Krasnow & Goodman, 1998; Read & Weiner, 1999; May, 2001). Enticements such as that the vagueness and capriciousness of standard use of the term public interest by the Federal Communications Commission (former FRC) leading to violations of the non-delegation doctrine, have led more than one author to opt for the demise or scaling down of FCC power. However, other researchers have supported a reform of the FCC and thereby recognize that the Commission is still highly important in shaping the telecommunications industry. Read and Weiner (1999), in support of an FCC agency, argue for a role in the incorporation of procompetitive antitrust doctrine, which would mean a referral to the 1934 Communications Act interpretation of the agencys Activity in the public interest. What this means, in my opinion, before anything, is that Congress should redefine the public interest standard under which the FCC functions. At the same time, a major goal of these Acts, it almost seems, is in fact keeping what is Actually meant by the term public interest vague by nowhere being specific about it. Could this be in the public interest?
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http://www.freedomforum.org/packages/first/publicforumdoctrine/

In 1996 Congress enacted the Telecommunications Act that, in contrast to the Communications Act of 19342, did not primarily set out to promote the public interest in communication matters. Its primary focus, as follow from the text, was on promoting competition and reducing regulation in order to secure lower prices, higher quality services for American telecommunications consumers and encouraging the rapid deployment of new telecommunications technologies. Paraphrasing Kang (2009), in broad terms, this amendment to the Communications Act of 1934 was made necessary by technological convergence and legal balkanization, meaning that convergence in media caused changed opportunities for certain businesses to use and expand their influence on the market. Still, in both Acts the FCC was authorized to regulate broadcasters (and other users of the radio spectrum) in the public interest. Given the change in focus, the attention for the public interest may have become smaller in the Telecommunications Act compared to the 1934 Communications Act. Also, what public interest stands for may have changed over time. This paper therefore looks at both Acts in order to find changes in the usage of the term public interest. Chapter II will provide an analysis of two notably public interest-related communications issues and tries to assess how these can be linked to the First Amendment. In so doing, it will come to workable distinctions that make both Acts analyzable in terms of the public interest. I discuss the issues on an abstract level, trying not to narrow down too much to the modernday situation to avoid ignoring matters that were more salient in the 1930s and 1940s and
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The paper initially set out to find differences in usage of the term public interest in the 1927 Radio Act compared to the 1996 Telecommunications Act in terms ideology. However, because the Radio Act was in its entirety copied to the broader 1934 Communications Act, and the FCC normally refers to the latter text, it will take Communications Act for its analyses.

not now. The chapter thus makes for interest starting points for analyzing the contents of both Acts. Chapter III deals with the methodology behind the analysis and chapter IV states the result of the analysis that on the definition of the public interest in both Acts. The research thus compares the contexts in which the term public interest is used and comes to conclusions on the manner in which the Act under concern speak of the public interest.

II Literature review In reading law reviews on the matter of public interest and FCC, it seemed two causes for concern were particularly salient: the Telecommunications Act, in contrast with the Communications Act, put emphasis on the matter of promoting competition instead of on the public interest. the definition of the public interest as used by the FCC is fluid

It was not easy to see whether and how these concerns could be linked to constitutional principles as mentioned in the 1st Amendment to make them measurable. For that, I looked at mentions of the public interest in this Amendment. A short discussion of two major communications issues, competition and viewpoint diversity would then assess whether these issues can in fact be called constitutional. First Amendment In studying the First Amendment I decided to narrow it down to two major points of public interest: The amendment states that there can be no such thing as the government prohibiting or speaking in support or disdain about the free exercise of speech, or of publishing. Regulation is the last recourse. The government at any moment may not impose penal sanctions on peaceful and truthful discussion of matters of public interest merely on a showing that others may thereby be persuaded to take Action inconsistent with its interests.

I take these to be two of the most important limitations to government rule under this amendment and many of the nowadays important regulations in place regarding recipients privileges, facility circuits, bottlenecks, copyright are derived from them. In light of these two points, I will analyze two communication issues that are important regarding both points: competition and viewpoint diversity. Competition The 1934 Act consolidated authority over radio and telecommunications common carriers for the first time in one entity. Like the Federal Radio Commission (FRC), the criteria governing the then new FCC's licensing power was the "public interest, which in the 1996 changed to public interest, convenience, and necessity (See 47 U.S.C. 307(a), 309(a), 310(b) (4), 310(d) (1994)). One other obvious change between the 1934 and 1996 Act is that the latter is aimed at further market consolidation. This may from a historical perspective not come as a surprise since the FCC administration originated from combining the FRC and the Interstate Commerce Commission. However, it may go too far to say that this combination leads it to be guided only by matters of economical importance, such as the ones comprised in Article 1, Section 8.2 of the U.S. constitution. Although formally only regulating interstate and not local commerce, many instances in history ever since 1905 (Swift v. United States) have taught that the Court can any clause that has an important effect of the current of commerce can be regulated under the Commerce Clause (Wikipedia, 2009). In 1996, it became under circumstances easier for the Bell Operating Company (BOCs) and its competitors to obtain FCCs 1996 Section 271 approval to perform activities in the marketplace. BOCs are no longer precluded from participating in certain activities and now

have to only satisfy terms on a fourteen point competitive checklist (1) and be consistent with the public interest, convenience and necessity (2) (Finn, 1997). Section 271(d)(4) states that the FCC shall not by rule or otherwise" limit or extend the terms of the competitive checklist. This alleged demise of FCC power has brought about great concerns about the extent to which the public interest can be served under the new Section 271. The FCC focus has since the Radio Act of 1927 been on local community service mainly, as is suggested by many commentators, as local service is critical to democratic values and an informed (and engaged) citizenship (Philips, 2008, p. 159). Yet, where can we find local community service and public interest to be one and the same thing? And new technologies could potentially change the entire meaning of localism, since they can affect any social relation between people and thus the balance of power (Adams, 2009). Following Finn (1997), a correct reading of the Telecommunications Act in plain language only binds the Commission to grant those applicants consistent with the public interest, and no other. Minows concern may get more weight if we consider Judge Greenes ruling in 1996 over objections of several BOCs to a broad interpretation of FCC power in Section 271. It is in the interest of the BOCs, obviously, to interpret FCCs right to limit or extend the competitive checklist in a narrow way. Yet, Judge Greene provides that in Section 271's plain language, the public interest is part of the Commission's competitive analysis (See U.S. v. Western Elec. Co., 2 Comm. Reg. (P & F) 1389). This may point to the shift that has been undertaken from the 1934 Act established solely in the public interest towards the 1996 Act ultimately prioritizing competition over the public interest. In other words, the Commissions notion of

public interest seems to be completely encompassed by curing anti-competitive behavior of BOCs by removing legal and regulatory entry barriers in order to secure lower prices and higher quality services for American telecommunications (Telecommunications Act of 1996). Shouldnt the public interest be something more than the beneficiary of competition promoting measures? Viewpoint Diversity The Fairness Doctrine may be called one of the most important pillars of the Public Interest Doctrine. The Doctrine, which was first amended in 1949, should enhance the variety of views, letting others than just the licensees and persons they favored be heard in broadcasting. Ever since we can speak of a functional privately owned cable infrastructure, however, channels can be multiplied endlessly and the FCC has no power to strive for public interest requirements on this particular medium. In 1985, in sum, the FCC denounced the Fairness Doctrine because it had become redundant. Due to its diverse nature, the marketplace would generate sufficient viewpoint diversity. The FCC also argued that intrusion by the government would restrict the journalistic freedom of the broadcasters. The FCC held the view that the spectrum scarcity that justified the Red Lion opinion (1969) belonged to the past and could no longer be justified under the First Amendment (Kang, p. 631). Following this statement, the Circuit Court of Appeals made clear that the Fairness Doctrine was not statutorily required. Interestingly, the Court did this on the grounds that concern public interest and not on constitutional grounds. Kang makes a point of this distinction in the chapter on access to broadcast. Following this debate, it is likely that the Telecommunications Act is the culmination of developments in broadcast regulations

starting in the 1980s. Thus, there has likely been a shift from specific rules designed to promote diversity in programming and ownership towards relying completely on competition. One logical result of this would be that the FCC has lost interest in promoting minority and womans ownership since the 1980s. From this brief overview of both issues that largely overlap, I make two conjectures that can be analyzed in both the 1934 and 1996 Acts. Hypothesis 1: The 1996 Act defines the public interest more in terms of restricting FCC regulatory power than does the 1934 Act. Hypotheses 2: The 1996 Act defines the public interest less in terms of localism than does the 1934 Act. Hypothesis 3: The 1996 Act defines the public interest more in terms of power to parties other than the FCC than does the 1934 Act. III Method To operationalize these hypotheses, I had to find ways to define the terms power/freedom and restricting of power. I chose to do this by finding categorize through analysis of both Acts. It soon turned out that there was very little mention of the public interest in the 1934 Act. The 1996 Act contains far more mentions of this term. Also, hypothesis 2 couldnt possibly be analyzed properly since there were almost no references to localism in the public interest in both Acts. It would thus need a different research setting to analyze whether localism has or has not become less of a priority in the public interest following the 1996 enactment. The other two hypotheses seemed analyzable in terms of mentions referring to

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the public interest in both acts. What I started out with, however, in order to create some clarity on what exactly I was talking about, was break mentions of the public interest in both Acts down on a superficial level into categories like in the public interest and contrary to the public interest, which resulted in the following overview: Mentions 1934 1996 94

Desirable/ found in/ serving 6 the public interest Against / contrary to the 1 public interest Promotion or protection of 0 the public interest Public interest groups 0

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A total of 7 mentions of the term public interest were counted in the different sections of the 1934 Act, not counting the mentions in the headers of the specific section (or in introductions to the specific section). If public interest was mentioned more than once in one part of the section, it was counted as one mention. Conversely, a total of 131 mentions of the term public interest were counted in the different sections of the 1996 Telecommunications Act (including amended 1934 Communications Act), not counting the mentions in the headers of the specific sections, or in introductions to sections. One other large difference with the 1934 Act is that almost all mentions in the 1996 Act are in the form of public interest, convenience, and necessity (and the purpose of this section)", as opposed to the plain public interest of the 1934 Act.

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I decided put any reference to obligations FCC or another party had to meet into a category called tasks. Descriptions such as the Commission shall would typically fall into this category. When the Acts talked in terms of the Commission may such instances were put in a different category, called power. A third category, restrictions, comprised of mentions of one of the parties shall not or may not. Obviously, many of the references to FCC power were also tasks that the FCC is expected to perform. I have looked, though, at how the mentions were formulated. If the FCC was mentioned regarding the public it was almost always listed as a task, whereas if the FCC was mentioned regarding other parties (i.e. stations) it was almost always listed as power. Also, some mentions of public interest were listed twice since they were formulated both ways, which makes for the higher total of mentions in this table. Another thing to keep in mind is that, although there is crossover, the analysis does not concern the actual content of Acts. I only looked at the way the contexts that referenced the public interest referred to FCC or third parties, and whether these contexts depicted them as a party that is restricted, called upon or given power. Thus, if a context mentions that the Commission shall not approve the authorization requested unless... it was listed as a restriction of FCC power.

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IV Results and Conclusion Comparing contexts of public interest in the Communications Act (1934) and Telecommunications Act (1996). Public Interest and FCC power Mentions References to restrictions of the FCC power (shall not/may specify only) in the public interest References to tasks FCC shall perform (the Commission shall) in the public interest References to FCC power (the Commission may) in the public interest References to tasks parties other than FCC shall perform (i.e. stations, State commissions) in the public interest References to restrictions on parties other than the FCC in the public interest References to power of parties other than the FCC in the public interest Congressional declarations of policy in the public interest 1934 0 1996 19 (of which 6 in amended Sections) 50 (of which 18 in amended Sections) 32 (of which 6 in amended Sections) 9 (of which 3 in amended Sections) 6 (of which 1 in amended Sections) 9 (of which 6 in amended Sections) 6 (of which 1 in amended Sections)

3 3 4

1 0 0

The results show that the 1996 Act has a lot more attention for parties other than the FCC, which for the most part include stations and common carriers. Also, it puts restrictions to FCCs regulative freedom. In comparing the 1996 amended Act, in which sections of the 1934 Act were specifically amended, it is obvious that in general the FCC lost power and tasks and gained restrictions, while at the same time third parties gained power and tasks and lost restrictions. Also, FCC tasks decisively changed in favor of third parties, so for instance in
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Section 202 (2)(d), where the Commission shall extend its waiver policy to any of the top 50 markets, consistent with the public interest, convenience, and necessity and in Section 629 (3), where the regulations adopted under this section shall cease to apply when the Commission determines (3) elimination of the regulations would promote competition and the public interest. If we assume that these findings reveal some of the perspective the Acts speak of regarding the public interest, we may conclude that the conception or definition of public interest in the 1996 Act compared to the 1934 Act is more in terms of both FCC power restrictions (0% to 15%) and third parties power (0% to 7%), which would confirm both hypothesis 1 and 3. Conversely, the 1996 definition of public interest is far less in terms of tasks for and restrictions on third parties than the 1934 definition. Although this is not onesided, it could point at greater freedom to such parties.

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V Discussion The findings may also be interpreted as a confirmation of the assumption that the U.S. law system steers away from a constitutionality under the First Amendment and towards constitutionality under Article 1, section 8.2. Outcomes of policy-debates may thus be disguised as being in the interest of the public, even though nobody will ever know what the public thus referred stands for. It is obvious that my lack of experience with and knowledge of the U.S. law system prevents me from making informed judgments about on any of the findings in this paper. The overwhelming saliency of the term public interest in the 1996 Telecommunications Act as compared with the 1934 Communications Act does not mean that the public interest has become more important. One could say, though, that the term itself has become more important, which may very well be a political measure of repeating one term so many times that everyone will believe it is true. Let it be clear that this suggestion comes out of nowhere and is not based on evidence. The distinction between what is and what is not in the public interest also remains completely unclear. The analysis of the two communications issues, competition and viewpoint diversity has been narrowed down to such a degree that drawing conclusions on the posed hypotheses could not be regarded as real evidence. Yet, it might lead to other research that can untangle some of the dense complexity of these issues and come to more informed conjunctures and results. Another point of concern is the fact that I have only analyzed mentions of public interest in both Acts by relating them to both hypotheses. It would be far more interesting to analyze all

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sections of both Acts and perform a comparative content analysis. In this way, the overlapping sections of both Acts could be analyzed separately. Although different pieces of legislation were initiated between 1934 and 1996, notably the Cable and Broadcasting Act of 1984 and 1987, and the Telecommunications Act of 1984, the scope of this paper does not include any of these, since it is primarily interested in the development of the notion of public interest over time in comparing 1934 with 1996. It may very well be that policy-making decisions have been guided the way towards the hypothesized change in this paper (constitutionality under the First Amendment towards constitutionality under Article I, Section 8, Clause 3, i.e. the Commerce Clause), and a detailed analysis of what Acts were most influential and why, may form an interesting point of departure for follow-up research on the public interest issue. It thus remains dubious whether the Telecommunications Act of 1996 amended the Communications Act of 1934 and added new regulations to it as a result of economical and technological developments or because the new Act just fits the Commissions character better, or both. As Read and Weiner suggest, the Commission has so tortured the public interest standard through its regulative applications that the public interest may be better served by amending a new standard. It becomes far more likely, then, that the new Act will not change the behavior or the Commission in the public interest and is not concerned with constitutional grounds under the First Amendment, but merely forms an adaption of the Commissions legislative regulation to todays communication-related issues. There is thus no clarity on whether the Commission ever set out to serve the public interest, or whether this goal was a hoax from the start in 1934. I think Minow (1989) hits the nail on the head

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when he says, the heart of the Communications Act is its clear emphasis on the public interest. Whatever the temptations to abandon this notion - and they are many - the stakes are too high. Without commitment to the public interest, all government action vis--vis communications would be without meaning". Bibliography Adams, P. C. (2009). Geographies of Media and Communication. West Sussex: WileyBlackwell Commerce Clause. (n.d.). Retrieved December 2, 2009, from the STS Wiki: http://en.wikipedia.org/wiki/Commerce_clause Communications Act of 1934. Retrieved November 14, 2009, from http://www.criminalgovernment.com/docs/61StatL101/ComAct34.html) Duke, L.J. (1996). The Publics Airwaves: What Does the Public Interest Require of Television Broadcasters? Duke Law Journal Vol. 45, No. 6, p. 1089 First Amendment to the United States Constitution. Retrieved, November 29, 2009 from http://www.firstamendmentcenter.org/ Finn, M.F. (1997). The Public Interest and Bell Entry into Long-Distance Under Section 271 of the Communications Act, 5 CoMMLw CoNsPEcrus 203, 218 Geller, H. (2003). Promoting the public interest in the digital era. Federal Communications Law Journal. Los Angeles: May 2003. Vol. 55, Iss. 3; pg. 515. Retrieved November 22, 2009 from http://proquest.umi.com/pqdweb?&did=353211891&sid=1&Fmt=3&RQT=309&VName=PQ D&clientId=1201&cfc=1)

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Kang, J. (2009). Communications Law and Policy: Cases and Materials, 3rd ed. Binding: Hardcover Publisher: Foundation Press

Krasnow, E.G. & Goodman, J.N. (1998) The Public Interest Standard: The Search for the Holy Grail, 50 FED. COMM. L.J. 605, 60708

May, R.J. (2001). The Public Interest Standard: Is It Too Indeterminate to Be Unconstitutional? Vol. 53 Federal Communications Law Journal, 427, 2001

Minow, N. & Lamay, G.L. (1995). Abandoned in the Wasteland: Children, Television, and the First Amendment, 58-104

Minow, N. (1989). Commemorative Message, in A Legislative History of the Communications Act of 1934, at xv (Max D. Paglin ed. 1989)

Ortner, M. (2000). Current public law and policy issues: Serving a different master the decline of diversity and the public interest in American radio in the wake of the Telecommunications Act of 1996. Hamline Journal of Public Law & Policy, Vol. 22 No. 139

Philips, V.F. (2007). Summing Up the Public Interest: A Review of "Localism and Diversity: Meaning and Metrics" edited by Philip M. Napoli, 60 FED. COMM. L.J.

Rendall, S. (2009). The Fairness Doctrine How We Lost it, and Why We Need it Back. Retrieved November 22, 2009 from http://www.commondreams.org/views05/0212-03.htm

Telecommunications Act of 1996, Pub. LA. No. 104-104, 110 Stat. 56 (1996). Retrieved November 14, 2009 from http://www.fcc.gov/telecom.html

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