IP: REH speech: Democracy in a Digital Age"

[David Farber <farber () cis upenn edu>]

[ I missed it due to family matters DJF} 


Date: Fri, 12 Sep 1997 18:16:52 -0400
From: Eugene Huang <EHUANG () fcc gov>


Dave,


This maybe of interest to IPers: Hundt's speech today at Penn railing
against the broadcasters.


Eugene Huang



--


September 12, 1997


FCC CHAIRMAN REED HUNDT CALLS ON FCC TO LAUNCH MAJOR FREE
TIME INITIATIVE


        In an address today to the Annenberg Public Policy Center of the
University of Pennsylvania, FCC Chairman Reed Hundt noted that "[a]ll
over our country decent, honorable people are effectively precluded
from elective office simply because they don't have close ties to Big
Money or aren't willing to do what it takes to get those ties," and called
on the FCC to vote "to give us a major new free time initiative," that would
promote candidate access to the nation's airwaves.  Hundt asserted that
"being on TV is the only way to get elected to almost any contested
public office with a large constituency," but that "you cannot run for
office successfully without getting your message to the people by
embedding it in the country's nightly fare of popular entertainment on
broadcast TV." 


        Noting calls for free time by the President, the Vice President, and
over 68 Members of Congress as well as support for free time among a
majority of Americans, Hundt observed that the grant of new digital
spectrum to broadcasters "was made with the express statutory
provision that this public property of the airwaves could be used only
subject to a public interest obligation," which the FCC should define to
include free time.  Adding that the Congressional Research Service and
others have concluded that a free time requirement would be
constitutional, Hundt asked whether "at the very least shouldn't the FCC,
Congress' expert agency on all broadcast matters, inquire into the issue,
make a public record, and issue a report?"  


        Hundt also observed that the current Lowest Unit Charge rule,
which entitles candidates to reduced rate TV air time, fails in practice
because "at a majority of stations, political candidates have paid higher
prices than commercial advertisers because sales techniques
encouraged them to buy higher-priced classes of time."  He said an
alternative would be to replace the lowest unit charge rule with a rule
requiring a heavier, but limited, discount even to the point of free time. 
"The lowest unit charge rule gives a candidate unlimited purchasing
power, supposedly at low rates," noted Hundt, "Why don't we just make
the rates very low, even zero, but only up to a certain amount of time."


--FCC-- 


CHAIRMAN REED E. HUNDT
FEDERAL COMMUNICATIONS COMMISSION


ANNENBERG PUBLIC POLICY CENTER
UNIVERSITY OF PENNSYLVANIA
PHILADELPHIA, PA


SEPTEMBER 12, 1997


(As Prepared for Delivery)




DEMOCRACY IN A DIGITAL AGE




        Well, are you ready?  


        According to the New York Times last week, the Presidential race
for the year 2000 has already begun. And the key to sorting out the
candidates, according to the article, is not how they would close the gap
between rich and poor, or build a global informational highway, or
promote greater quality and equality of education in our country.


        No, the key, says the Times, is how much money can they raise.


        Listen to this:


        A prominent Republican consultant said about his party's field:
"Alexander's gong to have 15 mill by Iowa . . . But Bush will have 20. I
wouldn't be surprised if Bush holds his first dinner and breaks every
record . . . I don't think Quayle has as much money."


        Now I went to college with Governor Bush and I believe him to be
a fine fellow. I suspect he would rather be thought of as Presidential
material for a million reasons other than his ability to raise a million
dollars
at a dinner.


        But more important than the Governor's grounds for outrage at
the disrespect this view shows for his record, thoughts, and agenda,
the fact is that the country has every reason to be outraged that the
ability to raise Big Money is apparently the primary method of sorting out
political candidates.


        As another Republican consultant said, "guys like John McCain
are not viable because they are not able to raise money . . . Steve
Forbes is viable because money is not an issue to him."


        I know both these fine men and respect their views on a variety
of issues.
        
        I think if they want to run for President they ought to be able to do
so, without money being a precondition or a special advantage to the
viability of their candidacy.


        The situation is even worse for Congressional, Gubernatorial, and
Senatorial races. And for state races the role of money is far less
examined but I suspect even more pernicious because of the relative
lack of vigorous TV coverage of state and local government.


        All over our country decent, honorable people are effectively
precluded from elected office simply because they don't have close ties
to Big Money or aren't willing to do what it takes to get those ties.


        All over our country people agree with me.


        Why do you think the country despairs of politics, and its focal
point Washington,
 D.C.?


        Don't you think the number one reason by far is the relationship
between Big Money and politics?


        Everyone knows that the connection of Big Money to politics
shakes the credibility of our democracy. The most innocent and decent
people in politics -- and I call many of them, and one in particular, dear
friends -- are the ones who most want campaign reform. Because they
know how enervating to democracy is today's imperative that in order to
do the right thing in public office you've got to raise Big Money to get in
public office.


        And what is that Big Money for?  TV of course.


        In 1996, 63% of Clinton's and 61% of Dole's went to broadcast
advertising in the general election phase of the campaign.  In competitive
Senate races over 60% of campaign funds went to media costs.


        Millions are raised and spent on TV time buys because TV is the
way 70 percent of Americans get all their information.


        Being on TV is the only way to get elected to almost any
contested public office with a large constituency.


        More precisely, you cannot run for office successfully without
getting your message to the people by embedding it in the country's
nightly fare of popular entertainment on broadcast TV.


        I believe in the future the Internet will change this paradigm. But
we have got to save democracy in the present and not in the sweet bye
and bye.


        Let's start with the bottom line:


        To reduce to any bearable level the role of money in American
politics candidates need ample advertising time on popular broadcast TV
shows. They need lots of it and they need it at the important times --
especially right before the election and on popular shows.


        The purpose of government, said Abraham Lincoln, the first
Republican President and a fellow who was famous for not raising Big
Money, is to do what needs doing but no one of us can do so well acting
alone.


        None of us alone can make it possible for those without the
special access, and sad special debts, to Big Money to run for office.
But acting through government we can make it so.


        Anything else -- absolutely anything else -- that Congress might
do to reform the political process will be a flat failure unless free time and
widespread, meaningful access to that time is the key part of the
solution.


        The American public agrees.  An April CBS News/NYT poll found
that 65% of those polled favored free television time and March
CNN/USA Today/Gallup poll found that 64% of those polled supported
free time.


        The President has called for free time.  As the President stated at
an conference sponsored by the Annenberg Center for Public Policy in
Washington, "[i]t is time to update broadcasters' public interest obligations
to meet the demands of the new times and the new technological
realities.  I believe broadcasters who receive digital licenses should
provide free air time for candidates, and I believe the FCC should act to
require free air time for candidates."  The President said again at
American University earlier this week that he will insist on campaign
reform and on free time as a key part of it.


        Notwithstanding the President's leadership, since the election
knowledgeable observers have said there would be no campaign
reform. 


        I've said all along that they will be wrong and that there will be
free time as well before the November 1998 election. I'm betting on the
President and sticking with my prediction.


        I admit those Thompson hearings could make you wonder about
priorities:  is where a public official was sitting when he made a phone
call a more important issue in campaign reform than the inability of any
candidate for public office to run for office without raising millions?


        But I'm inspired by leaders like Senator John McCain, who told me
months ago that there would eventually be free time for political
candidates.


        He is well aware that the Senate has never held a vote on
McCain/Feingold,the principal campaign reform bill.


        This week 45 Democratic Senators signed a letter asking for that
vote and yesterday they took to the Senate floor to demand action.  John
McCain and two other Republicans have joined them. The
McCain/Feingold bill provides for some free time -- not enough perhaps,
but it's a start.


        Momentum for reform is building.


        In this Congress alone, more than 68 Members have written the
FCC in support of free time.


        They are joined by the most farsighted visionaries in the
broadcasting industry.  


        Barry Diller said "I propose that we [the broadcasters of America]
take sole responsibility for the cost of airing all political advertising
messages for all government candidates and to use this lever as the
impetus to abolish all forms of the current system of political
contributions."  


        Rupert Murdoch, Walter Cronkite, Paul Taylor have all called for
free time as a key component to campaign reform.


        The odd fact is that free time for political candidates represents
so much to democracy and so very little for broadcasters. 


        Federal and non-federal candidates spent $400 million total on
political ads in 1996 which constituted about one percent of the $30
billion spent on all advertising in 1996, according to Broadcasting and
Cable, a trade magazine.


        Even the broadcast industry lobbyists agree that free time would
be an insignificant fraction of the ad revenues of the industry.


        The National Association of Broadcasters estimated "that political
ads accounted for only 1.2% of total ad revenues" in 1996.  This figure
can be looked at in context of an estimated $36.2 billion in TV advertising
revenue in 1995, the most recent year for which estimates are available.


        Consider that Americans spent $400 million on campaigns in 1996,
while Procter and Gamble spent $580 million on network TV advertising
during the same period.


        In fact, broadcasters could give away free time to candidates and
then, by shrinking the amount of self-promotional ads they run (you know
the ones where ABC tells you in yellow colors that TV Is Good), they
could replace any paid ad time they had lost.


        But some question whether broadcasters can be compelled to
give back the public's airwaves for public purposes, even in small part,
such as free time.


        Senator Arlen Specter said recently that he "find[s] the free air
time provision in McCain/Feingold troubling . . . I believe proposals for free
air time constitute a 'taking' from broadcasters and are unconstitutional." 


        But other prominent Republicans have focused not on takings
from broadcasters but givings to broadcasters.


        In 1996 Congress insisted on ordering the FCC to give
broadcasters digital TV licenses that if sold at auction would have
jumpstarted digital competition against cable and analog broadcasting,
while also bringing in anywhere from $7 to $20 billion to the public
treasury.


        Conservatives like William Safire called this freebie a "rip-off on a
scale vaster than dreamed by yesteryear's robber barons."  And Bob
Dole called it a "giant corporate welfare program."  


        This huge gift to broadcasters was made with the express
statutory provision that this public property of the airwaves could be
used only subject to a public interest obligation. That is what the FCC is
supposed to define.


        And I assure you that if I had the votes we would long since have
defined the public interest to include free time.


        I admit a disappointment here. I was not even able to convince
three commissioners to vote for a notice of inquiry to look into the
subject!


        I would think Senator Specter, who is a fine lawyer, would have
welcomed a debate on the constitutionality of free time. That is what our
inquiry would have sparked.


        The Senator would have to go against Representative Louise
Slaughter, the courageous Congresswoman from New York, who has
said that "Enacting caps on campaign expenditures, limiting contributions,
and other reforms will be meaningless unless we do something about the
aspect of campaigning that costs the most: television time." 


        Furthermore, she has stated: "It is important to remember that the
airwaves do not belong to the broadcasters, they belong to the American
people.  Placing conditions on the way private interests use the public
airwaves is therefore not 'taking' anything away from these stations. 
The Library of Congress' Congressional Research Service has prepared
a written memorandum supporting the constitutionality of my legislation
(HR 84)."


        Senator Specter has every right to disagree with Congress'
research service but at the very least shouldn't the FCC, Congress'
expert agency on all broadcast matters, inquire into the issue, make a
public record, and issue a report?


        Moreover, without doubt, the FCC can issue a rule requiring free
time subject to the power of Congress to repeal the rule if it wishes.


        Meanwhile, no one should ignore the fact that the FCC by statute
and rule for years has tried to guarantee candidates ready access to the
airwaves.


        We have on the books a lowest unit charge rule. The broadcast
lobby supports it. This rule is supposed to let candidates have cheap air
time. 


        But does it work?  In July 1990, the FCC audited TV and radio
stations and found that 80% of TV and 40% of radio stations audited
failed to give candidates the lowest available rates as required by LUC
statute. 


         The audit's "most significant finding" was that "at a majority of
stations, political candidates have paid higher prices than commercial
advertisers because sales techniques encouraged them to buy
higher-priced classes of time."         


        What kind of a deal is this? Why don't we just change the lowest
unit charge rule and substitute a rule requiring a much heavier discount,
even to the point of free time, but say that a candidate can only get a set
amount of such time. The lowest unit charge rule gives a candidate
unlimited purchasing power, supposedly at low rates. Why don't we just
make the rates very low, even zero, but only up to a certain amount of
time? 


        In addition to this truly low priced or even free time, candidates
could buy only what broadcasters would sell and only at prices the
broadcasters choose to charge.


        Moreover, broadcasters could impose a surcharge above
commercial rates on the additional time. This then would fund the free
time.


        Other ideas are viable as well. 


        But in all the history of broadcasting free time ideas have never
been examined at Congress' expert TV agency, the FCC.


        I couldn't get this FCC to act on free time.  Two commissioners
stopped our inquiry. But they are retiring, along with me. A new group is
coming in when the Senate confirms them in October.


        As Roll Call, the Capitol Hill newspaper editorialized in supporting
FCC actions on free time, "if Congress won't act, those who can,
should."  


        As Barry Diller and other broadcasters who support free time
already understand, to whom much is given much is expected. 


        To broadcasters much has been given. And something is
expected back beyond the entertainment, sports, and news that the
business already generates.


        And to the commissioners of the next FCC much also has been
given:  the special responsibility to determine what broadcasters need to
do to serve the public interest.


        This responsibility brings with it the opportunity to do something
truly great for Democracy. 


        I know the details of a free time proposal will be as complicated
as the most complicated of the 1600 items we voted on while I was
chairman. But on 98% we voted unanimously, and on all of them we
reached conclusions that were well-reasoned and well thought through.


        The Commission can do the same thing for free time. It can
conduct an open and complete inquiry. It can do a sound and sensible
proposed rule making. It can vote unanimously to give us a major new
free time initiative, with or without McCain/Feingold.


        This is a wonderful opportunity for the new Commission to make
its contribution to history. I almost wish I were staying to cast a vote. But
I will be waiting for my chance to applaud.  So will the rest of America.