FC: James Plummer on FCC deregulation vote and true competition

[Declan McCullagh <declan () well com>]

---

Date: Tue, 24 Jun 2003 16:55:06 -0400
To: declan () well com
From: J Plummer <jplummer () consumeralert org>
Subject: for politech? : Real Media Reform

Declan,

Politech readers may find my piece below of interest.  It's on real media 
reform vs. the beltway brouhaha over the new FCC media ownership rules.

- JCP

<http://www.techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&CID=1051-062003F>

Real Media Reform

By James Plummer
6/20/03

The Senate Commerce Committee on Thursday voted by voice vote to roll back 
much of the Federal Communications Commission's recent revision of 
regulations governing media ownership. The 3-2 party line vote of the FCC 
commissioners earlier this month eased restrictions on how many broadcast 
television stations one company could own nationwide, and allowed newspaper 
owners to purchase a television station in the same market.

The reaction from the pro-regulation crowd was swift. Even as FCC Chairman 
Michael Powell called for the ayes and nays from his four colleagues, two 
members of the women's left-activist group Code Pink in the audience began 
singing and chanting: "Mass deregulation of the mass communication means 
the end of democracy."

But what most empowers consumers - and democracy - is the ability of 
consumers to freely choose in an open market those media that best fit 
their diverse tastes and values. Indeed, "diversity, localism and 
competition" were the policy buzzwords repeated as a mantra by 
commissioners and senators between the fractious FCC meeting and a 
follow-up Congressional hearing. And not without reason.

The evidence does indeed indicate that diverse consumers do want 
"diversity," including "localism," among their media choices. But 
competition, not "public interest" regulation, is the only way to ensure 
these choices reflect the values and tastes of consumers rather than 
bureaucrats and special-interest groups.

And to that end, the FCC's action, for all the chanting to the contrary, 
was a positive step for consumers. In an age of cable, satellite, DVD and 
Internet, greater opportunities for horizontal and vertical integration can 
enable not only the media dinosaurs to diversify their offerings, but also 
allow new independent operators, such as the family-oriented Paxson 
Communications and its Pax Network, to compete by offering consumers 
something new.

In point of fact, Pax was only able to offer a family-friendly alternative 
to the big networks by owning and operating broadcast stations reaching 
more than 60 percent of the country. It skirted the FCC rules limiting 
station ownership to 35 percent of the country because UHF stations counted 
as only half a station.

The new FCC rules take the ownership limit up to 45 percent. But the Senate 
Commerce Committee action would make permanent the old 35 percent national 
market-penetration standard (as would a separate bill pending in the 
House). Such a measure would in fact hinder the diversity and competition 
offered by upstarts such as Pax.

The Commerce Committee bill also included a reinstatement of a ban on 
newspapers owning a television station in the same market. And the 
committee separately passed a measure revoking a grandfather clause 
protecting companies whose holdings already exceeded new caps on radio 
ownership in one market.

If members of Congress really wants to bring about more "diversity, 
localism and competition" in media markets, they will let the ruling stand, 
and instead take measures to tear down barriers to entry in broadcasting. 
Congress should:

·       End suppression of microradio -- Those who profess a concern for 
"diversity, localism and competition" could start by reversing the Radio 
Broadcasting Preservation Act, passed as part of the appropriations bill in 
2000. The act itself overturned the FCC's modest attempt in 1999 to license 
low-power "microradio" broadcasters. It cut in half the small number of 
low-power licenses the FCC was set to grant and also barred the Commission 
from eliminating or reducing the "minimum distance separations" between 
stations on the radio dial. In effect, that limits the number of licenses 
for new stations while ignoring the digital technology that makes wide 
separation unnecessary. If diversity and competition aren't just rhetorical 
terms, it needs to lift the caps so scrappy start-ups can provide 
independent, local coverage.

·       Roll back the digital mandate -- Besides giving away a huge, 
valuable, swath of spectrum to the very corporations they now worry are 
becoming too powerful, the federal mandates increase the costs of 
maintaining a broadcast station by upwards of $1 million. This 
anti-competitive barrier to entry crowds out smaller stations, the ones 
that typically offer more diverse and local content.

·       Drive a stake through the estate tax -- Family-owned local media, 
whether they be daily newspapers or television stations, are at a distinct 
disadvantage with national or international corporations. Corporations 
never die; people do. And once every generation a family has upwards of 
half its capital confiscated by the federal government. This simple truth 
explains much of the consolidation of media and other businesses over the 
past century, as local owners converted their private interests into public 
shares of stock in media conglomerates. The current estate tax structure 
calls for the tax to slowly be phased to nothing in 2010, and then 
reinstated in 2011. That's hardly something estate planners can count upon. 
This typical slice of Beltway insanity provides family-run businesses with 
no assurance, outside of a carefully timed suicide, that the business will 
stay in family hands. The incentives to sell out remain. If Congress 
prefers independent media to corporate conglomeration, they must make the 
repeal of the estate tax complete and permanent.

Any one of these institutional reforms would do more to bring about true 
competition -- including "diversity and localism" in the electronic media 
-- than simply rolling back a technical regulatory decision. The question 
is does anyone on the Hill have the fortitude to do anything about them?

James Plummer is a policy analyst for Consumer Alert, a non-profit consumer 
group based in Washington, DC.


        06/20/

James 
Plummer 
jplummer () consumeralert org
http://www.nccprivacy.org/                               Policy Analyst, 
Consumer Alert
National Consumer Coalition Privacy Group        Phone: 202-467-5809
                                                                      Fax: 
202-467-5814




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