Telecommunications Act of 2006 (Part 1)

(Table of Contents)

When legislators announce the need for revising regulatory legislation, it's vital to understand what they believe is wrong with the old legislation. For the last 28 years such legislation has been reliably geared towards making it easier for firms to maintain a profitable relationship with customers, while removing obligations to the community. Public statements made by legislators have emphasized that media firms such as Time Warner, NBC Universal, and Viacom/CBS* have been pointlessly thwarted in their endeavor to aquire control of other media channels.

It's an astonishing thing to say, but the National Association of Broadcasters (NAB) claims that the 1996 Act did not go far enough in deregulating the industry. The basis is not, after all, so surprising: there are rival media formats (radio versus newspaper) and the newspapers enjoy an immunity from antitrust legislation that is quite extreme. The name of this legal concept is "regulatory parity," and it insists that existing regulations discriminate against various types of media. In fact, the notion that press, broadcast radio and TV, telephony, broadband, and cable TV are all so similar they are entitled to identical regulation, is a product of academic abstraction.

The simple underlying premise behind regulatory parity is that because telephone, cable and broadcast companies are competing to provide consumers communication products they should be treated equally. Why should broadcasters suffer the burdens of license obligations? The cable companies don’t have this problem. Why should cable companies suffer the burdens of local franchise commitments? The broadcasters don’t have to report to local communities. Why should telephone companies have to share their infrastructure with competitors? The cable companies don’t have to. And, of course, what the industry means by regulatory parity is getting rid of rules they don’t like.

Any serious examination of the laws applied to telephone companies, broadcasters and cable companies will reveal a complex set of rules arising from very different political and legal histories, different economic structures, different engineering challenges, and different jurisdictional relationships. As Sherille Ismail demonstrated in his article "Mapping Regulatory Treatment of Similar Services," Katz is not comparing apples and apples; there are so many important differences between broadcast, telephone, and cable companies that the simple notion of similarity quickly falls apart. Intelligent policymaking does not mean ignoring real distinctions and treating everything that seems similar as though it were the same.

The alleged danger posed, according to Katz, is that failure to achieve regulatory parity will result in regulation determining consumption patterns. The problem with Katz's reasoning is that he is arbitrarily applying an academic category--"media"--to what is, in reality, very different enterprises. The real goal of regulatory parity is to provide a legal foundation for challenging any regulation whatsoever.

Ironically, while media firms would avail themselves of a bizarre legal-cum-economic doctrine to win final and complete release from regulation, consumers would face profound restrictions on the technology available to them; satellite radio sets would have to be modified to prevent users from recording songs off the radio.

(part 2)

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*Time Warner: formerly AOL Time Warner; merger in 2001 was a financial and technical debacle, resulting in one-year loss of $99 billion (2002-CNET).
NBC Universal: General Electric owns 80% of NBC Universal; Vivendi owns the rest.
Viacom/CBS: Viacom is the film-production and cable side of the old Viacom (before the late 2005 split); CBS Corporation owns the CBS and UPN broadcasting networks. Both Viacom and CBS are controlled by the National Amusements chain of movie theaters. I would argue that, following the business philosophy espoused by the financial press since around the 1970's, the breakup of Viacom into two firms controlled by the same holding company has enhanced the efficiency of both as dominating mindshare.

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Sources for this post:
Wikipedia, "Telecommunications Act of 2005" [sic].

"The People's Guide" (download PDF), Center for Media and Democracy; via "Making Sense of the Telecommunications Act of 2006 -- Introducing "The People's Guide" (for You & Me)," saschameinrath.com

As of posting, this bill had not yet become law. Here was the draft (via Wiki). In Nov. '05, US Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, issued a statement outlining the motives of the overhaul.