Ralph Nader P.O. Box 19312 Washington, DC 20036 James Love Andrew Saindon Consumer Project on Technology P.O. Box 19367 Washington, DC 20036
July 15, 1995
re: Federal Telecommunications Legislation - Impact on Media Concentration
We are writing to offer the enclosed materials as an aid to understanding the current telecommunications legislation in Congress, and to urge your newspaper's editorial board to oppose key provisions of these bills.
On June 15, 1995 the U.S. Senate passed S. 652. This bill would:
The House of Representatives is considering similar legislation, H.R. 1555, which will go even further than the Senate legislation. Under the version of H.R. 1555 that was reported from the House Committee on Commerce on May 25, 1995, the Congress would:
As significant as these change are, it is conceivable that even more sweeping changes will be made once H.R. 1555 reaches the full House for a vote.
It should also be noted that the FCC's rules for the new Personal Communications Services (PCS) licenses allow the current telecommunications incumbents (local exchange telephone, cable and cellular) to obtain licenses for most of the new wireless spectrum. For example, in much of California, the incumbent providers of telephone, cable and cellular services will be allowed to acquire up to 100 Mhz of the 120 Mhz of new spectrum (up to 110 Mhz after the year 2000). And the FCC has not adopted any rules limiting cross ownership of Direct Broadcast Satellite (DBS) licenses, allowing cable companies, for example, to occupy scarce DBS spectrum which should be used by competitors to the wired cable systems.
Moreover, both the Senate ( S. 652) and the House (HR 1555) would overturn the FCC's common carrier Video Dial Tone (VDT) rules, by allowing telephone companies entering the video market to operate as cable companies, with unregulated rates and closed systems and no common carrier access rights to unaffiliated entities.
We believe that Congress is moving the law in the wrong direction, toward greater concentration and fewer choices for consumers, all under the guise of "greater competition." Laws and rules that limit cross-ownership and concentration not only enhance competition, a putative goal of the new legislation, but they also serve important non-economic goals, by promoting a greater diversity of programming, and enhancing opportunities for local ownership.
In a sense, this is a move toward a Brazilian Globo-lization of the media, placing ever greater power in the hands of fewer giant media moguls. The predictable result will be less diversity, more pre-packaged programming, and fewer checks on political power. That these provisions are being included in legislation that is being sold as pro-competition is particularly galling. If the goal of the legislation is simply to encourage more competition for local and long distance telephone service, or to allow the telephone companies to compete against cable companies, it is hardly necessary to eliminate nationwide concentration rules for broadcast radio, greatly relax concentration rules for broadcast television, allow same-market telephone company/cable mergers, allow same-market joint ownership of newspapers and broadcast television and radio, or pave the way for telephone company purchases of local television stations. These are gratuitous assaults on competition, diversity and political pluralism.
The far reaching changes that would occur under S. 652 or H.R. 1555 have been widely criticized by virtually all of the active public interest groups engaged in the current debate. The Consumer Federation of America, Consumers Union, the Media Access Project and the Center for Media Education have all issued strong criticisms of the provisions of the bills which would allow for greater concentrations of power, as have well known press critics such as Tom Shales, whose biting critique of the legislation in the June 13, 1995 issue of the Washington Post led to the June 14, 1995 Nightline show, titled "New Communications Law a Power Giveaway?" The House is now preparing to debate H.R. 1555, perhaps as soon as the last week in July. It is important to have a broader public examination of these issues before then.
Congress, at the least, should retain existing limits on concentration of ownership of broadcast radio and television licenses, and rules prohibiting same-market joint ownership of newspapers and broadcast radio and television licenses. Local exchange telephone companies should not be allowed to buy cable operators in their own service area.
Moreover, Congress should bolster existing restrictions on concentration and cross-ownership with provisions that address the new technologies and new regulatory environment. In particular, we should do more to insure that wireless spectrum is licensed to new market entrants, rather than the well-entrenched incumbent players, revisiting the question of cross-ownership restrictions on PCS spectrum and taking steps to reserve DBS licenses to entities not controlled by cable or local exchange telephone companies. And,
given the new and very different role of the local exchange telephone companies in providing information services and video programming, we believe that it is important to establish limits on the range of media outlets that these large companies can control. In particular, we believe it is important to prevent local exchange telephone companies from acquiring newspapers and broadcast radio or television licenses in their own service areas.
We are attaching four exhibits providing background information on this important issue. The first is a brief timeline of important developments in laws and rules concerning concentration and cross-ownership. The second exhibit provides a matrix which details the existing laws and rules on concentration and cross-ownership for eight industry groups. Exhibits three and four show which changes would be made by S. 652 or H.R. 1555. Please feel free to contact James Love at 202/387-8030 (firstname.lastname@example.org) if you have any questions about these materials. Thank you for your attention to this important issue.
* Concentration would only be limited by anti-trust laws.
** The definition and conditions for cable systems that are eligible for buy-out or merger are poorly drafted and sometimes contradictory in the Senate bill, leading to some confusion about which systems will qualify. The House language described below is clearer and also broader than the Senate version, authorizing more mergers.
***However, on a case-by-case basis the FCC may deny a license to an entity if it finds that the combination of the license and a non-broadcast entity will lead to "undue concentration of meda voices."
Editor's note. When HR 1555 passed the House of Representatives, Representative Markey reduced the broadcast TV audience cap to 35 percent, and restored the current cross-ownership ban between cable TV and broadcast TV in the same market.