TELECOMMUNICATIONS ACT OF 1996

The Communications Act of 1934 brought the telephone, telegraph, and the then-fledgling broadcasting industry under the control of the newly created Federal Communications Commission (FCC). The U.S. Congress reasoned that because the radio spectrum was a permanent resource, owned by the citizens of the United States, representatives of the federal government should regulate those that sought to exploit this resource for profit. The 1934 act governed the licensing, operation, and conduct of the broadcast industry for more than sixty-two years.

History

The FCC and its predecessor, the Federal Radio Commission, designed and enforced a system of frequency allocation and transmission regulation to assure the maximum availability of radio service to Americans. When the 1934 act was passed, AM (amplitude modulation) radio was king. Over the years, various amendments were added to the 1934 act as Congress tried to keep up with newly discovered radio spectrum, new transmitting and receiving devices, and the tastes of the American people. For example, when FM (frequency modulation) radio came into being in the 1940s, the FCC attempted to regulate the new service in a manner that would be in the public interest.

Beginning in 1947, the television industry slowly usurped radio's dominance of the American public's in-home entertainment. To make sure that all Americans could have equal access to television signals, the FCC asked Congress to amend the 1934 act to create a broadcast standard for television, and, later, for color television. When color television became the norm, the FCC required stations to continue to broadcast a "compatible" signal that could be viewed on a monochrome (black-and-white) television—a rule that is still in effect.

The 1960s and 1970s saw the FCC move into the Equal Employment Opportunity Act arena with its regulation of broadcast stations. The commission's equal employment opportunity rules said that the workforce of a television or radio station had to reflect the percentage of minorities located within the city of license. At least 50 percent of the full-time workers and 25 percent of the part-time staff had to reflect this ethnic diversity.

The Communications Act of 1934 also delved into the programming area, with limited regulations that dealt with the content of broadcasts. Obscene and indecent material was banned from the airwaves at times when children could be viewing or listening. A "safe-harbor" was created during the late-night and early-morning hours, when children were less likely to be viewing or listening, so that stations could broadcast their more adult-oriented programs.

In the early 1990s, it became clear to Congress and the FCC that the 1934 act was inadequate to regulate the new technologies that were changing the role of broadcasting and other media. There were wireless devices (e.g., cell phones), cable television, satellite television, the Internet, and other new digital ways to communicate that were not even in the realm of science-fiction in 1934. Thus, the FCC, with the help of Congress, drafted the Telecommunications Act of 1996. This act is supposed to work with the newly emerging technologies in the same way that the Communications Act of 1934 worked with the early radio and television technologies.

Regulations and Deregulations

The Telecommunications Act of 1996, which amends the Communications Act of 1934 to reflect technological change, is an omnibus law that regulates most of the electronic communication technologies that are in existence, as well as others that are still in development. The following is a list of new regulations and deregulations that are present in the act as it was formulated by the FCC and by Congress and as it pertains to the broadcasting industry. They are presented in the order in which the FCC implemented the key portions of the act.

Access by People with Disabilities

As mandated by the Americans with Disabilities Act, the FCC becomes the sole arbitrator of disputes that deal with disabled people and their access to telecommunications. Broadcast stations are required to give access to disabled people, making any required physical changes to their facilities to allow disabled people to use the facilities. The act created the Architectural and Transportation Board to mediate disputes of this nature.

Market Entry Barriers

The FCC is required under the act to identify and eliminate barriers that prevent entrepreneurs and other small businesses from participating in the ownership of telecommunications services and information services or the provision of parts of those services. Every three years, the FCC is required to report to Congress on the outcome of their review of regulations that are to eliminate barriers, and they must recommend statutory remedies for those barriers.

Broadcast Spectrum Flexibility

The biggest news in television broadcasting is the change from the National Television Standards Committee (NTSC) television standard to digital television. The 1996 act gives existing television stations a timetable in which to convert their broadcast facilities to digital, and this timetable depends on the market size. The act also gives television stations another channel for their digital broadcasts until a certain percentage of their market purchases digital television receiving equipment. After that threshold is reached, the stations must give back their old analog channel. The old channel will then be used for other services, such as two-way communication and wireless phones.

One of the advantages of digital broadcasting for broadcasters is the ability to operate more than one service within the new channel. If the television station does not broadcast in high-definition television (HDTV), then that leaves spectrum for other, or ancillary, services. These ancillary services can take the form of other television programs, Internet access, or subscription services. The 1996 act allows stations to use these ancillary services; however, if they choose to use them, the act states that the stations must pay a user fee to the FCC for the use of the public spectrum for profitable services other than advertisements. This fee can amount to what the FCC could have collected had the agency charged a licensure fee for those services in the first place. This provision is being challenged by the broadcasting industry.

Broadcast Ownership

Depending on the size of the market that a broadcast group serves, the number of radio stations one group can own has greatly increased. Before, to ensure a "diversity of voices," broadcasters were severely limited in the number of stations that they could own. Under the 1996 act, this has changed. In large markets, an entity can own up to eight stations, so long as no more than five are of the same service (AM or FM). In medium markets, up to seven stations can be owned so long as no more than four are of the same service. In small markets, five stations can be owned so long as no more than three are of the same service. However, no entity can own more than 50 percent of the stations in any given market. In addition, the FCC may permit an entity to maintain interest in a broadcast station, so long as the station will increase the number of radio stations in operation in a market (as long as the new stations have the room in the spectrum to broadcast without interfering with an existing broadcaster). In other words, if an entity is in danger of exceeding the limits, it is in the entity's best interest to encourage another station to enter the market—if there is room in the spectrum.

Television Ownership Limitation

An entity can own as many television stations as it wants, so long as the total audience served does not exceed 35 percent of the national audience. Still to be resolved is whether or not the same entity can own more than one television station in a single market that is not among the top fifty markets. The one-to-a-market rule has been waived in the top fifty markets. The prohibition of cross-ownership of a television station and a cable system that serve the same market has been dropped.

Over-the-Air Reception Devices

The FCC has preempted local zoning regulations of satellite Earth stations. That means that local governments can no longer prohibit residents from putting up satellite dishes in their yards or on their houses.

Cable Reform

The act established so-called uniform rate structures that apply to cable systems that are not subject to competition from other cable, or wireless cable, systems. However, this structure does not apply to pay-per-view or subscription channels. It makes the FCC the arbitrator of complaints that deal with rate structure, declaring "predatory pricing" illegal. Predatory pricing is the offering of discounts on some aspects of cable service to entice potential customers from a competing cable company and then raising the rates after the customer has switched cable services. In franchise areas of fifty thousand subscribers or less, the basic service pricing rules do not apply. The act's cable reform also requires that cable equipment be compatible with televisions and video recorders that are owned by the consumer. Also, the equipment that makes the televisions and video recorders compatible should not interfere with features of other electronic equipment. One other aspect of the cable reform portion of the act permits cable franchises to pass aggregation of equipment costs along to subscribers to help pay for upgrades to the cable system—so long as people who subscribe to only the "basic tier" service are not charged for the equipment used to view that service. The cable box that is used by the viewer to navigate the cable channels can be purchased at vendors that are not affiliated with the cable company, so long as such devices have not been altered to allow the home viewer to watch subscription services without paying for that service.

The 1996 act also requires broadcasters and cable channels to include closed captioning for hearing-impaired viewers. The FCC will eventually require a separate video description channel, within the digital channels, for those viewers who are blind.

The most publicized television portion of the Telecommunications Act of 1996 deals with the "V-chip" requirements for manufacturers and broadcasters. The first part of the act required broadcasters and cable casters to place a rating in the upper left-hand corner of the television screen to alert the viewer about the content of each program. The V-chip, or violence chip, is to be included in the electronics of the set. Broadcasters and cable casters are required to send an encoded, invisible, and inaudible signal with the beginning of each program. This signal communicates with the V-chip and tells it what the program rating is. Parents can then program the television set to not display programs that have ratings beyond a preselected threshold. That way, absent parents can control what their children watch without being in the room. The V-chip is to be included in all sets that have a measurement of thirteen inches or larger.

Beyond broadcasting, the act gives the FCC exclusive jurisdiction to regulate the direct-to-home satellite industry. The FCC has given the direct-to-home satellite industry permission to rebroadcast local stations into television markets where before they were forbidden. The act also contains numerous changes in the regulation of the telephone industry. These changes are designed to allow greater competition among local telephone services, long-distance services, and cable services in providing their customers with Internet access and new kinds of digital voice and video transmission.

Conclusion

As with the Communications Act of 1934, the Telecommunications Act of 1996 was intended to be flexible, so that the FCC and other regulatory agencies can keep up with communications technology that changes every day. The Telecommunications Act of 1996 will allow consumers the freedom to choose the source of their entertainment and information, and it ensures that the broadcasting, cable, and satellite industries will remain viable and competitive well into the twenty-first century.

See also:Broadcasting, Government Regulation of; Communications Act of 1934; Federal Communications Commission; Ratings for Television Programs; Telecommunications, Wireless; V-Chip.

Bibliography

Aufderheide, Patricia. (1999). Communications Policy and the Public Interest: The Telecommunications Act of 1996. New York: Guilford.

Emeritz, Bob, ed. (1996). The Telecommunications Act of 1996: Law and Legislative History. Bethesda, MD: Pike & Fischer.

National League of Cities. (1996). The Telecommunications Act of 1996: What It Means to Local Governments. Washington, DC: National League of Cities.

Reams, Bernard D., and Manz, William H., eds. (1997). Federal Telecommunications Law: A Legislative History of the Telecommunications Act of 1996, 21 vols. Buffalo, NY: William S. Hein.

Eric E. Harlan