roundtable: Ralph Nader on telecom leg - concentration of ownership
roundtable: Ralph Nader on telecom leg - concentration of ownership
Ralph Nader on telecom leg - concentration of ownership
James Love (love@Essential.ORG)
Sat, 15 Jul 1995 16:41:10 -0400 (EDT)
Date: Sat, 15 Jul 1995 16:41:10 -0400 (EDT)
From: James Love <love@Essential.ORG>
To: roundtable <roundtable@cni.org>,
Subject: Ralph Nader on telecom leg - concentration of ownership
Message-Id: <Pine.SUN.3.91.950715164029.13392F-100000@essential.essential.org>
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TAXPAYER ASSETS PROJECT - INFORMATION POLICY NOTE
July 15, 1995
- Letter by Ralph Nader and others details impact of pending
telecommunications legislation on media concentration. For
more information, contact James Love (202/387-8030;
love@tap.org) The letter follows:
--------------------------------------------
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 14, 1995
re: Federal Telecommunications Legislation - Impact on Media
Concentration
Dear Editor:
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:
- allow one entity to own more television stations, by
eliminating all nationwide numeric restrictions on the
number of stations owned by a single entity, and raising the
national "audience cap" for a single entity from 25 percent
to 35 percent;
- eliminate all FCC rules on the number of AM and FM radio
stations in the same geographic market or nationally which
can be owned by a single entity, allowing one entity to own
every AM and FM radio station in the United States*;
- allow telephone companies to enter electronic publishing;
and
- relax the current ban on cross-ownership of telephone and
cable systems. Telephone companies will be allowed to
purchase outright cable systems that have fewer than 20,000
subscribers, or in places with fewer than 50,000
inhabitants. Because about 36 percent of all cable
subscribers are served by systems with fewer than 20,000
subscribers, and 37 percent of the U.S. population lives in
"places" with fewer than 50,000 inhabitants, the total
effect of the relaxation of the current cross-ownership ban
will be significant.**
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:
- eliminate all nationwide numeric restrictions on the number
of broadcast television stations owned by a single entity,
and raise the national "audience cap" for a single entity
from 25 percent to 50 percent (within one year and one day);
- eliminate the current ban on cross-ownership of VHF and UHF
stations in the same market, and give the FCC authority to
allow joint ownership of two VHF stations in the same
market;
- eliminate all FCC rules on the number of AM and FM radio
stations in the same geographic market or nationally which
can be owned by a single entity, allowing one entity to own
every AM and FM radio station in the United States*;
- lift the current FCC ban on joint ownership of a broadcast
radio or TV license and a newspaper in the same market;
- overturn the current statutory provisions which have the
effect of prohibiting telephone companies from purchasing
and operating TV stations;***
- explicitly prohibit the FCC from adopting any rules which
prohibit any non-broadcasting entity from obtaining a
broadcast license or network of broadcast licenses;***
- allow telephone companies to enter electronic publishing;
and
- relax the current ban on telephone and cable mergers,
through a series of exemptions for "rural" areas, systems in
franchise areas with fewer than 50,000 inhabitants, or
systems owned by small operators in smaller markets. As
noted above, these exemptions, taken together, are likely to
cover a large portion of the population, leading to many
"one wire" communities.
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, in the Senate, S. 652 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 (love@tap.org)
if you have any questions about these materials. Thank you for
your attention to this important issue.
Sincerely,
Ralph Nader James Love, Director
Consumer Project on Technology
Andrew Saindon, Research Associate
Consumer Project on Technology
Notes:
* 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."
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