Media Regulation

The Problem with Calls for Social Media “Fairness”

by on September 6, 2018 · 0 comments

There has been an increasing outcry recently from conservatives that social media is conspiring to silence their voices.  Leading voices including President Donald Trump and Senator Ted Cruz have started calling for legislative or regulatory actions to correct this perceived “bias”. But these calls for fairness miss the importance of allowing such services to develop their own terms and for users to determine what services to use and the benefit that such services have been to conservatives.

Social media is becoming a part of our everyday lives and recent events have only increased our general awareness of this fact. More than half of American adults login to Facebook on a daily basis. As a result, some policymakers have argued that such sites are the new public square. In general, the First Amendment strictly limits what the government can do to limit speakers in public spaces and requires that such limits be applied equally to different points of view. At the same time, private entities are generally allowed to set terms regarding what speech may or may not be allowed on their own platforms.

The argument that modern day websites are the new public square and must maintain a neutral view point was recently rejected in a lawsuit between PraegerU and YouTube. Praeger believed that its conservative viewpoint was being silenced by YouTube decision to place many of its videos in “restricted mode.” In this case, the court found that YouTube was still acting as a private service rather than one filling a typical government role. Other cases have similarly asserted that Internet intermediaries have First Amendment rights to reject or limit ads or content as part of their own rights to speak or not speak. Conservatives have long been proponents of property rights, freedom of association, and free markets. But now, faced with platforms choosing to exercise their rights, rather than defend those values and compete in the market some “conservatives” are arguing for legislation or utilizing litigation to bully the marketplace of ideas into giving them a louder microphone. In fact, part of the purpose behind creating the liability immunity (known as Section 230) for such services was the principle that a variety of platforms would emerge with different standards and new and diverse communities could be created and evolve to serve different audiences.

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On cable operators’ junior varsity First Amendment rights

by on August 16, 2018 · 0 comments

For decades, cities, the FCC, and Congress have mandated that cable TV operators carry certain types of TV programming, including public access channels, local broadcast channels, local public television, and children’s programming. These carriage mandates have generated several First Amendment lawsuits but cable operators have generally lost. Cable operators have junior varsity First Amendment rights and the content they distribute is more regulated than, say, newspapers, Internet service providers, search engines, and Netflix. I submitted public interest comments (with JP Mohler) to the FCC this week explaining why cable operators would likely win today if they litigated these cable carriage regulations.

Regulations requiring newspapers, book publishers, or Internet service providers to carry the government’s preferred types of content are subject to strict scrutiny, which means such regulations typically don’t survive. However, cable is different, the Supreme Court held in the 1994 Turner case. The Supreme Court said regulations about what cable operators must carry are subject to intermediate–not strict–scrutiny because cable operators (in 1994) possessed about 95% of the subscription TV market and nearly every household had a single choice for subscription TV–their local cable monopoly. In the words of the Supreme Court, cable’s content regulations “are justified by the special characteristics of the cable medium: the bottleneck monopoly power exercised by cable operators.”

As a result, the FCC enforces “leased access” regulations that require cable operators to leave blank certain TV channels and give non-affiliated programmers a chance to use that channel capacity and gain viewership. Cable operators in the 1990s sued the FCC for enforcing these regulations in a 1996 case called Time Warner v. FCC. The DC Circuit relied on the 1994 Turner case and upheld the leased access rules.

Recently, however, the FCC asked whether First Amendment interests or TV competition requires giving these regulations another look. In our public interest comment, JP and I say that these rules have outlived their usefulness and cable operators would likely win a First Amendment lawsuit against the FCC today.

Two things have changed. First, cable operators have lost their “bottleneck monopoly power” that justified, in the eyes of the Supreme Court in 1994, giving cable operators weakened First Amendment protection.

Unlike in the 1990s, cable operators face significant competition in most local markets from satellite and telco TV providers. Over 99 percent of US households have at least three pay-TV options, and cable has lost over 15 million subscriber households since 2002. In 1997, when Turner II was decided, cable had over 90 percent of the pay-TV market. Cable operators’ market share has shrunk nearly every year since, and in 2015 cable had around 54 percent market share.

This competitive marketplace has stimulated massive investment and choice in TV programming. The typical household has access to far more channels than in the past. Independent researchers found that a typical US household in 1999 received about 50 TV channels. By 2014, the typical household received over 200 TV channels. In 2018, there will be an estimated 520 scripted TV series available, which is up nearly 50 percent from just five years ago.

This emergence of TV competition and its beneficial effects in programming and consumer choice undermines the justification for upholding cable content regulations like leased access.

Second, courts are more likely to view the Supreme Court’s Denver decision about leased access regulations in a new light.  In Denver, the Supreme Court divided into concurrences as to the proper First Amendment category of cable operators, and whether intermediate or strict scrutiny should apply to the leased access laws at issue. The “Marks test” is the test lower courts use for determining the holding of a Supreme Court decision where there is no majority supporting the rationale of any opinion. Viewed through the lens of the prevailing Marks test, cable operators are entitled to “bookstore owner” status for First Amendment purposes:

Given that four justices in Denver concur that one of the potential bases for deciding cable’s First Amendment status is the classification of cable operators as bookstores and three justices concur that this classification is the definitive justification for the judgment, the narrowest grounds for resolving the issue is simply this latter justification. Under the prevailing Marks test, then, lower courts will apply strict scrutiny to the leased access rules in light of the Denver decision.

For these reasons, and the need to conserve agency resources for more pressing matters, like rural broadband deployment and spectrum auctions, we encourage the FCC to discontinue these regulations.

You can read our public interest comment about the leased access regulations at the Mercatus Center website.

Leased Access Mandates Infringe on the First Amendment Rights of Cable Operators, and the FCC Should Decline to Enforce the Regulations

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The Week Facebook Became a Regulated Monopoly (and Achieved Its Greatest Victory in the Process)

by on April 10, 2018 · 1 comment

With Facebook CEO Mark Zuckerberg in town this week for a political flogging, you might think that this is darkest hour for the social networking giant. Facebook stands at a regulatory crossroads, to be sure. But allow me to offer a cynical take, and one based on history: Facebook is potentially poised to score its greatest victory ever as it begins the transition to regulated monopoly status, solidifying its market power, and limiting threats from new rivals.

By slowly capitulating to critics (both here and abroad) who are thirsty for massive regulation of the data-driven economy, Facebook is setting itself up as a servant of the state. In the name of satisfying some amorphous political “public interest” standard and fulfilling a variety of corporate responsibility objectives, Facebook will gradually allow itself to be converted into a sort of digital public utility or electronic essential facility.

That sounds like trouble for the firm until you realize that Facebook is one of the few companies who will be able to sacrifice a pound of flesh like that and remain alive. As layers of new regulatory obligations are applied, barriers to new innovations will become formidable obstacles to the very competitors that the public so desperately needs right now to offer us better alternatives. Gradually, Facebook will recognize this and go along with the regulatory schemes. And then eventually they will become the biggest defender of all of it.

Welcome to Facebook’s broadcast industry moment. The firm is essentially in the same position the broadcast sector was about a century ago when it started cozying up to federal lawmakers. Over time, broadcasters would warmly embrace an expansive licensing regime that would allow all parties—regulatory advocates, academics, lawmakers, bureaucrats, and even the broadcasters themselves—to play out the fairy tale that broadcasters would be good “public stewards” of the “public airwaves” to serve the “public interest.”

Alas, the actual listening and viewing public got royally shafted in this deal. Continue reading →

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Why the FCC silence on NBC license challenges? Other priorities, and it’s not up to them.

by on October 16, 2017 · 0 comments

Broadcast license renewal challenges have troubled libertarians and free speech advocates for decades. Despite our efforts (and our law journal articles on the abuse of the licensing process), license challenges are legal. In fact, political parties, prior FCCs, and activist groups have encouraged license challenges based on TV content to ensure broadcasters are operating in “the public interest.” Further, courts have compelled and will compel a reluctant FCC to investigate “news distortion” and other violations of FCC broadcast rules. It’s a troubling state of affairs that has been pushed back into relevancy because FCC license challenges are in the news.

In recent years the FCC, whether led by Democrats or Republicans, has preferred to avoid tricky questions surrounding license renewals. Chairman Pai, like most recent FCC chairs, has been an outspoken defender of First Amendment protections and norms. He opposed, for instance, the Obama FCC’s attempt to survey broadcast newsrooms about their coverage. He also penned an op-ed bringing attention to the fact that federal NSF funding was being used by left-leaning researchers to monitor and combat “misinformation and propaganda” on social media.

The silence of the Republican commissioners today about license renewals is likely primarily because they have higher priorities (like broadband deployment and freeing up spectrum) than intervening in the competitive media marketplace. But second, and less understood, is because whether to investigate a news station isn’t really up to them. Courts can overrule them and compel an investigation.

Political actors have used FCC licensing procedures for decades to silence political opponents and unfavorable media. For reasons I won’t explore here, TV and radio broadcasters have diminished First Amendment rights and the public is permitted to challenge their licenses at renewal time.

So, progressive “citizens groups” even in recent years have challenged license renewals for broadcasters for “one-sided programming.” Unfortunately, it works. For instance, in 2004 the promises of multi-year renewal challenges from outside groups and the risk of payback from a Democrat FCC forced broadcast stations to trim a documentary critical of John Kerry from 40 minutes to 4 minutes. And, unlike their cable counterparts, broadcasters censor nude scenes in TV and movies because even a Janet Jackson Superbowl scenario can lead to expensive license challenges.

These troubling licensing procedures and pressure points were largely unknown to most people, but, on October 11, President Trump tweeted:

“With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!”

So why hasn’t the FCC said they won’t investigate NBC and other broadcast station owners? It may be because courts can compel the FCC to investigate “news distortion.”

This is exactly what happened to the Clinton FCC. As Melody Calkins and I wrote in August about the FCC’s news distortion rule:

Though uncodified and not strictly enforced, the rule was reiterated in the FCC’s 2008 broadcast guidelines. The outline of the rule was laid out in the 1998 case Serafyn v. CBS, involving a complaint by a Ukrainian-American who alleged that the “60 Minutes” news program had unfairly edited interviews to portray Ukrainians as backwards and anti-Semitic. The FCC dismissed the complaint but DC Circuit Court reversed that dismissal and required FCC intervention. (CBS settled and the complaint was dropped before the FCC could intervene.)

The commissioners might personally wish broadcasters had full First Amendment protections and want to dismiss all challenges but current law permits and encourages license challenges. The commission can be compelled to act because of the sins of omission of prior FCCs: deciding to retain the news distortion rule and other antiquated “public interest” regulations for broadcasters. The existence of these old media rules mean the FCC’s hands are tied.

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Modernizing US Media Regulations: Our FCC Comments

by on August 15, 2017 · 0 comments

By Brent Skorup and Melody Calkins

Recently, the FCC sought comments for its Media Modernization Initiative in its effort to “eliminate or modify [media] regulations that are outdated, unnecessary, or unduly burdensome.” The regulatory thicket for TV distribution has long encumbered broadcast and cable providers. These rules encourage large, homogeneous cable TV bundles and burden cable and satellite operators with high compliance costs. (See the complex web of TV regulations at the Media Metrics website.)

One reason “skinny bundles” from online video providers and cable operators are attracting consumers is that online video circumvents the FCC’s Rube Goldberg-like system altogether. The FCC should end its 50-year experiment with TV regulation, which, among other things, has raised the cost of TV and degraded the First Amendment rights of media outlets.

The proposal to eliminate legacy media rules garnered a considerable amount of support from a wide range of commenters. In our filed reply comments, we identify four regulatory rules ripe for removal:

  • News distortion. This uncodified, under-the-radar rule allows the commission to revoke a broadcasters’ license if the FCC finds that a broadcaster deliberately engages in “news distortion, staging, or slanting.” The rule traces back to the FCC’s longstanding position that it can revoke licenses from broadcast stations if programming is not “in the public interest.”

    Though uncodified and not strictly enforced, the rule was reiterated in the FCC’s 2008 broadcast guidelines. The outline of the rule was laid out in the 1998 case Serafyn v. CBS, involving a complaint by a Ukrainian-American who alleged that the “60 Minutes” news program had unfairly edited interviews to portray Ukrainians as backwards and anti-Semitic. The FCC dismissed the complaint but DC Circuit Court reversed that dismissal and required FCC intervention. (CBS settled and the complaint was dropped before the FCC could intervene.)

    “Slanted” and distorted news can be found in (unregulated) cable news, newspapers, Twitter, and YouTube. The news distortion rule should be repealed and broadcasters should have regulatory parity (and their full First Amendment rights) restored.

  • Must-carry. The rule requires cable operators to distribute the programming of local broadcast stations at broadcasters’ request. (Stations carrying relatively low-value broadcast networks seek carriage via must-carry. Stations carrying popular networks like CBS and NBC can negotiate payment from cable operators via “retransmission consent” agreements.) Must-carry was narrowly sustained by the Supreme Court in 1994 against a First Amendment challenge, on the grounds that cable operators had monopoly power in the pay-TV market. Since then, however, cable’s market share shrank from 95% to 53%. Broadcast stations have far more options for distribution, including satellite TV, telco TV, and online distribution and it’s unlikely the rules would survive a First Amendment challenge today.

  • Network nonduplication and syndicated exclusivity. These rules limit how and when broadcast programming can be distributed and allow the FCC to intervene if a cable operator breaches a contract with a broadcast station. But the (exempted) distribution of hundreds of non-broadcast channels (e.g., CNN, MTV, ESPN) show that programmers and distributors are fully capable of forming private negotiations without FCC oversight. These rules simply make licensing negotiations more difficult and invite FCC intervention.

Finally, we identify retransmission consent regulations and compulsory licenses for repeal. Because “retrans” interacts with copyright matters outside of the FCC’s jurisdiction, we encourage the FCC work with the Copyright Office in advising Congress to repeal these statutes. Cable operators dislike the retrans framework and broadcasters dislike being compelled to license programming at regulated rates. These interventions simply aren’t needed (hundreds of cable and online-only TV channels operate outside of this framework) and neither the FCC nor the Copyright Office particularly likes being the referees in these fights. The FCC should break the stalemate and approach the Copyright Office about advocating for direct licensing of broadcast TV content.

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Title II, Broadcast Regulation, and the First Amendment

by on October 27, 2016 · 0 comments

Title II allows the FCC to determine what content and media Internet access providers must transmit on their own private networks, so the First Amendment has constantly dogged the FCC’s “net neutrality” proceedings. If the Supreme Court agrees to take up an appeal from the DC Circuit Court of Appeals, which rejected a First Amendment challenge this summer, it will likely be because of Title II’s First Amendment deficiencies.

Title II has always been about handicapping ISPs qua speakers and preventing ISPs from offering curated Internet content. As former FCC commissioner Copps said, absent the Title II rules, “a big cable company could block access to an investigative report about its less-than-stellar customer service.” Tim Wu told members of Congress that net neutrality was intended to prevent ISPs from favoring, say, particular news sources or sports teams.

But just as a cable company chooses to offer some channels and not others, and a search engine chooses to promote some pages and not others, choosing to offer a curated Internet to, say, children, religious families, or sports fans involves editorial decisions. As communications scholar Stuart Benjamin said about Title II’s problem, under current precedent, ISPs “can say they want to engage in substantive editing, and that’s enough for First Amendment purposes.”

Title II – Bringing Broadcast Regulation to the Internet

Title II regulation of the Internet is frequently compared to the Fairness Doctrine, which activists used for decades to drive conservatives out of broadcast radio and TV. As a pro-net neutrality media professor explained in The Atlantic last year, the motivation for the Fairness Doctrine and Title II Internet regulation is the same: to “rescue a potentially democratic medium from commercial capture.” This is why there is almost perfect overlap between the organizations and advocates who support the Fairness Doctrine and those who lobbied for Title II regulation of the Internet. Continue reading →

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Why is the FCC Doubling Down on Regulating the TV Industry and Set Top Boxes?

by on September 21, 2016 · 2 comments

The FCC appears to be dragging the TV industry, which is increasingly app- and Internet-based, into years of rulemakings, unnecessary standards development and oversight, and drawn-out lawsuits. The FCC hasn’t made a final decision but the general outline is pretty clear. The FCC wants to use a 20 year-old piece of corporate welfare, calculated to help a now-dead electronics retailer, as authority to regulate today’s TV apps and their licensing terms. Perhaps they’ll succeed in expanding their authority over set top boxes and TV apps. But as TV is being revolutionized by the Internet the legacy providers are trying to stay ahead of the new players (Netflix, Amazon, Layer 3), regulating TV apps and boxes will likely impede the competitive process and distract the FCC from more pressing matters, like spectrum and infrastructure. Continue reading →

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No, the Telecom Act didn’t destroy phone and TV competition

by on August 16, 2016 · 2 comments

I came across an article last week in the AV Club that caught my eye. The title is: “The Telecommunications Act of 1996 gave us shitty cell service, expensive cable.” The Telecom Act is the largest update to the regulatory framework set up in the 1934 Communications Act. The basic thrust of the Act was to update the telephone laws because the AT&T long-distance monopoly had been broken up for a decade. The AV Club is not a policy publication but it does feature serious reporting on media. This analysis of the Telecom Act and its effects, however, omits or obfuscates important information about dynamics in media since the 1990s.

The AV Club article offers an illustrative collection of left-of-center critiques of the Telecom Act. Similar to Glass-Steagall  repeal or Citizens United, many on the left are apparently citing the Telecom Act as a kind of shorthand for deregulatory ideology run amuck. And like Glass-Steagall repeal and Citizens United, most of the critics fundamentally misstate the effects and purposes of the law. Inexplicably, the AV Club article relies heavily on a Common Cause white paper from 2005. Now, Common Cause typically does careful work but the paper is hopelessly outdated today. Eleven years ago Netflix was a small DVD-by-mail service. There was no 4G LTE (2010). No iPhone or Google Android (2007). And no Pandora, IPTV, and a dozen other technologies and services that have revolutionized communications and media. None of the competitive churn since 2005, outlined below, is even hinted at in the AV Club piece. The actual data undermine the dire diagnoses about the state of communications and media from the various critics cited in the piece.  Continue reading →

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New Article at Harvard JLPP: The FCC’s Transaction Reviews May Violate the First Amendment

by on June 8, 2016 · 0 comments

The FCC’s transaction reviews have received substantial scholarly criticism lately. The FCC has increasingly used its license transaction reviews as an opportunity to engage in ad hoc merger reviews that substitute for formal rulemaking. FCC transaction conditions since 2000 have ranged from requiring AOL-Time Warner to make future instant messaging services interoperable, to price controls for broadband for low-income families, to mandating merging parties to donate $1 million to public safety initiatives.

In the last few months alone,

  • Randy May and Seth Cooper of the Free State Foundation wrote a piece that the transaction reviews contravene rule of law norms.
  • T. Randolph Beard et al. at the Phoenix Center published a research paper about how the FCC’s informal bargaining during mergers has become much more active and politically motivated in recent years.
  • Derek Bambauer, law professor at the University of Arizona, published a law review article that criticized the use of informal agency actions to pressure companies to act in certain ways. These secretive pressures “cloak what is in reality state action in the guise of private choice.”

This week, in the Harvard Journal of Law and Public Policy, my colleague Christopher Koopman and I added to this recent scholarship on the FCC’s controversial transaction reviews. Continue reading →

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Cable set top boxes are a distraction. The FCC is regulating apps.

by on April 15, 2016 · 0 comments

For decades Congress has gradually deregulated communications and media. This poses a significant threat to the FCC’s jurisdiction because it is the primary regulator of communications and media. The current FCC, exhibiting alarming mission creep, has started importing its legacy regulations to the online world, like Title II common carrier regulations for Internet providers. The FCC’s recent proposal to “open up” TV set top boxes is consistent with the FCC’s reinvention as the US Internet regulator, and now the White House has supported that push.

There are a lot of issues with the set top box proposal but I’ll highlight a few. I really don’t even like referring to it as “the set top box proposal” because the proposal is really aimed at the future of TV–video viewing via apps and connected devices. STBs are a sideshow and mostly just provide the FCC a statutory hook to regulate TV apps. Even that “hook” is dubious–the FCC arbitrarily classifies apps and software as “navigation devices” but concludes that actual TV devices like Chromecast, Roku, smartphones, and tablets aren’t navigation devices. And, despite what activists say, this isn’t about “cable” either but all TV distributors (“MVPDs”) like satellite and telephone companies and Google Fiber, most of whom are small TV players. Continue reading →

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