My new article on “FCC v. Fox and the Future of the First Amendment” has just been published in the February 2009 edition of Engage, the journal of the Federalist Society. Here’s how it begins:
On November 4th, 2008, the Supreme Court heard oral arguments in the potentially historic free speech case of Federal Communications Commission v. Fox Television Stations, Inc. This case, which originated in the Second Circuit Court of Appeals, deals with the FCC’s new policy for “fleeting expletives” on broadcast television. The FCC lost and appealed to the Supreme Court. By contrast, the so-called “Janet Jackson case” — CBS v. FCC — was heard in the Third Circuit Court of Appeals. The FCC also lost that case and has also petitioned the Supreme Court to review the lower court’s ruling.
These two cases reflect an old and odd tension in American media policy and First Amendment jurisprudence. Words and images presented over one medium-in this case broadcast television-are regulated differently than when transmitted through any other media platform (such as newspapers, cable TV, DVDs, or the Internet). Various rationales have been put forward in support of this asymmetrical regulatory standard. Those rationales have always been weak, however. Worse yet, they have opened the door to an array of other regulatory shenanigans, such as the so-called Fairness Doctrine, and many other media marketplace restrictions.
Whatever sense this arrangement made in the past, technological and marketplace developments are now calling into question the wisdom and efficacy of the traditional broadcast industry regulatory paradigm. This article will explore both the old and new rationales for differential First Amendment treatment of broadcast television and radio operators and conclude that those rationales: (1) have never been justified, and (2) cannot, and should not, survive in our new era of media abundance and technological convergence.
I go on in the piece to make the case against the those rationales and the call for the Supreme Court to use the
Fox and CBS cases to end this historical First Amendment anomaly of differential treatment of broadcast platforms relative to all other media providers.
This article can be downloaded as a PDF here, or viewed down below the fold in the Scribd reader.
Continue reading →
The WSJ reports on the intensifying economic pressure on local TV stations: declining viewership, ad revenue and the threat that national networks might go straight to cable.
Many stations are looking to the Internet for salvation:
Stations are scrambling to find new revenue streams. Some are testing out technology that will send their signals to cellphones and mobile devices, and beefing up their Web sites to boost online advertising. Others say rather than shrinking local news coverage, they’re expanding it, since it’s the only original content they still have…. Nexstar Broadcasting Group Inc., a Texas-based company that owns or manages 51 stations around the country, launched highly local “community” Web sites. Stations owned by NBC Universal are piping content and ads to TV screens in supermarkets, taxi cabs and their own Web sites.
“These tough times really force you to look at everything,” says John Wallace, president of NBC Local Media, the cadre of stations owned by NBC. “It remains to be seen how this is going to evolve, but I do believe there will be a market for local television well into the future.”
As I am getting ready to watch the Super Bowl tonight on my amazing 100-inch screen via a Sanyo high-def projector that only cost me $1,600 bucks on eBay, I started thinking back about how much things have evolved (technologically-speaking) over just the past decade. I thought to myself, what sort of technology did I have at my disposal exactly 10 years ago today, on February 1st, 1999? Here’s the miserable snapshot I came up with:
- 10 years ago today, I did not own a high-definition television set, as they were too expensive (I bought my first one from Sears on an installment plan a few months later. It was a boxy 42-inch, 4×3 monstrosity that rolled around on the floor on casters and it took up half the room). Moreover, only a few HDTV signals could be picked up locally and none were yet available from my cable or satellite provider.
- 10 years ago today, the biggest television in my house was a 32-inch 4×3 ProScan analog set, which I thought was massive. (Of course, it was in terms of weight. It was over 125 lbs).
- 10 years ago today, I was still using a dial-up, 56k narrowband Internet connection even though I lived in downtown Washington, DC just 6 blocks from our nation’s Capitol.
- 10 years ago today, my computer was a Compaq laptop that weighed more than my dog, had barely any storage or RAM, and had a screen that was only slightly brighter than an Etch-A-Sketch.
- 10 years ago today, I was still occasionally using an old CompuServe e-mail address that had nine digits in it. (But at least I wasn’t one of the 20 million or so people paying $20 bucks per month to graze around inside AOL’s walled garden!)
- 10 years ago today, I was still backing up files on 3 1/2 inch floppy disks. I had boxes full of those things. (And, sadly, I still had 5 1/4 inch floppies in my possession that I was saving “just in case” I ever needed those old files. Pathetic!)
Continue reading →
This ongoing series has focused on the growing substitutability of Internet-delivered video for traditional video distribution channels like cable and satellite. YouTube has recently begun exploring adding traditional television programming to its staggering catalogue of mostly amateur-generated content.
But now YouTube is going one step farther by exploring the possibility of signing Hollywood professionals to produce “straight-to-YouTube” content:
The deal would underscore the ways that distribution models are evolving on the Internet. Already, some actors and other celebrities are creating their own content for the Web, bypassing the often arduous process of developing a program for a television network. The YouTube deal would give William Morris clients an ownership stake in the videos they create for the Web site.
This kind of deal would make Internet video even more of a substitute for traditional subscription channels—thus further eroding the existing rationale for regulating those channels.
But what’s even most interesting about this development is that YouTube’s interest seems to be driven primarily by the possibility of reaping greater advertising revenues on such professional content than on its currently reaps from its vast, but relatively unprofitable, catalogue of user-generated content:
YouTube’s audience is enormous; the measurement firm comScore reported that 100 million viewers in the United States visited the site in October. But, in part because of copyright concerns, the site does not place ads on or next to user-uploaded videos. As a result, it makes money from only a fraction of the videos on the site — the ones that are posted by its partners, including media companies like CBS and Universal Music.
The company has shown interest in becoming a home for premium video in recent months by upgrading its video player and adding full-length episodes of television shows. But some major television networks and other media companies are still hesitant about showing their content on the site. The Warner Music Group’s videos were removed from the site last month in a dispute over pay for its content.
Digital video recorders (DVRs) may turn out to be the “last gasp” of cable, satellite and other traditional multichannel subscription video providers. If users can get the same basic functionality (on demand viewing of the shows they want) over the Internet for free or paying for each show rather than a hefty monthly subscription, Who Needs a DVR?, as Nick Wingfield at the WSJ asks:
Among a more narrow band of viewers -– 18- to 34-year-olds -– SRG found that 70% have watched TV online in the past. In contrast, only 36% of that group had watched a show on a TiVo or some other DVR at any time in the past.
That last figure is a fairly remarkable statistic. Remember that DVRs have the advantage of playing video back on a device where the vast majority of television consumption has traditionally occurred –- that is, the TV set. Although it’s also possible to watch shows over the Internet on a TV set through a device like Apple TV and Microsoft’s Xbox 360, most people watch online TV shows through their computers — which have inherent disadvantages, like smaller screens and, in most cases, no remote controls.
Indeed, if users are going to buy a piece of hardware, why buy a DVR when they can buy a Roku box or a game console like the XBox 360 that will put Internet-delivered TV on their programming on their “television” (a term that increasingly simply means the biggest LCD in the house, or the one that faces a couch instead of an office chair)—
and save money?
This is precisely the point Adam Thierer and I have been hammering away at in this ongoing series. The availability of TV through the Internet and the ease with which consumers can display that content on a device, and at a time, of their choosing are quickly breaking down the old “gatekeeper” or “bottleneck” power of cable. Let’s see how long it takes Congress and the FCC to realize that the system of cable regulation created in the analog 1990s no longer makes sense in this truly digital age.
This is just a listing of the installments of my ongoing “Media Deconsolidation Series.” I needed to create a single repository of all the essays so I could point back to them in future articles and papers. For those not familiar with it, this series represents an effort to set the record straight regarding the many myths surrounding the media marketplace. These myths are usually propagated by a group of radical anti-media regulatory activists who I call the “media reformistas.” Sadly, however, many policymakers, journalists, and members of the public are buying into some of these myths, too.
In particular, I have spent much time here debunking the notion that rampant consolidation is taking place and that media operators are only growing larger and devouring more and more companies. In fact, nothing could be further from the truth. Over the past several years, traditional media operators and sectors have been coming apart at the seams in the face of unprecedented innovation and competition. The volume of divestiture activity has been quite intense, and most traditional media operators have been getting smaller, not bigger. As a result, America’s media marketplace is growing more fragmented and atomistic with each passing day.
Anyway, here’s the series so far…
Continue reading →
Ken Ferree and I just filed an amicus brief with the D.C. Circuit in what could be among the most important First Amendment cases involving economic regulation in years: Comcast’s challenge to the FCC’s cap on the maximum size of a cable operator’s nationwide subscriber-audience. While few may feel righteous indignation at limitations targeted at large corporations such as Comcast or Time Warner, the larger principle at stake here is deeply important: Will the First Amendment provide a meaningful check on what USC law professor Chris Yoo has called “architectural censorship” (i.e., so-called “structural” regulations that “have the unintended consequence of reducing the quantity, quality, and diversity of media content”).
In a nutshell, we argue that that:
- The provisions of the 1992 Cable Act authorizing the FCC to impose a “cable cap” are outdated in world of media abundance and vibrant platform competition.
- Because cable is no longer the unique “bottleneck” or “gatekeeper” that it was in 1992, these statutory provisions (not just the FCC’s 30% rule) must be subject to strict scrutiny under the First Amendment as a limitation on free speech.
- Because there are “less restrictive means” of ensuring cable operators do not impede the flow of video programming to consumers, the court should strike down these provisions.
- Even if the court upholds the statute, it should nonetheless strike down the cap issued by the FCC in December 2007 (30% of all Multichannel Video Programming (MVPD) subscribers as based on an outdated model of the video marketplace.
I encourage you to read our brief (below). I’ve provided a summary below, along with some additional commentary we just couldn’t cover under our 3500 word limit.
Strict Scrutiny. Yoo’s article Architectural Censorship and the FCC is essential reading for anyone who believes that government regulations on the size and shape of the “soapbox” can have huge effects on speech itself. Yoo argues that the First Amendment should check this kind of regulation–however “content-neutral” it might seem–under “strict scrutiny”, which requires that the government show that a regulation is the “least restrictive means” available for advancing a “compelling government interest.” But Yoo ultimately concludes (pp. 713-718, PDF pp. 45-50) that, under existing precedent, most “architectural censorship will be effectively insulated from meaningful judicial review.” Continue reading →
George Will’s weekly Washington Post column focuses on the Fairness Doctrine and calls out those on the Left who would support its reinstatement:
Because liberals have been even less successful in competing with conservatives on talk radio than Detroit has been in competing with its rivals, liberals are seeking intellectual protectionism in the form of regulations that suppress ideological rivals. If liberals advertise their illiberalism by reimposing the fairness doctrine, the Supreme Court might revisit its 1969 ruling that the fairness doctrine is constitutional. The court probably would dismay reactionary liberals by reversing that decision on the ground that the world has changed vastly, pertinently and for the better.
Mr. Will was kind enough to cite my new book with Brian Anderson, A Manifesto for Media Freedom [more info here] on the explosion of media outlets and options since the Supreme Court’s disastrous 1969 Red Lion decision, which blessed the Fairness Doctrine. Some of those stats: today there are about 14,000 radio stations, twice as many as in 1969; 18.9 million subscribers to satellite radio, up 17 percent in 12 months; and that 86 percent of households with either cable or satellite television receive an average of 102 of the 500 available channels.
No need to be putting the “Unfairness Doctrine” back on the books with unprecedented abundance like that.
Last night, I appeared on the Jim Bohannon radio show for 30 minutes and discussed the past, present, and future of the Fairness Doctrine and broadcast industry regulation in general. More specifically, we got into efforts to drive Fairness Doctrine-like regulations back on the books via backdoor efforts like “localism” mandates, community oversight boards, and other public interest requirements. These are issues that Brian Anderson and I discuss in our new book, A Manifesto for Media Freedom, which I blogged about here when it was released in October.
If you’re interested, you can listen to the entire show by clicking here.
There’s news today that the Department of Justice (DOJ) is imposing fines on three leading electronics manufacturers — LG Display Co. Ltd., Sharp Corp. and Chunghwa Picture Tubes Ltd. — “for their roles in conspiracies to fix prices in the sale of liquid crystal display (LCD) panels.” According to the DOJ’s press release, of the $585 million in fines, LG will pay $400 million, the second highest criminal fine ever imposed by the DOJ’s Antitrust Division.
Regardless of the merits of the DOJ’s case, I have to ask: Has there ever been a worse attempt at fixing prices in the entire history of price fixing? After all, have you looked at flat-screen prices lately? They do nothing but fall, fall, fall — fast! Here are some numbers from Steve Lohr’s New York Times article about the DOJ case:
The LCD business is a $100-billion-a-year market and growing, but prices are falling relentlessly. Recently, panel prices have often been cut in half each year, a downward trajectory even steeper than in other technology markets known for steady price pressure, like those for computer chips and hard drives. In the last six months alone, the price of a 15.4-inch panel for a notebook PC has dropped to $63, from $97, and a 32-inch LCD for a television has gone to $223, from $321, according to iSuppli, a market research firm. The price-fixing conspiracy, industry analysts said, was an effort to slow the speed of price declines. “These companies were trying to get a toehold to protect profits in a very difficult market,” said Richard Doherty, director of research at Envisioneering, a technology consulting firm.
Yeah, well, that “toehold” didn’t protect squat. And how could it; it’s not like these are the only three companies in the LCD business. And you’ll forgive those of us who only have plasmas or projectors in our homes for wondering what the big deal is (although I am certainly aware that LCDs are the primary technology for smaller flat screen displays in computer monitors, cell phones, and other handhelds).
But hey, I’m sure the DOJ’s effort was worth it at some level. Some lucky handful of consumers will probably get a check for 65 cents once the class action dust settles on this one. In the meantime, if there is some sort of Antitrust Hall of Fame out there, I hearby nominate LG, Sharp, and Chunghwa for the “Worst Price Fixers in History” award.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.