The Telecommunications Act Worsened the Situation

Date: 25 Feb 1997 | posted in: From the Desk of David Morris, The Public Good | 0 Facebooktwitterredditmail

The Telecommunications Act Worsened the Situation

by David Morris

February 25, 1997 – published in St. Paul Pioneer Press

A year ago the Telecommunications Act of 1996 became law. At the signing ceremony President Clinton promised the American people the Act would spur competition and give consumers “the benefits of lower prices, better quality and greater choices in their telephone and cable systems.” Lawmakers of both political parties cited a widely-circulated industry study that promised the bill would add 3.6 million new jobs by 2003 and save customers a staggering $63 billion a year.

“(T)he best overall blueprint that any country in the world has ever come up with”, boasted Rep. Edward Markey (D-Mass).

Never have so many been proven so wrong so quickly. In the last twelve months the telecommunications industry has laid off thousands of workers. Monthly rates for cable TV have climbed at more than twice the rate of inflation. Long-distance phone rates are up. Local rates are rising.

Competition is down. Concentration is up. And far from providing better quality services, the owners of the broadcast media have begun to eliminate even the few efforts they had made in that direction. CSPAN, the 24 hour public affairs channels has been either cut or eliminated from some 9 million homes, a direct result, the head of CSPAN told the National Press Club of the “fabulous Telecommunications Act”.

None of this should have been unexpected. The Act promised competition but virtually guaranteed concentration. It removed all limitations on the number of radio stations one company can own nationally and allowed one company to own up to 8 stations in each community. It relaxed the rules regarding how many TV stations one company can operate and permitted common ownership of cable TV systems and broadcast networks. It ended all rate regulations of smaller cable TV systems and promised the same for larger ones later on. It extended the license term of TV and radio stations to 8 years from 4.

An orgy of consolidation predictably ensued. Westinghouse/CBS bought Infinity Broadcasting for $4.9 billion and became the dominant power in the nationÕs top 10 radio markets. Time Warner Inc and Turner Broadcasting merged in a $6.7 billion deal that created the worldÕs largest media company Nynex bought Bell Atlantic for $22.1 billion. SBC and Pacific Telesis joined forces in a $16.7 billion merger. US West paid $10.8 billion for Continental cablevision, the third largest cable operator in the US.

Today no new entry into cable programming can be successful nationally without the acceptance of both Time Warner and TeleCommunications Inc.(TCI) because together they control access to almost half of all the cable subscribers in the U.S.

Concentrated power has become such a clear and present danger that the Justice Department has been forced to step in. Last October it exercised its anti-trust powers and ordered American Radio Systems Corporation to cut in half the number of stations it owns in Rochester, New York to reduce its stranglehold on that city’s radio advertising revenues.

The new law not only concentrates private power; it drastically restricts public authority. Both Democrats and Republicans love to talk about their passion for shifting power from Washington to states and towns. But the reality is that the Telecommunications Act move us in the opposite direction. In what may constitute an unprecedented usurpation of power by the federal government, the Act specifically directs the Federal Communications Commission(FCC) to preempt local and state authority even when that authority is being used to regulate only intrastate service.

The FCC has already exercised its new powers by overturning franchise related decisions of two small Kansas cities and the state of Connecticut. The industry is demanding further efforts by the FCC and the courts to curtail local authority. TCI is challenging the right of cities to charge additional franchise fees for cable stations that provide phone or other services. US West is challenging the right of Minnesota cities to use their zoning authority in the communications area. The Cellular Telecommunications Industry Association has asked the FCC to preempt local authority over the siting of cellular towers.

This is a sorry state of affairs. A broad bipartisan effort at the national level has aided and abetted an unprecedented concentration of absentee ownership and private power in a sector vital to the maintenance of a healthy democracy while undermining the capacity of communities to manage their own affairs.

The rhetoric of competition has masked a policy to promote concentration. The rhetoric of devolution has masked a policy to preempt local authority. This is politics at its worst. No wonder Americans are so cynical about big government and big business.

David Morris is vice-president of the Institute for Local Self-Reliance

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David Morris is co-founder of the Institute for Local Self-Reliance and currently ILSR's distinguished fellow. His five non-fiction books range from an analysis of Chilean development to the future of electric power to the transformation of cities and neighborhoods.  For 14 years he was a regular columnist for the Saint Paul Pioneer Press. His essays on public policy have appeared in the New York TimesWall Street Journal, Washington PostSalonAlternetCommon Dreams, and the Huffington Post.