5

Communication Policy & Technology

Lon Berquist, M.A.*

Throughout its history, U.S. communication policy has been shaped by evolving communication technologies. As a new communication technology is introduced into society, it is often preceded by an idealized vision, or Blue Sky perspective, of how the technology will positively impact economic opportunities, democratic participation, and social inclusion. Due, in part, to this perspective, government policy makers traditionally look for policies and regulations that will foster the wide diffusion of the emerging technology. At the same time, however, U.S. policy typically displays a light regulatory touch, promoting a free-market approach that attempts to balance the economic interests of media and communication industries, the First Amendment, and the rights of citizens.

Indeed, much of the recent impetus for media deregulation was directly related to communication technologies as “technological plenty is forcing a widespread reconsideration of the role competition can play in broadcast regulation” (Fowler & Brenner, 1982, p. 209). From a theoretical perspective, some see new communication technologies as technologies of freedom where “freedom is fostered when the means of communication are dispersed, decentralized, and easily available” (Pool, 1983, p. 5). Others fear technologies favor government and private interests and become technologies of control (Gandy, 1989). Still others argue that technologies are merely neutral in how they shape society. No matter the perspective, the purpose of policy and regulation is to allow society to shape the use of communication technologies to best serve the citizenry.

Background

The First Amendment is a particularly important component of U.S. communication policy, balancing freedom of the press with the free speech rights of citizens. The First Amendment was created at a time when the most sophisticated communication technology was the printing press. Over time, the notion of “press” has evolved with the introduction of new communication technologies. The First Amendment has evolved as well, with varying degrees of protection for the traditional press, broadcasting, cable television, and the Internet.

Communication policy is essentially the balancing of national interests and the interests of the communications industry (van Cuilenburg & McQuail, 2003). In the United States, communication policy is often shaped in reaction to the development of a new technology. As a result, policies vary according to the particular communication policy regime: press, common carrier, broadcasting, cable TV, and the Internet. Napoli (2001) characterizes this policy tendency as a “technologically particularistic” approach leading to distinct policy and regulatory structures for each new technology. Thus, the result is differing First Amendment protections for the printed press, broadcasting, cable television, and the Internet (Pool, 1983).

In addition to distinct policy regimes based on technology, scholars have recognized differing types of regulation that impact programming, the industry market and economics, and the transmission and delivery of programming and information. These include content regulation, structural regulation, and technical regulation.

Content regulation refers to the degree to which a particular industry enjoys First Amendment protection. For example, in the United States, the press is acknowledged as having the most First Amendment protection, and there certainly is no regulatory agency to oversee printing. Cable television has limited First Amendment protection, while broadcasting has the most limitations on its First Amendment rights. This regulation is apparent in the type of programming rules and regulations imposed by the Federal Communications Commission (FCC) on broadcast programming that is not imposed on cable television programming.

Structural regulation addresses market power within (horizontal integration) and across (vertical integration) media industries. Federal media policy has long established the need to promote diversity of programming by promoting diversity of ownership. The Telecommunications Act of 1996 changed media ownership limits for the national and local market power of radio, television, and cable television industries; however, the FCC is given the authority to review and revise these rules. Structural regulation includes limitations or permissions to enter communication markets. For example, the Telecommunications Act of 1996 opened up the video distribution and telephony markets by allowing telephone companies to provide cable television service and for cable television systems to offer telephone service (Parsons & Frieden, 1998).

Technical regulation needs prompted the initial development of U.S. communication regulation in the 1920s, as the fledgling radio industry suffered from signal interference while numerous stations transmitted without any government referee (Starr, 2004). Under FCC regulation, broadcast licensees are allowed to transmit at a certain power, or wattage, on a precise frequency within a particular market. Cable television systems and satellite transmission also follow some technical regulation to prevent signal interference.

Finally, in addition to technology-based policy regimes and regulation types, communication policy is guided by varying jurisdictional regulatory bodies. Given the global nature of satellites, both international (International Telecommunications Union) and national (FCC) regulatory commissions have a vested interest in satellite transmission.

Regulation of U.S. broadcasting is exclusively the domain of the federal government through the FCC. The telephone industry is regulated primarily at the federal level through the FCC, but also with regulations imposed by state public utility commissions. Cable television, initially regulated through local municipal franchises, is now regulated at the federal level, the local municipal level, and, for some, at the state level (Parsons & Frieden, 1998).

The FCC was created by Congress in 1934 to be the expert agency on communication matters. It is composed of five members appointed by the President, subject to confirmation by the Senate. The President selects one of the commissioners to serve as chairman. No more than three commission members can be of the same political party. Although the FCC is considered an independent agency, this structure leads to the Chairman and majority members affiliated with the same political party of the President, resulting in FCC policy reflecting the policy goals of the administration (Feld & Forscey, 2015).

The Evolution of Communication Technologies

Telegraph

Although the evolution of technologies has influenced the policymaking process in the United States, many of the fundamental characteristics of U.S. communication policy were established early in the history of communication technology deployment, starting with the telegraph. There was much debate on how best to develop the telegraph. For many lawmakers and industry observers, the telegraph was viewed as a natural extension of the Post Office, while others favored government ownership based on the successful European model as the only way to counter the power of a private monopoly (DuBoff, 1984).

In a prelude to the implementation of universal service for the telephone (and the current discussion of a “digital divide”), Congress decreed that, “Where the rates are high and facilities poor, as in this country, the number of persons who use the telegraph freely, is limited. Where the rates are low and the facilities are great, as in Europe, the telegraph is extensively used by all classes for all kinds of business” (Lubrano, 1997, p. 102).

Despite the initial dominance of Western Union, there were over 50 separate telegraph companies operating in the United States in 1851. Interconnecting telegraph lines throughout the nation became a significant policy goal of federal, state, and local governments. No geographic area wanted to be disconnected from the telegraph network and its promise of enhanced communication and commerce.

Eventually, in 1887, the Interstate Commerce Act was enacted, and the policy model of a regulated, privately-owned communication system was initiated and formal federal regulation began. Early in the development of communication policy, the tradition of creating communications infrastructure through government aid to private profit-making entities was established (Winston, 1998).

Telephone

Similar to the development of the telegraph, the diffusion of the telephone was slowed by competing, unconnected companies serving their own interests. Although AT&T dominated most urban markets, many independent telephone operators and rural cooperatives provided service in smaller towns and rural areas. Since there was no interconnection among the various networks, some households and businesses were forced to have dual service in order to communicate (Starr, 2004).

As telephone use spread in the early 1900s, states and municipalities began regulating and licensing operators as public utilities, although Congress authorized the Interstate Commerce Commission (ICC) to regulate interstate telephone service in 1910. Primarily an agency devoted to transportation issues, the ICC never became a major historical player in communication policy. However, two important policy concepts originated with the commission and the related Transportation Act of 1920. The term “common carrier,” originally used to describe railroad transportation, was used to classify the telegraph and eventually the telephone (Pool, 1983). Common carriage law required carriers to serve their customers without discrimination. The other notable phrase utilized in transportation regulation was a requirement to serve the “public interest, convenience, or necessity” (Napoli, 2001). This nebulous term was adopted in subsequent broadcast legislation and continues to guide the FCC even today.

As telephone use increased, it became apparent that there was a need for greater interconnection among competing operators, or the development of some national unifying agreement. In 1907, AT&T President Theodore Vail promoted a policy with the slogan, “One system, one policy, universal service” (Starr, 2004, p. 207). There are conflicting accounts of Vail’s motivation: whether it was a sincere call for a national network available to all, or merely a ploy to protect AT&T’s growing power in the telephone industry (Napoli, 2001). Eventually, the national network envisioned by Vail became a reality, as AT&T was given the monopoly power, under strict regulatory control, to build and maintain local and long-distance telephone service throughout the nation. Of course, this regulated monopoly was ended decades ago, but the concept of universal service as a significant component of communication policy remains today.

Broadcasting

While U.S. policymakers pursued an efficient national network for telephone operations, they developed radio broadcasting to primarily serve local markets. Before the federal government imposed regulatory control over radio broadcasting in 1927, the industry suffered from signal interference and an uncertain financial future. The Federal Radio Act created the Federal Radio Commission and imposed technical regulation on use of spectrum and power, allowing stations to develop a stable local presence.

Despite First Amendment concerns about government regulation of radio, the scarcity of spectrum was considered an adequate rationale for licensing stations. In response to concerns about freedom of the press, the Radio Act prohibited censorship by the Radio Commission, but the stations understood that the power of the commission to license implied inherent censorship (Pool, 1983). In 1934, Congress passed the Communication Act of 1934, combining regulation of telecommunications and broadcasting by instituting a new Federal Communications Commission.

The Communication Act essentially reiterated the regulatory thrust of the 1927 Radio Act, maintaining that broadcasters serve the public interest. This broad concept of “public interest” has stood as the guiding force in developing communication policy principles of competition, diversity, and localism (Napoli, 2001; Alexander & Brown, 2007).

Rules and regulations established to serve the public interest for radio transferred to television when it entered the scene. Structural regulation limited ownership of stations, technical regulation required tight control of broadcast transmission, and indirect content regulation led to limitations on station broadcast of network programming and even fines for broadcast of indecent material (Pool, 1983).

One of the most controversial content regulations was the vague Fairness Doctrine, established in 1949, that required broadcasters to present varying viewpoints on issues of public importance (Napoli, 2001). Despite broadcasters’ challenges to FCC content regulation on First Amendment grounds, the courts defended the commission’s Fairness Doctrine (Red Lion Broadcasting v. FCC, 1969) and its ability to limit network control over programming (NBC v. United States, 1943), In 1985, the FCC argued the Fairness Doctrine was no longer necessary given the increased media market competition, due in part to the emergence of new communication technologies (Napoli, 2001).

Historically, as technology advanced, the FCC sought ways to increase competition and diversity in broadcasting with AM radio, UHF television, low-power TV, low-power FM, and more recently, digital television.

Cable Television and Direct Broadcast Satellite

Since cable television began simply as a technology to retransmit distant broadcast signals to rural or remote locations, early systems sought permission or franchises from the local authorities to lay cable to reach homes. As cable grew, broadcasters became alarmed with companies making revenue off their programming, and they lobbied against the new technology.

Early on, copyright became the major issue, as broadcasters complained that retransmission of their signals violated their copyrights. The courts sided with cable operators, but Congress passed compulsory license legislation that forced cable operators to pay royalty fees to broadcasters (Pool, 1983). Because cable television did not utilize the public airwaves, courts rebuffed the FCC’s attempt to regulate cable.

In the 1980s, the number of cable systems exploded and the practice of franchising cable systems increasingly was criticized by the cable industry as cities demanded more concessions in return for granting rights-of-way access and exclusive multi-year franchises. The Cable Communications Act of 1984 was passed to formalize the municipal franchising process while limiting some of their rate regulation authority. The act also authorized the FCC to evaluate cable competition within markets (Parsons & Frieden, 1998).

After implementation of the 1984 Cable Act, cable rates increased dramatically. Congress reacted with the Cable Television Consumer Protection and Competition Act of 1992. With the 1992 Cable Act, rate regulation returned with the FCC given authority to regulate basic cable rates. To protect broadcasters and localism principles, the act included “must carry” and “retransmission consent” rules that allowed broadcasters to negotiate with cable systems for carriage (discussed in more detail in Chapter 7). Although challenged on First Amendment grounds, the courts eventually found that the FCC had a legitimate interest in protecting local broadcasters (Turner Broadcasting v. FCC, 1997). To support the development of direct broadcast satellites (DBS), the 1992 act prohibited cable television programmers from withholding channels from DBS and other prospective competitors. As with cable television, DBS operators have been subject to must-carry and retransmission consent rules.

The 1999 Satellite Home Viewers Improvement Act (SHIVA) required, and the Satellite Home Viewer Extension and Reauthorization Act of 2004 (SHVER) reconfirmed, that DBS operators must carry all local broadcast signals within a local market if they choose to carry one (FCC, 2005). DBS operators challenged this in court, but as in Turner Broadcasting v. FCC, the courts upheld the government’s mandatory carriage requirements (Frieden, 2005). Congress continued these requirements in 2010 with the Satellite Television Extension and Localism Act (STELA), and more recently in 2014 with the STELA Reauthorization Act (STELAR) (FCC, 2016c).

Policies to promote the development of cable television and direct broadcast satellites have become important components of the desire to enhance media competition and video program diversity, while at the same time preserving localism principles within media markets.

Convergence and the Internet

The Telecommunications Act of 1996 was a significant recognition of the impact of technological innovation and convergence occurring within the media and telecommunications industries. Because of this recognition, Congress discontinued many of the cross-ownership and service restrictions that had prevented telephone operators from offering video service and cable systems from providing telephone service (Parsons & Frieden, 1998). The primary purpose of the 1996 Act was to “promote competition and reduce regulation in order to secure lower prices and higher-quality service for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies” (Telecommunications Act of 1996). Competition was expected by opening up local markets to facilities-based competition and deregulating rates for cable television and telephone service to let the market work its magic. The 1996 Act also opened up competition in the local exchange telephone markets and loosened a range of media ownership restrictions.

In 1996, the Internet was a growing technological phenomenon, and some in Congress were concerned with the adult content available online. In response, along with passing the Telecommunications Act of 1996, Congress passed the Communication Decency Act (CDA) to make it a felony to transmit obscene or indecent material to minors. However, the Supreme Court struck down the indecency provisions of the CDA on First Amendment grounds in Reno v. ACLU (Napoli, 2001). Section 230 of the CDA protected websites from liability for content posted by users of their online platform; and at the same time allowed online platforms to self-regulate and “restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable” (Caplan, Hanson & Donovan, 2018, p 24).

Congress continued to pursue a law protecting children from harmful material on the Internet with the Child Online Protection Act (COPA), passed in 1998; however, federal courts have found it, too, unconstitutional due to First Amendment concerns (McCullagh, 2007). It is noteworthy that the courts consider the Internet’s First Amendment protection more similar to the press, rather than broadcasting or telecommunications (Warner, 2008).

Similarly, from a regulatory perspective, the Internet does not fall under any traditional regulatory regime such as telecommunications, broadcasting, or cable television. Instead, the Internet was considered an “information service” and therefore not subject to regulation (Oxman, 1999). There are, however, policies in place that indirectly impact the Internet. For example, section 706 of the Telecommunications Act of 1996 requires the FCC to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans,” with advanced telecommunications essentially referring to broadband Internet connectivity (Grant & Berquist, 2000). In addition, Internet service providers have been subject to FCC network neutrality requirements addressed later in this chapter.

Recent Developments

Broadband

In response to a weakening U.S. economy due to the 2008 recession, Congress passed the American Recovery and Reinvestment Act (ARRA) of 2009. Stimulus funds were appropriated for a wide range of infrastructure grants, including broadband, to foster economic development. Congress earmarked $7.2 billion to encourage broadband deployment, particularly in unserved and underserved regions of the country.

The U.S. Department of Agriculture Rural Utility Service (RUS) was provided with $2.5 billion to award Broadband Initiatives Program (BIP) grants, while the National Telecommunications and Information Administration (NTIA) was funded with $4.7 billion to award Broadband Technology Opportunity Program (BTOP) grants. In addition, Congress appropriated funding for the Broadband Data Improvement Act, legislation that was approved during the Bush Administration in 2008 but lacked the necessary funding for implementation.

Finally, as part of ARRA, Congress directed the FCC to develop a National Broadband Plan that addressed broadband deployment, adoption, affordability, and the use of broadband to advance healthcare, education, civic participation, energy, public safety, job creation, and investment. While developing the comprehensive broadband plan, the FCC released its periodic broadband progress report, required under section 706 of the Telecommunications Act of 1996. Departing from the favorable projections in previous progress reports, the FCC conceded that “broadband deployment to all Americans is not reasonable and timely” (FCC, 2010c, p. 3).

In addition, the Commission revised the dated broadband benchmark of 200 Kb/s by redefining broadband as having download speeds of 4.0Mb/s and upload speeds of 1.0 Mb/s.” (FCC, 2010a, p. xi).

In preparing the National Broadband Plan, the FCC commissioned a number of studies to determine the state of broadband deployment in the United States. In analyzing U.S. broadband adoption in 2010, the FCC determined 65% of U.S. adults used broadband (Horrigan, 2010); however, researchers forecast that regions around the country, particularly rural areas, would continue to suffer from poor broadband service due to lack of service options or slow broadband speeds (Atkinson & Schultz, 2009).

The targeted goals of the National Broadband Plan through 2020 included:

•At least 100 million homes should have affordable access to download speeds of 100 Mb/s and upload speeds of 50 Mb/s.
•The United States should lead the world in mobile innovation with the fastest and most extensive wireless network in the world.
•Every American should have affordable access to robust broadband service, and the means and skills to subscribe.
•Every American community should have affordable access to at least 1 Gb/s broadband service to schools, hospitals, and government buildings.
•Every first responder should have access to a nationwide, wireless, interoperable broadband public safety network.
•Every American should be able to use broadband to track and manage their real-time energy consumption (FCC, 2010a).

The most far-reaching components of the plan included freeing 500 MHz of wireless spectrum, including existing television frequencies, for wireless broadband use, and reforming the traditional telephone Universal Service Fund to support broadband deployment.

The Broadband Data Improvement Act (2008) required the FCC to compare U.S. broadband service capability to at least 25 countries abroad. Recent international comparisons of broadband deployment confirm that the U.S. continues to lag in access to broadband capability (FCC, 2018c); and within the U.S. 25 million Americans lack access to wireline broadband service, with over 31% of rural residents lacking access to broadband (FCC, 2018a).

Broadband data from the Organisation for Economic Co-operation and Development (OECD) reports the United States ranked 15th among developed nations for fixed wireline broadband penetration (see Table 5.1). Other studies show the United States ranked 12th for average connection download speed (15.3 Mb/s), with top-ranked Korea offering significantly greater broadband speed (29 Mb/s), followed by Norway (21.3 Mb/s), Sweden (20.6 Mb/s), Switzerland (18.7 Mb/s), Latvia (18.3 Mb/s), and Japan (18.2 Mb/s) (OECD, 2017).

Table 5.1
International Fixed Broadband Penetration

Country

Broadband Penetration*

Switzerland

45.8

Denmark

42.9

Netherlands

42.2

France

42.0

Norway

40.9

Korea

40.9

Germany

39.4

Iceland

38.7

United Kingdom

38.6

Belgium

38.2

Sweden

37.4

Canada

37.2

Luxembourg

35.7

Greece

34.2

United States

33.6

* Fixed Broadband access per 100 inhabitants

Source: OECD (2017)

The evolving trends in broadband deployment and the increasing broadband speeds offered by providers, prompted the FCC to reevaluate their benchmark definition of broadband established in 2010 (with download speeds of 4.0Mb/s and upload speeds of 1.0 Mb/s). Because of speeds required to access high definition video, data, and other broadband applications, the FCC determined in their 2015 Broadband Progress Report that in order to meet Congress’ requirement for an “advanced telecommunications capability” the benchmark measure for broadband should be increased to download speeds of 25.0 Mb/s and upload speeds of 3.0 Mb/s (FCC, 2015a).

In January 2017, the newly appointed Trump majority FCC Commission announced the formation of a Broadband Deployment Advisory Committee to make recommendations to the Commission on how best to accelerate deployment of broadband by reducing regulatory barriers to broadband investment (FCC, 2018a).

Universal Service Reform

For 100 years, universal service policies have served the United States well, resulting in significant telephone subscription rates throughout the country. But telephone service, an indispensable technology for 20th century business and citizen use, has been displaced by an even more essential technology in the 21st century—broadband Internet access.

Just as the universal deployment of telephone infrastructure was critical to foster business and citizen communication in the early 1900s, broadband has become a crucial infrastructure for the nation’s economic development and civic engagement. However, 24 million Americans lack access to broadband, and broadband deployment gaps in rural areas remain significant (FCC, 2018a).

In response to uneven broadband deployment and adoption, the FCC shifted most of the billions of dollars earmarked for subsidizing voice networks in the Universal Service Fund (USF) to supporting broadband deployment. Two major programs were introduced to modernize universal service in the United States: the Connect America Fund and the Mobility Fund.

The Connect America Fund, initiated in 2014, earmarked $4.5 billion annually over six years to fund broadband and high-quality voice in geographic areas throughout the U.S. where private investment in communication was limited or absent. The funding was released to telecommunications carriers in phases, with Phase I releasing $115 million in 2012 to carriers providing broadband infrastructure to 400,000 homes, businesses, and institutions previously without access to broadband. In March 2014, the second round of Phase I funding provided $324 million for broadband deployment to connect more than 1.2 million Americans (FCC, 2014). In 2015, the FCC awarded $1.7 billion through Connect America so carriers could provide broadband to more than eight million rural residents (FCC, 2015b). The Mobility Fund targets wireless availability in unserved regions of the nation by ensuring all areas of the country achieve 3G service, with enhanced opportunities for 4G data and voice service in the future (Gilroy, 2011). In 2012, the Mobility Fund Phase I awarded close to $300 million to fund advanced voice and broadband service for primarily rural areas in over 30 states (Wallsten, 2013).

In 2017, the FCC announced the Connect America Phase II Auction which will provide an additional $1.98 billion over ten years to provide voice and broadband service in unserved rural areas. The Commission also established a Mobility Fund Phase II Auction to allocate $4.53 billion over the next decade to advance the deployment of 4G Long-Term Evolution (LTE) high speed wireless to unserved areas and to preserve service where it might not otherwise exist (FCC, 2018a).

In 2016, the FCC reformed the Lifeline program—a fund developed in 1985 to make telephone service more affordable for eligible low-income Americans. To modernize Lifeline for the digital age, the program was revised to support broadband service to low-income households by leveraging $2.25 billion to provide the same $9.25 monthly subsidy previously used exclusively for telephone costs. The subsidy could be utilized for fixed broadband, mobile services, or bundled service plans combining broadband and voice (FCC, 2016b).

After a critical General Accountability Office report (2017) on the operation of the Lifeline program, the FCC explored deficiencies in the Lifeline and proposed a number of rules to modify the program including:

•Establishing a budget cap for Lifeline
•Limiting subsidies to facility-based providers
•Reviving the role of states in designating Lifeline eligible telecommunications carriers (ETC)
•Improving eligibility verification and recertification to end fraud and abuse (FCC, 2017d)

The Connect America Fund, the Mobility Fund, and the Lifeline reform program maintain the long tradition of government support for communication development, as intended by Congress in 1934 when they created the FCC to make “available…to all the people of the United States…a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges” (FCC, 2011a, p. 4). Ultimately the Connect America Fund is expected to connect 18 million unserved Americans to broadband, with the hope of creating 500,000 jobs and generating $50 billion in economic growth (FCC, 2011b).

Spectrum Reallocation

Globally, the United States ranks 5th in wireless broadband penetration (See Table 5.2). Historically, mobile broadband speeds have been much greater in Asian and European countries due to greater spectrum availability and wireless technology (Executive Office of the President, 2012). In response to the U.S. spectrum crunch, the National Broadband Plan called for freeing 500 MHz of spectrum for wireless broadband.

Table 5.2
International Wireless Broadband Penetration

Country

Broadband Penetration*

Japan

157.4

Finland

145.4

Australia

132.5

Denmark

129.0

United States

128.6

Estonia

125.6

Sweden

122.4

Korea

111.1

Iceland

110.5

Ireland

102.4

New Zealand

101.3

Switzerland

97.8

Norway

96.4

Austria

94.8

Spain

92.7

* Wireless Broadband access per 100 inhabitants Measure includes both standard and dedicated mobile broadband subscriptions

Source: OECD (2017)

The FCC has begun the steps to repurpose spectrum for wireless broadband service by making spectrum from the 2.3 GHz, Mobile Satellite Service, and TV bands available for mobile broadband service. The Commission has made additional spectrum available for unlicensed wireless broadband by leveraging unused portions of the TV bands, or “white space” that might offer unique solutions for innovative developers of broadband service. Congress supported the effort with passage of the Middle Class Tax Relief and Job Creation Act of 2012, including provisions from the Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act of 2011 (Moore, 2013). The spectrum reallocation was accomplished through the FCC’s authority to conduct incentive auctions where existing license holders, such as broadcasters, relinquish spectrum in exchange for proceeds shared with the Federal government. The FCC began accepting bids for existing broadcast frequencies in March, 2016 with the potential for some broadcast stations to earn up to $900 million for relinquishing their channel for wireless utilization (Eggerton, 2015).

The spectrum auction closed in March 2017 with wireless providers winning 70 MHz of spectrum. Wireless carriers bid a total of $19.8 billion for mobile broadband spectrum, and over $10 billion was shared by 175 broadcasters that elected to repurpose their channels for mobile use. More than $7 billion was deposited to the U.S. Treasury as result of the auction (FCC, 2017g). Also in 2017, the FCC made available an additional 1700 MHz of spectrum bands above 24 GHz for mobile radio services. The FCC expects making these airwaves available may lay the groundwork for Fifth Generation (5G) wireless networks (FCC, 2017f).

Network Neutrality

In 2005, then-AT&T CEO Edward Whitacre, Jr. created a stir when he suggested Google, Yahoo, and Vonage should not expect to use his network for free (Wu, 2017). Internet purists insist the Internet should remain open and unfettered, as originally designed, and decried the notion that broadband providers might discriminate by the type and amount of data content streaming through their lines. Internet service users are concerned that, as more services become available via the Web such as video streaming and voice over Internet protocol (VoIP), Internet service providers (ISPs) will become gatekeepers limiting content and access to information (Gilroy, 2008).

In 2007, the FCC received complaints accusing Comcast of delaying Web traffic on its cable modem service for the popular file sharing site BitTorrent (Kang, 2008). Because of the uproar among consumer groups, the FCC held hearings on the issue and ordered Comcast to end its discriminatory network management practices (FCC, 2008).

Although Comcast complied with the order and discontinued interfering with peer-to-peer traffic like BitTorrent, it challenged the FCC’s authority in court. In April 2010, the U.S. Court of Appeals for the D.C. Circuit determined that the FCC had failed to show it had the statutory authority to regulate an Internet service provider’s network practices and vacated the order (Comcast v. FCC, 2010).

Because broadband service was classified as an unregulated information service, the FCC argued it had the power to regulate under its broad “ancillary” authority highlighted in Title I of the Telecommunications Act. The court’s rejection of the FCC argument disheartened network neutrality proponents who feared the court’s decision would encourage broadband service providers to restrict network data traffic, undermining the traditional openness of the Internet.

In evaluating the court decision, the FCC revisited net neutrality and determined it could establish rules for an open Internet through a combination of regulatory authority.

The FCC Open Internet Rule was adopted in November 2010 and established three basic rules to ensure Internet providers do not restrict innovation on the Internet:

•Disclose information about their network management practices and commercial terms to consumers and content providers to ensure transparency
•Accept the no blocking requirements of lawful content and applications
•Prevent unreasonable discrimination, broadband Internet providers could not unreasonably discriminate in transmitting lawful network traffic over a consumer’s Internet service

In January 2011, both Verizon Communications and Metro PCS filed lawsuits challenging the FCC’s Open Internet Rule, and in early 2014, the U.S. Court of Appeals for the D.C. Circuit struck down two vital portions of the rule (Verizon v. FCC, 2014).

As in the Comcast v. FCC decision, the court determined the FCC lacked legal authority to prevent Internet service providers from blocking traffic and lacked authority to bar wireline broadband providers from discriminating among Internet traffic. However, the court upheld the transparency rule which required Internet service providers to disclose how they manage Internet traffic and affirmed the FCC’s general authority to oversee broadband services under Section 706 of the Telecommunications Act of 1996.

Rather than appeal the ruling, the FCC set out to adopt new rules that considered the Circuit Court’s legal rationale (Mazmanian, 2014). In July 2014, the FCC published a Notice of Proposed Rulemaking highlighting the new rules designed to protect and promote an open Internet for consumers. The FCC received a record 3.7 million public comments before the September deadline, surpassing the 1.4 million complaints received after the infamous 2004 Super Bowl broadcast of Janet Jackson’s wardrobe malfunction (GAO, 2015).

In February 2015 the FCC formally adopted the rule for Protecting and Promoting the Open Internet (FCC, 2015d). Most importantly, the rule reclassified broadband Internet access service as a telecommunications service under Title II of the Communications Act of 1934, therefore subject to common carrier regulation. In addition, the rule covered mobile broadband Internet access based on the definition of commercial mobile services under Title III.

The three major components of the rule included:

•Broadband providers cannot block access to legal content, applications, services, or devices.
•Broadband providers cannot impair or degrade lawful Internet traffic based on content, applications, services or devices (i.e. no throttling).
•Broadband providers cannot favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind.

As with previous FCC network neutrality actions, the industry responded with numerous civil suits. The primary challenge was to the FCC’s reclassification of broadband under Title II, the principal component of the Open Internet Order. In addition, industry raised the stakes by arguing the Open Internet Order violated their First Amendment rights of free speech (Green, 2015). Ultimately, the U.S. District Court of Appeals for the D.C. Circuit consolidated the numerous industry lawsuits into one docket and affirmed the FCC’s Open Internet Order. (United States Telecom Association et al. v. FCC, 2016).

The election of Donald J. Trump in 2016 resulted in the appointment of Commissioner Ajit Pai as FCC Chairman. As a Commissioner, Pai had previously opposed FCC network neutrality rules. As Chairman, and with a newly appointed Republican majority, he initiated a reexamination of the network neutrality rule and proposed a rule titled Restoring Internet Freedom that rolled back network neutrality requirements.

The FCC received an even larger number of public comments than the record setting comment period for the 2015 Protecting and Promoting the Open Internet rule. Over 21 million comments were received by the FCC in response to the proposed Restoring the Internet rule; however, many submitted comments were determined to be duplicate messages or fraudulent (Hitlin, Olmstead & Toor, 2017).

The FCC adopted the Restoring the Internet Order in December 2017 (FCC, 2017e). The new rule rescinded most of the 2015 Open Internet rule by:

•Restoring the classification of wireline broadband as an information service under Title I of the Communications Act
•Reclassifying mobile broadband Internet service as a private mobile service thereby not subject to common carrier regulation
•Allowing broadband providers to utilize paid prioritization of content
•Eliminating blocking and throttling restrictions
•Pre-empting local and state broadband regulations

The FCC contends that the transparency requirements in the new Order will counter concerns about broadband service providers thwarting consumers’ access to content. Broadband providers are required to publicly disclose their network management practices, network performance characteristics and commercial terms of the broadband internet access services they offer “sufficient for consumers to make informed choices” (FCC, 2017e, p. 308).

Competition and Technology Transformation

Technological transformation and policy changes traditionally improve video programming capabilities and competition among multichannel video programming distributors (MVPDs) which include cable television, direct broadcast satellite, and cable services offered through telephone systems. However, according to the FCC, in 2015 only 17.9% of U.S. homes had access to at least four MVPDs, down from 38.1% in 2014 (FCC, 2017a).

The FCC’s Eighteenth Report on Video Competition (2017a) showed that from 2014 to 2015, cable lost video market share to telephone systems (See Table 5.3). More importantly, the report discovered online video distributors (OVDs) such as Netflix, Amazon Prime, and Hulu have significantly increased video programming options for consumers, with more than 59.4 million households watching online video in 2015. It is estimated that 70% of North American Internet wireline traffic during prime time viewing hours is due to streaming video and audio.

Table 5.3
MVPD Market Share

Multichannel Video Programming Distributor

2014

2015

Cable

53.4%

53.1%

DBS

33.3%

33.2%

Telco Cable

12.9%

13.4%

Source: FCC (2017a), p. 7

Although MVPDs and OVDs offer an alternative to traditional broadcast television, in 2015 11% of all U.S. households, or 12.4 million homes, still rely exclusively on over-the-air broadcasting for video news and entertainment. Although the introduction of video competition has gradually decreased broadcast television viewership over time, the FCC competition report shows that the prime-time audience share for network affiliates was 32% for 2013-2014 and increased to 33% in 2014-2015 (FCC, 2017a).

In 2017, the FCC enacted revised broadcast ownership rules that eliminated the previous ban of newspaper-broadcast cross-ownership within a market; a rule dating back to 1975. Additionally, the FCC eliminated rules prohibiting cross-ownership of both a radio and a television station within a single market. Finally, the new ownership rules modified the Local Television Ownership Rule making it easier to own more than one station in a local market (FCC, 2017b).

Factors to Watch

The 2017 Restoring Internet Freedom rule has revived strong divisions among industry and policymakers regarding network neutrality. Utilizing the Congressional Review Act, the Senate has attempted to overrule the FCC’s network neutrality rule (Fung, 2018). More than 20 states have sued the FCC in the U.S. District Court of Appeals in Washington, D.C. in an effort to overturn the FCC’s network neutrality repeal (Neidig, 2018). Internet titans Amazon, Facebook, Google, and Netflix plan to join lawsuits to preserve net neutrality through the Internet Association, the lobbying group of the Internet companies (Finley, 2018).

During the eight years of the Obama Administration, the Democratic controlled FCC concluded in their annual broadband progress reports that broadband was not being deployed to all Americans in a reasonable and timely fashion. This conclusion was based on continuing disparities in broadband availability and broadband adoption throughout the United States (FCC, 2016a). In 2018, the Republican controlled FCC under Chairman Pai concluded that, through the FCC’s revised deregulatory policies (including the Restoring Internet Freedom rule), “the Commission is now encouraging the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans” (FCC, 2018a, p. 3).

One of the final actions of the Obama era FCC was to implement an Internet privacy rule that established a framework for requiring customer consent before Internet service providers could use and share customers’ personal information (2016d). The 115th U.S. Congress eventually leveraged the Congressional Review Act to pass legislation nullifying this FCC privacy rule which was signed by President Trump in 2017 (Fung, 2017). The new legislation allows ISPs to mine consumer’s Web browsing history, app usage history, and location data. The FCC is prohibited from passing similar privacy regulations in the future, and the Federal Trade Commission is expected to provide limited consumer protection for ISP customers.

In 2018, the FCC created a new Office of Economics and Analytics charged with ensuring that economic analysis is deeply and consistently incorporated into the agency’s regular operations and will support work across the FCC and throughout the decision-making process. Specifically, it will provide stronger economic analysis and more data driven research to develop policies and strategies within the FCC (FCC, 2018b).

In addition to revising broadcast cross-ownership rules, the FCC is considering raising national broadcast ownership limit. As of mid-2018, regulation limits an entity from owning or controlling television stations that reach more than 39 percent of the television households in the country (FCC, 2017c). Critics of media concentration fear the FCC is reconsidering the cap in support of the Sinclair Broadcast Group’s $39 billion takeover of Tribune Media, as the proposed merger surpasses the current cap (Reardon, 2017). AT&T’s proposed merger with Time Warner has been delayed as the Department of Justice antitrust division insists that the acquisition cannot be approved without divestment of either DirecTV or Turner Networks, which includes CNN (Johnson, 2017).

Controversies surrounding online content including libel (Browne-Barbour, 2015), cyberbullying, and fake news (Hwang, 2017; Stanford Law and Policy Lab, 2017) have led to calls for Congress to revisit Section 230 of the Communications Decency Act that may challenge the strong First Amendment protections of the Internet and social media. Congress is also considering strengthening Federal election law to require greater disclosure for political ads on social media, after discovering Russian efforts to disrupt the 2016 presidential election via social media (Kelly, 2017).

Despite the Trump administration’s pro-business and deregulatory focus, the FCC’s continuing efforts to promote broadband confirm a strong national commitment to ubiquitous broadband service for all Americans. The FCC’s new benchmark of 25 Mb/s for the definition of broadband acknowledges the increasing capabilities of broadband in the U.S. The FCC’s efforts to expand the use of wireless spectrum recognizes that mobile Internet has become a vital medium for distributing data, voice, and video—with global mobile data traffic expected to grow sevenfold by 2021 (Cisco, 2017). The Connect America Fund and the Mobility Fund provide significant funding for broadband expansion. President Trump’s proposed $1.5 trillion infrastructure plan, includes $50 billion directed at a broad range of rural infrastructure projects, including broadband service (Eggerton, 2018). Observers will watch to see if the FCC and administration policies result in enhanced broadband deployment and faster Internet speeds for all Americans.

It is likely the conflicts among the FCC, Congress, industry, and consumer advocates will continue as ideological and political clashes permeate the current policy environment. As communication policy is reshaped to accommodate new technologies, policymakers must explore new ways to work together to serve the public interest.

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_______________

* Senior it Policy Analyst, Texas A&M University (College Station, Texas)

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