A public interest perspective on the impact of the broadcasting provisions of the 1996 Act.

• Author: Campbell, Angela J.
• Position: Telecommunications Act of 1996: Ten Years Later Symposium

1. INTRODUCTION II. SECTION 201: BROADCAST SPECTRUM FLEXIBILITY III. SECTION 202: BROADCAST OWNERSHIP IV. LICENSE RENEWAL PROVISIONS V. CONCLUSION I. INTRODUCTION

   The broadcasting provisions contained in Title II of the Telecommunications Act of 1996 ("1996 Act") (1) received much less public attention than many of the other provisions when the 1996 Act was adopted. (2) Nonetheless, these provisions, which governed the transition from analog to digital television, revised the broadcast ownership rules, and altered broadcast licensing procedures, have had an important and often detrimental impact on the viewing public. This Essay discusses how these provisions have affected the viewing public over the last ten years in both expected and unexpected ways.

   The broadcasting provisions in Title II resulted from lobbying by broadcast interests. They include the so-called "broadcaster spectrum flexibility" provisions of Section 201, the broadcast ownership provisions of Section 202, and the license renewal provisions of Sections 203 and 204. Broadcasters sought to ensure exclusive control over additional spectrum to facilitate the conversion from analog to digital technology, and thus better compete against multichannel video providers such as cable and satellite. At the same time, they wanted to eliminate or relax broadcast ownership rules to allow greater consolidation. Finally, they sought to lengthen license terms and make license renewals even easier and more foolproof than before.

   Public interest advocates regarded these changes as harmful to the listening and viewing public at the time they were adopted. Andrew Jay Schwartzman, head of the Media Access Project, succinctly summed up his reaction: "The bill stinks." (3) Robert McChesney, who later founded Free Press, called the 1996 Act "one of the most corrupt pieces of legislation in U.S. history." He asserted that

   As a result of this bill, the information highway will be entirely controlled by the big firms, and it will be developed to make the most profit, regardless of the social implications. Forget about the public interest. The rich will get served, the middle class noticed, and the poor forgotten. (4) In this Essay, I show that many, but not all, of the public interest advocates' fears were realized and that moreover, the 1996 Act has had other negative consequences that were not anticipated, or at least publicly discussed, when it passed.

2. SECTION 201: BROADCAST SPECTRUM FLEXIBILITY

   Section 201 added a new Section 336 to the Communications Act (5) governing the transition from analog television to what has variously been called high-definition television ("HDTV"), advanced television ("ATV") or digital television ("DTV"). (6) Although the FCC had already begun planning for the transition to digital television through rulemaking, (7) the 1996 Act resolved some of the outstanding issues.

   Digital broadcasting allows the electromagnetic spectrum to be used more efficiently and flexibly. With the same amount of spectrum used for a single analog television signal (6 MHz), a digital broadcaster may broadcast in high definition ("HD"), provide multiple program streams ("multicast"), and provide various data or other ancillary and supplementary services. To receive the digital signals, members of the public have to buy new, expensive television sets, or at least converter boxes. This presents what is known as the "chicken-and-egg problem": consumers have no incentive to buy new television sets if there is nothing to watch, and broadcasters have no incentive to provide digital programming if no one can watch it. (8)

   The 1996 Act was supposed to solve this problem by allowing existing television licensees, and only existing television licensees, (9) to use an additional 6 MHz of spectrum free of charge so that they could simultaneously broadcast their traditional analog signal and their digital program streams, along with any ancillary and supplementary services. Both liberals and conservatives criticized the 1996 Act's plan to give broadcasters additional spectrum at no charge. Republican Senator Bob Dole attacked the provision as a "multibillion-dollar 'giveaway' to broadcasters," (10) while liberal Democratic Representative John Conyers, Jr. called it "a huge charitable corporate gift." (11) Proponents of the spectrum flexibility provision, such as Richard E. Wiley, former head of the FCC's Advisory Committee on Advanced Television Service, argued that spectrum flexibility was necessary to facilitate the transition to digital television, which would "provide viewers with dazzlingly clear, wide-screen TV pictures and CD-like sound" and would "provide easy access to the information superhighway and its advanced digital services." (12) In response to criticism that spectrum flexibility was a giveaway of valuable frequencies to broadcasters, Wiley responded that "in reality it is only an exchange of one block for another" and that "[b]roadcasters would not be allowed to retain two channels permanently." (13)

   The 1996 Act conditioned the grant of digital licenses on the return at some unspecified time in the future of one of the licenses. (14) At that time, broadcasters would turn off the analog signal and return the spectrum to the government for other uses. Return of the spectrum is important both because auctioning the spectrum was estimated to bring up to $70 billion to the U.S. Treasury (15) and because of the great demand for spectrum for other uses such as wireless telephony and public safety.

   Although the 1996 Act did not specify a particular date for the end of analog broadcasting, it was widely reported at the time that ten years would provide sufficient time for the transition to occur. (16) And indeed, the very next year, in the Balanced Budget Act of 1997, Congress mandated that analog television licenses could not be renewed after December 31, 2006. (17) However, the same bill contained an exception for markets where 15% or more of households did not have the capability to receive digital television signals. (18) Many observers were concerned that this exception would allow broadcasters to hold on to both the analog and digital spectrum for much longer than ten years, if they ever returned it at all. (19)

   Now that ten years have passed, broadcasters are still using both the analog and digital spectrum. In February 2006, President Bush signed a bill that established February 17, 2009, as the date for the DTV transition. (20) Thus, broadcasters will be able to hold the analog spectrum for at least an additional three years, preventing its use for other public service.

   In the past ten years, the majority of television stations have begun broadcasting in digital as well as analog. (21) However, they have not provided significant new or different services for the public. Because of the lack of disclosure requirements, (22) it is difficult to even find out exactly what stations are doing with their digital capability. A recent analysis of one week of programming aired by ninety-one digital broadcasters in sixteen markets found that less than 5% of digital programming was aired in HD. (23) This study further found that 98% of HD programming was entertainment oriented, that only two stations aired locally oriented programming in HD, and that only 0.3% of digital programming focused on local public affairs. (24) The study also found little difference between the types of programming offered on primary and nonprimary multicast channels. (25) Recent press accounts support the conclusion that few television stations have used their digital capability to provide compelling programming or services, but suggest that the situation may be improving. As Broadcasting and Cable magazine notes, "HDTV has been around for years (The Tonight Show With Jay Leno switched to HD in 1999), but until recently, there hasn't been a lot to watch...." (26) Moreover, multicasting by the major broadcast networks is just getting off the ground. (27)

   Because of the lack of compelling programming and services, the public has had little incentive to buy new digital television sets, which, although they have come down in price, remain expensive. (28) At present, only about 11% of homes have HDTV sets capable of displaying the higher quality picture and sound. (29) Moreover, it is difficult for consumers to watch multicast channels since a vast majority of households receive their television signals by subscribing to a cable system or satellite service. Cable systems and satellite providers are not required to carry more than one program stream of local broadcast stations and because the multicast programming is not compelling--and it competes with their own programming--cable and satellite operators have little incentive to carry the additional streams. (30) Thus, the chicken-and-egg problem continues to hinder progress in the transition to digital.

   And while broadcasters have been able to hold on to both the analog and digital spectrum, they have been able to use that spectrum without having to comply with any additional public interest requirements. The 1996 Act made clear that all services offered by digital broadcasters were to serve the public interest, convenience, and necessity. (31) However, Congress did not specify what the "public interest" required in this new digital environment, leaving that question for the FCC to decide.

   In March 1997, President Clinton established an Advisory Committee on the Public Interest Obligations of Digital Television Broadcasters, (32) and subsequently appointed twenty-two members representing industry as well as public interest organizations. (33) The Advisory Committee held numerous meetings and produced a lengthy report released in December 1998. (34) Several of the Advisory Committee report's ten recommendations were addressed to the FCC. For example, the Advisory Committee recommended that broadcasters should be required to make...