DIGITAL HIGHWAY ROBBERY Where is the "competition" the Telecommunications Act was supposed to provide? By Robert W. McChesney The 1996 Telecommunications Act has just marked its first year of existence. From Bill Clinton to Newt Gingrich, the bipartisan proponents of the legislation promised it would unleash a "digital revolution," combining fantastic technologies with the genius of the unregulated market. At the very least, competition would improve products and services and lower cable and telephone charges for consumers. In the long run, the Telecommunications Act would usher in the Information Age, an era of unprecedented human freedom and economic prosperity. None of the above promises have materialized, nor is there any reason to believe they will. Here's what has happened: In early February, the Federal Communications Commission began allocating the digital spectrum to the existing commercial broadcasters. Without any public debate or competitive arrangement, the largest media companies in the world are being handed what could become the equivalent of at least five new channels in every market where they currently own one. This near-secret process virtually guarantees that Disney/Cap Cities, Time Warner, General Electric, Westinghouse, Viacom, the Tribune Company and the News Corporation, among others, can maintain their rule over U.S. media for another generation or two. It is worth noting that The Washington Post estimated the value of this digital spectrum to run as high as $70 billion. The stench of corruption is so thick that The Wall Street Journal even ran a front-page article on March 17 deploring the giveaway, and Bob Dole followed suit in a New York Times Op-Ed two weeks later. As Senator John McCain puts it, broadcasters "are about to pull off one of the great scams in American history." Since the Telecommunications Act gave a green light to consolidation by lifting many media ownership restrictions and advising the F.C.C. to eliminate the rest as soon as possible, its passage was like firing the gun to launch the Oklahoma land rush. In telephony, the seven regional Baby Bells will soon be reduced to five because of the Bell Atlantic-NYNEX and PacTel-SBC Communications mergers. MCI is joining with British Telecom, and almost all industry analysts expect even more consolidation in the next few years. MCI president Gerald Taylor states that the probable outcome will be "four to six global gangs" dominating the world telecommunications market. The recent World Trade Organization telecommunications "liberalization" deal -- pushed for by the United States on behalf of its telecom firms -- almost assures that outcome. In broadcasting, the major networks are now permitted to own stations reaching up to 35 percent of the population, and there are loopholes that effectively make the percentage somewhat higher. Rupert Murdoch's Fox Broadcasting purchased the New World chain in 1996 and now has twenty-two stations reaching 40 percent of the population. Westinghouse's CBS, G.E.'s NBC and Disney's ABC are all shopping to expand their holdings to the legal limit. In radio, the restrictions were loosened even more, and the past year has seen a wave of unprecedented consolidation. The two largest radio chains now control some 180 stations between them; one, Westinghouse, captures 40 percent of all radio revenues in New York, Chicago, Philadelphia and Boston. In cable television, as Variety notes, "mergers and consolidations have transformed the cable-network marketplace into a walled-off community controlled by a handful of media monoliths." To communications companies, then, the act has been a big success. The U.S. commercial media system is currently dominated by a few conglomerates -- Disney, the News Corporation, G.E., cable giant T.C.I., Universal, Sony, Time Warner and Viacom -- with annual media sales ranging from $7 billion to $23 billion. These giants are often major players in broadcast TV, cable TV, film production, music production, book publishing, magazine publishing, theme parks and retail operations. The system has a second tier of another fifteen or so companies, like Gannett, Cox Communications, Dow Jones, The New York Times Co. and Newhouse's Advance Communications, with annual sales ranging from $1 billion to $5 billion. That the 1996 Telecommunications Act's most immediate effect was to sanctify this concentrated corporate control is not surprising; its true mission never had anything to do with increasing competition or empowering consumers. Among other things, it was about getting the issue of fundamental communications policy-making off the Congressional and public agenda and safely installed in the hands of the F.C.C. and other administrative agencies, where special interests duke it out for the best possible deals with minimal or nonexistent public involvement. It was also about having a statute that rejected the notion that there was a public interest in communication that the market could not satisfy. The only debate concerned whether the cable companies, the broadcasters, the Baby Bells or the long-distance carriers would get the most breaks. A few crumbs were tossed to "special interest" groups like schools and hospitals, but only when they didn't interfere with the pro-business thrust of the legislation. Why did Congress give the act such overwhelming bipartisan approval? Most members of Congress are very comfortable handing issues over to big business, especially when the corporate cause is encased in the approved jargon of "choice," "competition," "free markets" and the like. Also, the debate was framed in terms of technocratic issues that few members could possibly have understood. Finally, one need only look at the strength of the broadcast, cable, computer and telecommunications lobbies. The National Association of Broadcasters, for example, is generally regarded as one of the two or three most dominant lobbies in Washington, if not the absolute leader. The N.A.B.'s PAC alone -- not to mention member companies and executives -- has increased its contributions to Congressional races fivefold over the past decade, to nearly $1 million by 1996. The phone companies are every bit as lavish. By any known theory of democracy, such a concentration of control over media into so few hands, especially hands that have distinct self-interests that are often at odds with the needs of a democratic political culture, is a severe problem. Yet the sponsors of the Telecommunications Act said not to worry. If their beloved "free" market didn't introduce competition and break up the corporate media monopoly, digital technology and the Internet would. Yet it is with the Internet that the Telecommunications Act reaches tragic proportions. In keeping with the model the corporate giants prefer, the key decisions on the Net's future will be made by the F.C.C. and other administrative bodies, and these decisions, unbeknown to the general public, will probably determine its future course. Guided by the dictum "Whoever makes the most money sets the course," the Internet has already turned dramatically away from the noncommercial, nonprofit, independent and open public sphere that it promised to be just a few years ago. The media, telecommunications and computer giants are doing everything within their power to see that the Internet is drawn into their empires. The outcome is still very much in doubt -- and the Internet will likely remain a tremendous and even revolutionary asset in many respects -- but there is little reason to believe that digital technology unaided by social policy can miraculously overcome the power of the media and communications conglomerates. As Frank Beacham, one of the Internet's earliest and most fervent advocates, lamented last year, the market-driven Internet is shifting "from being a participatory medium that serves the interests of the public to being a broadcast medium where corporations deliver consumer-oriented information. Interactivity would be reduced to little more than sales transactions and e-mail." The most disastrous consequence of the Telecommunications Act, however, may well be the F.C.C.'s new policy to convert broadcasting from analog to digital formats. The telecom law advised the F.C.C. to institute such a policy and to favor the existing broadcasters (surprise, surprise), though otherwise it provides little instruction on how best to proceed. With the switch to digital television, the technical quality will improve, the number of channels will have the potential to increase by a factor of at least five and television sets will likely become a primary means for Americans to access the World Wide Web. This will be a communications revolution on the level of the introduction of AM radio in the twenties and VHF television in the forties and fifties. "Everything will be different" with digital television, F.C.C. chairman Reed Hundt proclaims. "The change is so extreme that many people have not grasped it." The White House and Hundt claim that handing out new licenses is no giveaway, because while they will allow the existing commercial broadcasters to use chunks of the digital spectrum at no charge (as is the current practice) the F.C.C. will also require them to do some "public interest" broadcasting for as much as 5 percent of their airtime. An inkling of just how rigorous Hundt's new "public interest" standard might be came last summer when the F.C.C. instituted a new policy whereby commercial broadcasters are required to do three hours of children's "educational" programming per week. The only catch is that these shows will all be advertising-supported, which means that the basic problem is not eliminated. The Wall Street Journal observes that many advertising agencies regarded the deal as providing a "marketing bonanza" for Madison Avenue, which is always on the lookout for new ways to carpet-bomb the "littlest consumers." The most "radical" public service proposal by Senator McCain, Hundt and the Clinton Administration is to require some free airtime for political candidates, whereas "moderates," like The New York Times, merely ask that the broadcasters be required to speed the conversion to digital format. Regardless of the final deal, when the dust clears the commercial broadcasters will be sitting in the catbird seat. What is being negotiated now are the terms of the surrender. Indeed, by proceeding with the spectrum allocation before determining a public interest standard, the F.C.C. is effectively giving away whatever leverage it might have. The F.C.C.'s digital TV plan is a ripoff, pure and simple. Instead of six to ten "free" channels in every market we may have forty to a hundred, but they will be owned by the same corporations, all mimicking one another to provide the tried and true commercial fare. Or the media giants may attempt to use the spectrum for nonbroadcast applications, if that seems more profitable. We are told by countless P.R. flacks that the commercial broadcasters will "give the people what they want," but the truth is that they will, as always, give advertisers and their shareholders what they want. "We're here to serve advertisers," CBS C.E.O. Michael Jordan recently stated. "That's our raison d'être." In all these areas -- media and communications corporate concentration, the Internet and digital television -- it is imperative that we have the public debate that the corporate interests have done so much to prohibit. There are lots of ideas floating around outside the corridors of power. Why not lease the spectrum and use the proceeds ($2 billion to $5 billion annually) to subsidize all forms of noncommercial broadcasting? Why not require broadcasters to provide advertising-free news and children's programming every day, and why not have the decisions for this programming made by kids' TV producers and journalists, insteady of by Rupert Murdoch and other corporate chieftains? Why not tax advertising and use those funds to subsidize kids' TV and noncommercial journalism? Why not make sure that there are dozens of digital TV channels for public access, community groups and noncommercial utilization? Why not require as a licensing condition that broadcasters not televise any political advertising? It is not enough to give free airtime; we need to abolish the entirely bogus, anti-democratic practice of TV political ads. What we need then is another Telecommunications Act, but one that reflects the full intelligence and interests of our population, not the needs of a handful of super-powerful corporations. There has been a groundswell of media activism in the past year or two, with the founding of the Cultural Environment Movement and the Media & Democracy Congress, and the renewed interest by organized labor in media policy issues. Moreover, Representative Bernie Sanders and members of the Congressional Progressive Caucus have earmarked breaking up the media as a key issue for democratic politics. But we have a long way to go. The lesson for activists of all stripes is clear: As long as we have the current media system, progressive social change is going to be vastly more difficult, if not impossible. It is incumbent upon all democratic activists to incorporate media politics into their agenda. ===================================================== Robert W. McChesney teaches journalism at the University of Wisconsin. He is the author of Corporate Media and the Threat to Democracy (Seven Stories) and co-author, with Edward S. Herman, of The Global Media: The New Missionaries of Corporate Capitalism (Cassell). ===================================================== Linkage: Text of the 1996 Telecommunications Act (Library of Congress) http://thomas.loc.gov/cgi-bin/bdquery/z?d104:SN00652: ===================================================== Copyright (c) 1997, The Nation Company, L.P. All rights reserved. Electronic redistribution for nonprofit purposes is permitted, provided this notice is attached in its entirety. Unauthorized, for-profit redistribution is prohibited. For further information regarding reprinting and syndication, please call The Nation at (212) 242-8400, ext. 226 or send e-mail to Max Block at mblock@thenation.com. http://www.thenation.com:80/issue/970421/0421mcch.htm