Ch 4 Structuring And Assigning Licenses

Week Three: Broadcast and Spectrum Regulation II
• Fairness Doctrine – prior to 1949, FCC had a policy that ‘stations should not editorialize on public issues because to do so would be an abuse of power; the rationale being that they have power and influence over the people
• 1978 – FCC had a reversal of thought; it redefined what fell into the “public interest, convenience, and necessity” and permitted editorializing

A. Centralized Policy
a. = The power to confer or withhold cast amounts of $$ to individuals/organizations that seek licenses, permissions or protections
B. Policy Problems
i. Opportunism
i. Controlling power to be certain it is used on in the public interest
ii. What is the Public Interest?
1. Majority of what FCC commissioners say it is
2. Changing perspectives
3. Technology forces regulatory change (and vice versa)
4. Role of congress and courts in affecting and negating regulatory change
ii. Differing political values
i. Defining public interest on issues for which any decision helps some people and hurts others, and for which there are differing political views
iii. Asymmetric information
i. Providing adequate information to make rational decisions when critical information is missing or misrepresented.
iv. Bounded rationality
i. Errors caused by policy maker’s lack of expertise
1. Citizens encouraged to participate.
2. Lobbyists very influential.
3. Inadequate information sometimes for rational decision-making.
4. Sometimes extreme delays in licensing and policy change matters.
v. There are no formal models of optimal processes that cope with all four problems simultaneously.
C. FCC Regulatory process
a. The public may play a role in FCC process by having access to view documents
b. Sunshine Notice = Notice of decision to be made on the Thursday following issue presented
c. The FCC changed its system for allocating station licenses because of lost revenue and transfer costs
d. Dingle Rule = FCC requirement to issue decision within 30 days in print to coincide with oral presentation made at FCC meeting
e. The educational benefits of lobbying on commissions – contributing level of expertise to commission / agency to provide information; this is a ‘symbiotic relationship.’
D. Agents
a. Effects
1. Decisions that change the set of rules in the economy.
2. Decisions that affect the personal welfare of the decision maker.
3.
b. Agents are appointed, not election
c. Agents are appointed to various positions that influence telecommunication policy; Appointees in practice are selected for ‘roles’ because they can accomplish different amounts of political capital to move policy in their preferred direction
1. All FCC commissioners are appointed by political officials
2. Utility commissioners
3. Senior congressional staff
4. Judges
E. Agent preferences
a. Shape of society (independent of personal effect)
b. Personal (self-interest – money, prestige, career positions). Note. Agents will often pursue a path of political preference to achieve another goal.
c. Shape of Society = preference of the agent when abstracting from personal interest and looking at whole of society interest in a way that is general ethical preference
d. Note. Some agent will balance public and private aspects of decisions, while others will swing in either directions
e. M-Dimensional space: Where does the agent fall (weighing the ethical from the public interest side in terms of preferences)
f. Note. Some FCC members have been known to leak decisions to the ‘trade press.’
g. Preferences in past rulings will dictate how present and future case proceedings unfold
F. FCC hearings
a. Single Applicant – No need for a formal selection process when there is only one applicant for a license. Only check “legal qualifications” to hold a license
b. Comparative – Occurs when there are multiple applicants for a license.
G. Frequency allocation
a. Frequency allocation
i. Block allocation earmarks certain frequencies for certain uses (e.g., voice, TV, DBS)
ii. Flexible allocation earmarks spectrum for a range of uses (e.g., voice and data)
iii. Open allocation does not predetermine use – FLEXIBLE USE
b. Frequency allotment assigns frequencies to certain regions or locations
c. Frequency assignment assigns frequencies to specific users or classes of users
d. Administrative licensing
i. Developed historically and most widely used
ii. Government plans spectrum allocation, allotment, and administers assignment
e. Spectrum auctions (used since 1998 in broadcasting in case of competing applications)
H. Broadcast spectrum
a. Notes
i. The spectrum by virtue of its composition has huge value for competing industries.
ii. DTV transitioned opened up some frequencies for re-auctioning.
iii. Spectrum at one time considered unusable has been found to be usable (i.e. for clandestine, military purposes – Navy communication with submarines via low frequencies)
iv. HF/VHF bands are being expended with allocation opportunities for the broadcasting of other services
v. The FCC has traditionally done a ‘lousy’ job of regulating interference within frequency bands, portions of which may be allocated to diverse service areas.
vi. Unlicensed wireless devices that operate at low, low frequencies do not need to be renewed / reviewed
b. Spectrum changes with new ways it can be used; the public interest, convenience, and necessity is more oriented toward the ‘sharing’ of spectrum in exchange for $$$
c. Acquiring a station
i. 2 options
1. Build a new facility
2. Purchase existing station
ii. “Public interest, convenience & necessity” must be shown
iii. Requirements
1. U.S. Citizenship
2. 20-25% foreign ownership in corporations
a. 1995 FCC waived rule for Rupert Murdoch to own Fox
3. No anti-trust violations
iv. License renewal
1. Filing for broadcast license renewal
a. No later than 4 months before license expires
b. Has to include public comments on violence and children, EEO measures and rule compliance
2. The FCC checks whether station has:
a. Served public interest, convenience & necessity
b. Committed any serious rule violation
c. Committed a series of minor violations that constitute a “pattern of abuse”
3. Telcom Act of 1996
a. Eliminated the comparative hearing process and introduced a two-step test for contested license renewals
1. Has the applicant committed such serious offenses as to be ineligible for a renewal? If no, the license is renewed (“renewal expectation”)
2. If yes, renewal is denied and other applications are accepted
v. Preferences
1. Minorities
a. Statement of Policy on Minority Ownership of Broadcasting Facilities (68 FCC 2d 979)
b. Metro Broadcasting, Inc. v. FCC, 497 U.S. 547 (1990)
2. Women
a. Lutheran Church-Missouri Synod v. FCC, 141 F.3d 344 (D.C. Cir. 1998)
I. Licensing
a. Renewals
i. Expectation
1. Licensees have a stronger incentive to make long-term investments related to their licenses if there is a reasonable expectation of renewal.
ii. Incumbent renewals
1. Citizens Communications Center v. FCC, 447 F.2d 1201 (D.C. Cir. 1971)
2. Central Florida Enterprises v. FCC, 683 F.2d 503 (D.C. Cir. 1982), cert. denied.
b. Transfers
i. WNCN Listeners Guild v. FCC, 620 F.2d 838 (D.C. Cir. 1979) (en banc), rev’d, 450 U.S. 582 (1981)
ii. FCC v. WNCN Listeners Guild, 450 U.S. 582 (1981)
J. Auctions
a. Three Approaches
i. Hearings (merit)
ii. Lotteries (chance)
1. FCC Authority Revoked in 1997
2. Never used for AM, FM or TV
iii. Auctions (competitive bid)
1. Auction Authority
a. 1993 (common carrier, private radio)
b. 1997 (all initial licenses and CPs including most broadcast licenses)
2. Digital TV Exemption
K. Defamation: Libel v. Slander
a. Slander
i. Malicious, false and defamatory spoken statement or report
b. Libel
i. Refers to any other form of communication such as written words or images

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