Signal Victory for the First Amendment?

When Congress passed the Radio Act of 1927, the US airwaves became "public" property. This scarce resource, Congress concluded, must be conserved and regulated for the benefit of all. The Federal Radio Commission (which evolved into the Federal Communications Commission) was set up to allocate frequencies, issue licenses, and set technical standards. Thus ended a several-decades-long era during which there had arisen a market for use of the airwaves. And thus, too, arose a system of extensive state control of telecommunications, a system whose present rationale is still based on the principles that motivated passage of the 1927 act.

Technological developments, however, now occurring at breakneck speed, have all but completely undermined the rationale for airwave regulation. A profusion of new and refined technologies- among them microwave and low-power transmission, cable, and fiber-optics, for example-has shown the antiquity of regulatory principles and their inapplicability to today's telecommunications world. One emerging technology that promises to deliver an especially powerful blow to the very foundations of communications regulation is direct-to-home satellite television. (This technology is commonly referred to as "direct broadcast satellite" TV. This latter term, however, is reserved by those in the industry and by regulators for a certain type of direct-to-home satellite TV, one that satisfies specific technical criteria. Since this distinction is not important from a nontechnical point of view, I shall throughout this article use the term "direct broadcast satellite" (DBS) TV to refer to all direct-to-home satellite TV service.)

The advent of DBS television, which went into commercial operation only a few months ago, will force serious rethinking of several fundamental aspects of regulation, including those concerning freedom of speech and antitrust. That DBS television presents such a bold challenge to the prevailing regulatory rationale follows from how DBS works.

You may have seen a satellite "dish" antenna, measuring 10 to 15 feet across, sitting in someone's back yard or seen an advertisement for one in your local newspaper. These, however, have nothing to do with DBS. These large, costly dishes are intended to receive signals from existing low-power satellites. And the signals in question were never intended to be received by individual homeowners. Instead, these signals are meant to deliver programs to local TV stations and cable-TV systems; to deliver pay-to-view programs to hotels, motels, and cable-TV systems; and to transmit unedited programs from on-the-spot locations to the TV networks' headquarters.

The legality of intercepting these signals with backyard dishes-an estimated 50,000 are now in use-is uncertain. Some communications lawyers refer to such reception as "piracy." Others argue that it's impossible-and wrong-to prevent people from receiving a signal that literally "falls on their doorstep." In any case, these signals have nothing to do with DBS.

By contrast, DBS is intended from the beginning for individual homeowners. Direct broadcast satellites use more-powerful transmitters-about 200 watts, as opposed to the roughly 20 watts used by existing TV satellites, though the use of lower-wattage transmission (in the 55-to 60-watt range) has recently been discussed. This allows the homeowner's receiving dish to be much smaller-about three feet (one meter) in diameter-and to be mounted on rooftops and conventional TV masts, rather than anchored in the ground. The cost for the DBS dish and its electronics is about $600, compared with an average $10,000-and as much as $50,000-you would pay for the 5-meter dishes used to intercept conventional satellite TV signals.

A direct-broadcast satellite, like other satellites transmitting TV signals to earth, is equipped with "transponders." These receive the original signals sent from an earth station, amplify the signals, then rebroadcast them back to earth. Also like existing communications satellites, direct broadcast satellites are in geosynchronous (or geostationary) orbit-that is, they take exactly 24 hours to circle the earth and hence appear to be fixed in the sky. Therefore, a DBS dish doesn't need to track the satellite. It can be fixed in position and will always point at the spot in the sky where the satellite appears. Moreover, the various DBS operators who have yet to start up service hope to "collocate" their satellites- that is, place them in the same orbital area, only miles apart-so if your antenna can "see" one of the satellites it can see the rest as well.

By November 1982, the Federal Communications Commission had granted "construction permits" to eight companies that had applied for authority to establish direct broadcast satellites in orbit about the earth. Satellite Television Corporation (STC), a subsidiary of the federally chartered Communications Satellite Corporation (Comsat), was the first applicant and had proposed an initial operating date of late 1985.

Then, early in 1983, the FCC granted permits to additional applicants. At least two of these proposed to use existing low-power satellites to provide DBS services, starting in 1984. Under pressure from this competitive threat, STC decided to advance its initial operational date to sometime in 1984. By late 1983, one company had already started up DBS service-United Satellite Communications, Inc. (USCI), of New York City.

What USCI and the DBS hopefuls primarily aim to do is tap the market of the 20 million to 30 million American households that are unlikely ever to get cable-TV service. In their first 5 years of operation, the DBS providers project a total of 4-5 million subscribers to their services.

To see just how and why DBS is going to undermine telecommunications regulation, it's first necessary to understand the origins of such regulation. When the Italian engineer and inventor Guglielmo Marconi constructed the first "wireless" communications device in the 1890s, he didn't need anyone's permission to put it "on the air." But by the second decade of this century, radio was widely used for maritime and naval purposes. Messages about maritime hazards were being interfered with, because any station could operate on any frequency. At the urging of the US Navy, Congress passed the Communications Act of 1912. This set aside certain frequency bands for commercial users and others for amateurs and required that all transmitters be licensed.

This, in itself, did not create a problem. It simply meant that individual operators could claim an operating authority within a band of frequencies (as with amateurs or CB operators) by obtaining a license. In effect, licensed operators "owned" the frequency. Indeed, by the 1920s, as available frequencies were appropriated by licensed operators, a market in licenses grew up. People bought and sold licenses and began to treat them much as they would treat deeds to real property. This arrangement came to an end when Congress nationalized the airwaves in the Radio Act of 1927.

The basic principle and rationale of the 1927 legislation is that the airwaves cannot be privately owned. Following from this is the principle that since radio frequencies are scarce, they must be allocated to specific users (and therefore denied to other specific users). The final principle is that since specific users have been allowed to use "public" property, their use of it must be regulated.

The Federal Communications Commission (FCC)-like its predecessor, the Federal Radio Commission-took seriously its responsibility to regulate the use of the airwaves "in the public interest." It concluded early on that radio would destroy local newspapers and, therefore, that radio stations should be required to provide the cohesive force in the community that the newspaper had done. This meant that stations should be primarily local in nature: they should broadcast local news, advertise the wares of local merchants, and provide a forum for local discussion. This was the concept of "localism," which governed not only the early allocation of radio frequencies but eventually that of TV channels as well.

Under the doctrine of localism, the FCC restricted the range of radio and TV stations, in order to assure that each region of the country would be served by its own station, free from the threat of competition from stations in other areas. This resulted in reducing the profits of stations and in creating large "underserved" areas, where people could receive only one or two stations.

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