Signal Victory for the First Amendment?

(Page 3 of 3)

There is yet another area where DBS will conflict with regulation-antitrust law. Antitrust is a peculiarly American superstition. Other national governments think that big companies are good but have to be fostered by the state, so they force little companies to merge or even nationalize them all to create one big company. In the United States, by contrast, conventional wisdom says that big companies are bad, but they just grow naturally, while little companies have to be fostered by the government. So the authorities break up the big companies and keep the little ones from cooperating with each other. This superstition is likely to hamper the development of DBS.

As I noted earlier, DBS operators would like to collocate their satellites so that, in order to receive all the services, a person need buy only one dish and point it at only one spot in the sky. In addition, they would like to standardize their scrambling procedures so that a person needs only one unscrambler. (You would pay for a different unscrambling code for each DBS service, but that would be a lot cheaper than buying a separate "black box" for each one.) Moreover, DBS operators would like to have a standardized dish, so no matter which one you buy, you can still receive all the operators' signals. But if they were to try to agree on some standard, they might be accused of violating the antitrust laws. This, despite the fact that a standard would actually increase competition, because DBS subscribers could use their equipment to switch easily from one service to another.

Looking farther ahead, from both an engineering and economic standpoint it makes no sense to have several individual satellites orbiting near each other in order to achieve collocation. And, indeed, by the 1990s it will be technically possible to launch a "space platform" that could have its own power supply and attitude-control and station-keeping equipment; it could also carry many more transponders than an ordinary satellite. For each DBS operator, such a facility would be cheaper than having its own individual satellite, since the overhead would be spread over more transponders-the devices on satellites that receive signals from terrestrial stations and retransmit them to DBS subscribers-and the total number of spare transponders would be smaller than if each individual satellite had to have at least one.

A consortium to build and launch such a platform, however, might be considered anticompetitive. It might be seen, in the eyes of regulators, as reducing "potential competition" among those who participate in the venture. Or, it might be seen as freezing out those who don't participate, since the nonparticipants would have higher operating costs. In either case, the obvious benefits to the viewer, flowing from the producers' lower costs, might be lost if antitrust law blocks DBS operators from such a cooperative enterprise.

By a fortunate coincidence, the collision between DBS and regulation comes at a time when there is a strong deregulatory trend in government. The successful deregulation of the airlines, for instance, has caused people to rethink their ideas about regulation. Many of the proposals for reopening the airwaves to market forces-such as levying user charges or even auctioning off frequencies-have moved from the academic journals into policy discussion in Washington.

While denationalizing the airwaves is probably still a long way off, there has been notable progress. In 1981, the FCC eliminated many of its regulations on radio programming, giving station owners a great deal more freedom. (The limit of 18 minutes of commercials per hour was removed, for instance, as was the requirement that stations air a specific minimum amount of news and public-affairs programing.) The FCC justified its action on the grounds that with so many radio stations in operation (about 10,000 nationwide), the industry is highly competitive and doesn't need regulation. The FCC ruling was challenged in court, but in May of 1983 the FCC was upheld by a federal appeals court.

Heartened by this success, FCC chairman Mark Fowler is moving to partially deregulate TV. Under a current proposal, the so-called 5-5-10 rule would be abolished. (Under this rule, TV stations are required to devote at least 5 percent of their programming to news and public affairs, 5 percent to local programming, and 10 percent to non-entertainment programming.) The proposal would also eliminate an existing requirement that TV stations make extensive public surveys to determine the kind of programming their viewers want (a similar requirement for radio stations was lifted in 1981). The reasoning behind the deregulatory proposal is that in a competitive market, TV stations can be counted upon to try to satisfy their viewers without the burden of FCC requirements.

The FCC has also proposed abolishing its current regulations requiring TV stations to keep detailed program logs- radio stations were relieved of this burden in 1981-and to limit broadcast of commercials to 16 minutes per hour. (The FCC had found that competitive pressures on radio stations kept the amount of advertising well under the limits allowed by regulation, hence the regulations were unnecessary. The same presumption holds for TV.) As of this writing, these proposals are not final, but they indicate a strong trend.

If the FCC were to follow its original regulatory practices, it would strangle DBS just as it strangled cable TV when cable didn't fit the regulatory pattern of the time. Fortunately, DBS has the backing of some major corporations-RCA, Western Union, and CBS among them- and government agencies (think of all the satellites NASA will launch), whereas cable TV started off as a "mom and pop" activity with no political clout. This means that DBS is unlikely to be strangled. Instead, it will strengthen the deregulatory trend already evident at the FCC.

In addition, DBS may give the final push necessary to get First Amendment protection for the electronic media, since it shows the fallacy of the arguments denying that protection.

Finally, DBS puts one more gaping hole in the already tattered fabric of intellectual justifications for antitrust. Though it's unlikely that American judges and regulators will abandon their superstitions about antitrust solely because of DBS, this new technology might bring some more rationality to the subject.

Direct broadcast satellite TV is not just another technology that will bring some benefit to consumers, welcome as that might be. It also promises to be a significant catalyst in the cause of freedom, certainly in the United States and possibly in other countries, as well.

Joseph Martino is a senior research scientist at the Research Institute of the University of Dayton.

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