In the past 10 years the Federal Communications Commission (FCC) has been slowly disentangling the regulatory knot tied around the electronic communications industry. Consumers, consequently, have been treated to a boom in telecommunications.
Cable systems are sprouting up all over. Radio and TV stations swell the airwaves in record numbers. New services like direct broadcast satellite, which would beam signals from a satellite directly to a home receiver, are lining up for frequency allocations. Long-distance phone companies undercut Ma Bell's prices, while multipoint distribution services send pay-TV signals to hotels and apartments.
The FCC stands at the center of this communications revolution; and at the center of the FCC is Mark S. Fowler, chosen by President Reagan to succeed a chairman who had made significant moves to deregulate radio and telephone. Would the Reagan FCC pick up the ball—or revert to the old game?
Initial signals were contradictory. The conservative National Association of Broadcasters applauded Reagan's choice as someone who would "take a more questioning attitude toward change"—in this case, deregulation and new competition. And Fowler was reported to have criticized the recent FCC for some of its loosening of the regulatory knot. Yet his first public speeches as the new chairman announced an era of "unregulation" and promised to sweep away the bureaucratic fog emanating from Washington which, he said, "obscures the environment, clouds thinking and prevents things from growing."
Mere deregulatory rhetoric? To get a clearer picture of what lies ahead for telecommunications, journalist Milton Mueller interviewed the new FCC chief for REASON.
REASON: Chairman Fowler, as head of the FCC you're responsible for regulating broadcasting, cable, the telephone system, satellites, and a host of other forms of radio communication. All of these areas seem to be undergoing tremendous technological, political, and economic change. How does it feel to be in the middle of all this?
FOWLER: Well, it is obviously a challenge. Technology has outstripped the program of regulation of this agency, and one of our challenges is to attempt to make our regulatory program state-of-the-art, if you will. But it is also disturbing to find yourself in that maelstrom, because of the power of the position. I find it abhorrent that we have business groups coming to us as supplicants, making cases to be permitted to enter a market. The economy has become so politicized that all must venture to Washington to be able to do business. So it's troubling in a way.
REASON: Tell us something about your background.
FOWLER: I'm a US taxpayer and a former fetus! I like to add that—that seems fashionable nowadays.
I was involved in broadcasting for 11 years, roughly from 1959 to 1969, although I didn't own a station. First I was an announcer, then I moved into production. I was involved in sales heavily and in management as a program director. Then I went to law school and came to Washington to practice with a communications firm here. In 1975 I left and started my own firm, which was about the same time I began working for then-Governor Reagan as communications counsel.
REASON: As a program director, how did you feel the impact of the FCC?
FOWLER: We had a lot of rules and content guidelines we had to follow—so much news, so much public-affairs programming, so much what they call "other," such as religious, instructional, and educational programming. Broadcasters would often bury public-affairs and instructional programming in the so-called graveyard hours because it was a tune-out; nobody listened to it. This suggests to me that the public didn't particularly like the kind of programming the government mandated to serve "the public interest."
REASON: How do you evaluate your predecessor in this job, Charles Ferris?
FOWLER: I'll let other people do that, but I think that one of the differences might be that, although many of his policies emphasized deregulation, he would say the FCC should not deregulate until it is sure that there is a competitive marketplace—then and only then may it deregulate in the public interest. I happen to believe that many of the regulations we have actually preclude competition, so we have to deregulate in order to have a competitive market.
REASON: Ferris was instrumental in pushing through radio deregulation. I take it you approve of what he did?
FOWLER: A good step, but just a first step. Beginning back with Chairman Dean Burch in the early '70s, the FCC started to eliminate regulations, a policy he called deregulation. Succeeding FCC chairmen have continued the process. I have said that we're going to unregulate, and that's the difference. We're going to finish the job.
REASON: Total deregulation?
FOWLER: To the maximum extent possible—because only in this way can we ensure maximum consumer choice and diversity. We are not unregulating in order to help business, although that is a definite benefit, because it eliminates costs that are inevitably passed on to consumers. But present regulations also prohibit players from entering other markets. They constitute barriers to entry into, for example, the video marketplace. So to unregulate, we must also permit the maximum number of players to play.
REASON: Two specific examples of eliminating barriers to entry are the low-power television proposal, which would make room for thousands of new local TV stations, and the direct broadcast satellite (DBS) proposal, which fosters competition with the networks. Yet existing broadcasters have opposed these measures because they would increase competition. Do you see any value at all in protecting existing businesses from competition?
FOWLER: As a general proposition, no. You mentioned low-power television and direct broadcast satellite. Those are two matters that are pending, so I cannot indicate specifically what my position would be. Otherwise, I might be said to have prejudged those items and be disqualified from voting. But as a general matter, I would say you cannot—nor should you—stop new technology, new competitors. It's not our business to be either pro or anti any one technology. In that sense we're pro-nothing, or, putting it another way, we're pro-telecommunications.
REASON: Is the broadcasting industry dead set against DBS? Will this prevent the commission from permitting it?
REASON: There are some broadcasters who are opposed. However, we have said that we are not going to protect protectionism, and I think broadcasters understand that. I don't think they're asking to hide behind the skirts of the agency. But on the other hand, I would say that when there are new forms of competition, new technologies, we ought not to preclude present players, such as broadcasters, from being involved. Again, let the players play. And I think that has gotten a good response from the industry. They realize that we're not going to erect or maintain artificial barriers to insulate them from competition. But on the other hand, we'll let them get involved in other areas where they are now precluded by our policies and rules.
REASON: AM radio stations now use a frequency bandwidth of 10 kilohertz. Some other countries use a spacing of 9 kilohertz. A shift to 9 would conserve spectrum space and make room for new competition in AM radio. Although a shift was endorsed by the Ferris FCC, your administration has opposed it. Why?
FOWLER: As a matter of fact, we have just voted to retain 10-kilohertz spacing. We looked at it from a cost-benefit perspective. The costs were fairly definite. It would cost the industry up to $40 million to make the technical change. Between one and two million digital receivers would become obsolete. The change in stations' frequency would cause the public some disruption, although minor. The service area of existing stations would decrease because of what we call adjacent channel interference. Such interference between the existing station and the new one might reduce the service area of an existing station by up to five percent. Another drawback is the disruption it would cause the FCC, because all of the nearly 5,000 AM stations would be required to file applications. Total up all these costs, and then look at the benefits of the other side. It would create between 400 and 1,400 new stations. From a technical standpoint, we didn't know where 400-1,400 new stations would fit. Three-quarters of them might have to be built in Wyoming or Utah to comply with our technical rules. Whether 400 or 1,400 new stations would be created depends on the power used—the lower the power, the higher the number of new stations. So you can play numbers all day. You could make them very low power stations, and you could have created 3,000 new stations. So we felt that the costs were great and the benefits were not terribly certain. The factual evidence did not permit us to be able to make a finding that the change would be worth it, frankly.
REASON: You don't think the added competition would benefit the public?
FOWLER: We now have almost 9,000 radio stations if you combine AM and FM. In Washington, for example, we have 27 stations.
REASON: The whole basis for the existence of the FCC is that the electromagnetic spectrum is a scarce resource. Because it is scarce it must be allocated by someone, but the market can't allocate it because we don't know how to define private property rights in something so intangible. So we are left with government allocation. Now, both you and President Reagan claim to be strong supporters of the free market. Do you feel comfortable in control of a nationalized resource?
FOWLER: Well, I question the whole concept of the scarcity of spectrum as a predicate which then requires the government to regulate how spectrum is allocated. Increasingly, technology makes it possible to squeeze more services on the air with the same spectrum. Secondly, anyone who wants to get into broadcasting can get a station for as little as $100,000, which is the equivalent of buying a pizza place in Washington, D.C. Anyone who wants to get in can get in. I just don't think it's scarce in that respect. And of course, with all the new technologies which don't use spectrum, such as cable, it makes that argument even less attractive. Besides, all resources are scarce.
REASON: Exactly—there is always more demand for spectrum than can be satisfied. Particularly today, when there are many new services trying to use it, how do you decide who gets what? To make spectrum space available for DBS, for example, you might have to deny it to high-definition television. How can the government make such decisions?
FOWLER: Well, you're raising a very fundamental policy question, and it's one that I'm not really prepared to comment on yet. Implicitly, you raise the whole issue of how the government is involved and indeed whether it ought to be involved.
REASON: Are you familiar with the proposals to define private property rights in the spectrum?
FOWLER: No, I'm not.
REASON: Do you believe that the First Amendment should apply to the electronic media?
REASON: Do you believe it does now?
FOWLER: No, not fully. And we're going to look at every rule and policy that affects First Amendment rights. If I had my way as a general philosophical proposition, we will seek to eliminate them.
REASON: Would that include the Fairness Doctrine?
FOWLER: That's an area we want to look at. Again, I don't want to prejudge any of this, but the Fairness Doctrine tells broadcasters that they have to broadcast things they might not otherwise broadcast, and I think that's a First Amendment question by anyone's definition."
REASON: Does the FCC have the power to eliminate the Fairness Doctrine, or would that require an amendment to the Communications Act?
FOWLER: There are two prongs to the Fairness Doctrine. One prong is that a broadcaster must actively ensure that he covers all significant controversial issues of public importance in his service area. And the second one is that if he broadcasts matter concerning one issue he must balance it with all significant opposing viewpoints. Now the second part is mandated by Congress. The first one is mandated by this agency, so we could eliminate it ourselves. The second would require Congress's cooperation.
REASON: Your desire to eliminate these regulations has enraged a number of liberal organizations, such as the ACLU, the National Citizens Committee for Broadcasting, and the Media Access Project. What do you think of the opponents of broadcasting deregulation?
FOWLER: The major philosophical difference is that they want the government to sit astride the pipeline of information and ideas and suggest, imply, or dictate to broadcasters certain kinds of programming. And I would rather say, Let's leave that to the marketplace and let the people decide through the marketplace mechanism what they wish to see and hear.
REASON: Wouldn't they say that they are trying to give the public access to the media, to make the media more sensitive to the needs of the public?
FOWLER: But the question is, Who defines what the public interest is? Is it the small interest group? I was talking with the representatives of one such group this afternoon. By their own figures, they have 8,000 subscribers, or members; and they want half an hour of guaranteed access to each broadcast station each day, so they can put on programming "that serves the public interest." Well, do they represent the public interest? Or do they represent a narrow point of view? And who decides, in any case?
REASON: But the concept of a government-defined "public interest, convenience and necessity" is written into law as the guiding standard of the FCC.
FOWLER: We believe the public interest will be more surely reflected by letting people choose, through the marketplace, what they want to hear, rather than letting four people out of seven on a commission tamper with programs and issue guidelines, policies, and rules that control what broadcasters shall broadcast.
REASON: Is there much public support for broadcasting deregulation?
FOWLER: I would say most people don't think about it, but I would submit that one of the reasons they don't is that, overall, the system serves people very well. No government requirement mandated that CBS broadcast 60 Minutes or Sunday Morning or Captain Kangaroo. I'm just using CBS as an example; the same could be said for other networks: ABC has the afternoon specials for children—that was not mandated by any government policy. No one mandated that radio carry the fireside chats of FDR. No one drew up program content guidelines during World War II, at which time radio told us every day what was happening in that great conflict. All of the program content rules and policies were adopted after WWII. No one says we have to have a Fairness Doctrine for newspapers or your magazine. And yet I think people would say that the Washington Post does on balance cover most of the different viewpoints on a particular issue.
REASON: What can citizens who support deregulation and the First Amendment do?
FOWLER: They can contact their congressmen—that's one thing. And I think the Congress is already willing to pass legislation which will enable this agency to get out of the way. But we are going to need the support of the people, so if someone does have that kind of an inclination they ought to let it be known.
REASON: What legislative proposals are coming up?
FOWLER: We're working on a very comprehensive package. I'm not able to tell you right now everything that is in that package, but it goes across the board. Nothing is sacred. Everything is being questioned. And everything has to be justified.
REASON: Political advertising is another hot topic these days. How is the FCC involved in this?
FOWLER: There are basically three areas. One, the rules require equal time for opposing candidates: candidates have a right to equal time on any station; if one candidate pays for advertising time, the other has to pay for it; if one gets it free, the other gets it free. The second area is what we call the lowest unit charge: all candidates, local state or federal, are entitled to purchase their broadcast time at the most favorable rates that are made available to a station's advertisers. The third area is reasonable access, which entitles federal candidates to air-time on stations.
REASON: Do you think these rules should be changed in any way?
FOWLER: Well, they infringe on the First Amendment, so those are areas we'd want to be looking at. I think there's some movement in Congress to look at them.
REASON: What motivation do congressmen have to change these rules? When it comes to political advertising, the Republicans and Democrats sit in judgment of their own case. As a Republican, how would you feel judging a media-access dealing with the Republican Party?
FOWLER: Well, if you believe in the First Amendment, I think you'd be looking long and hard at certain strictures which now dictate what's on the air.
REASON: In 1979 Jimmy Carter used FCC rules to acquire half an hour of network time almost a year before the election. Don't you think smaller parties, like the Libertarian Party or Citizens' Party, would have been denied time under the same rules? Is there a valid distinction to be made between the small parties and the established parties?
FOWLER: I would duck your question by saying that I don't think we should be involved at all. I feel strongly that that is just a prime example of why we shouldn't be involved. We have to play Solomon and maybe not bring as much wisdom as he did to the case.
REASON: We've just received notice that long-distance phone charges are going up considerably. Are these rate increases caused by the monopolistic structure of AT&T?
FOWLER: The decision to increase the rate of return for AT&T was made before I got here. But as I understand it, the reason was the higher interest rates that AT&T has to pay in order to borrow money and the higher costs of obtaining equity capital.
Under the laws we have now, the phone system traditionally has been a monopoly, but I can't say that the decision to increase the rate of return was based upon the fact that it was a monopoly per se. Because we're involved in common carrier regulation, we have to make a finding as to what that rate of return should be. We are, however, dedicated to promoting competition in common carrier, and I think the policies of this commission since 1970 have been to promote competition with AT&T. We're going to attempt to move that forward even more.
REASON: Is AT&T a monopoly because the government made it one or simply because it's so efficient that it pushes everybody out?
FOWLER: I don't know how to characterize AT&T. As to how efficient it is, I'm not sure anyone knows. It is a mammoth entity. As a general proposition, though, no entity ought to be immune from competition. We have networks competing with AT&T springing up all the time. MCI has built its own independent microwave network. Satellite Business Systems is creating an alternative network of transmission lines. There are others who plan to get involved. As alternatives are created, it seems to me there is greater consumer choice and in the final analysis better service at lower cost.
REASON: Cable, like the phone system, has been assumed to be a "natural monopoly" by local governments, which generally grant only one company a franchise for their area. Do we need monopoly franchises, or can different cable companies compete in the same area?
FOWLER: I think that's for the municipality or state to decide. I don't see any reason for a national policy as to whether you have one entity or several competing to provide cable service in a geographic area.
REASON: An increasing amount of social criticism centers on the electronic media. Television, in particular, is often made the whipping boy for all sorts of social problems. While its critics often go overboard, it's true that television has tremendous power in our society…
FOWLER: I think that premise may not be valid anymore. Let's take television. It's no longer just television—it's a video market now. There's not just over-the-air television. There are also the following forms of video transmission: multipoint distribution service, which is a way of transmitting television to apartments; pay cable; conventional cable; possibly direct broadcast satellite service; possibly low-power television; video cassettes; video discs. So it's the video market; it's not just television. And then there are other forms of communication—books, films, newspapers, magazines. Why is it that we now single out one form—over-the air television—and imbue it with specific social duties when we don't do the same for film, for example? Why is there this national obsession to tamper with this box of transistors and tubes when we don't do the same for Time magazine? Why don't we have a "fairness doctrine" for Time or the Washington Post, when we have one Washington Post in the city and seven television stations? I once said that television is just another appliance—it's a toaster with pictures. Obviously, I was engaging in hyperbole, but the point is, we've got to look beyond the conventional wisdom that we must somehow regulate this box, we must single it out. We should get the government out of the way, particularly when we have these sensitive First Amendment areas involved.
REASON: Thank you, Mr. Fowler.