Real Deregulation

With all the apocalyptic rhetoric around the FCC's "deregulation" decision today, you might expect the new rules to say something really radical, like "We will no longer regulate how many media outlets you can own." Instead, you'll find gems like this one: "In markets with five or more TV stations, a company may own two stations, but only one of these stations can be among the top four in ratings." A reader calling himself Uncle Brian comments: "So if I own two of the five stations in my market, one of them always has to be last in the ratings? Does that mean I have to make it intentionally suck? Do I forfeit ownership if I can't keep people from watching?"

Now, there may well be a reassuring answer out there to Brian's question. If I were writing an article instead of a blog entry, I'd call the FCC and maybe a communications lawyer or two and try to figure out how exactly the new rule should be interpreted. (Being a broadcast-policy geek, I just might do that anyway.) My point is that when a new law sounds absurd on its face and you have to go to a lawyer to make sense of it, you have not in any meaningful sense deregulated anything. In a deregulated realm, the rules are few and simple, not many and incomprehensible.

What would real deregulation of the spectrum look like? For a bracing alternative to the FCC's industry-driven tinkering with its rules, check out this piece in The Economist.

Comments

[twistedmerkin]

Just a guess, Jesse, but I suspect the rules concerning how many stations a company can own would be relevant only in regards to consolidation. If two companies want to merge, or a company wants to buy some stations, the FCC would approve/disapprove based on market share. Once the transaction has occured, I doubt the FCC would monitor station ratings to ensure that they are below a certain limit.

Having said that, I agree that deregulation should indicate a more simplified process. Deregulation frequently means just different regulation, in a more confined, complicated manner.

[Xrlq]

"My point is that when a new law sounds absurd on its face and you have to go to a lawyer to make sense of it, you have not in any meaningful sense deregulated anything. In a deregulated realm, the rules are few and simple, not many and incomprehensible."

I disagree on two levels. First, just because the new rules do not reflect a complete deregulation of the industry, this does not mean that they will not cause the industry to be significantly less regulated than it was before. Second, the number and the complexity of the rules is a poor proxy for the extent of overall regulation of the industry. A rule stating "no company may own more than one station in any market" would much simpler and easier to understand than the rule you cited, but it would also be more onerous.

[Jesse Walker]

I maybe wasn't as clear as I could have been. I agree that one complex set of rules can be less intrusive than another complex set of rules. You could call it a "mild deregulation." You could call it a "very limited deregulation." The most appropriate term would be "reregulation."

But it's not the radical change described in many media accounts. People are writing as though the FCC is giving up its powers, a la the 1970s deregulation of the airlines. In fact, it's slightly altering how and where it's applying those powers. Furthermore, its stated excuse for doing so is to prevent the courts from imposing a much more thoroughgoing reduction in the rules. You can approach that claim with varying levels of cynicism, but you shouldn't ignore it.

As for your second objection: Yeah, you can come up with simple regulatory regimes that are nonetheless incredibly intrusive. Like, say, "No one may ever use an electronic communications device for any purposes whatsoever." I said that simplicity was an important component of deregulation; I didn't mean to suggest that it was the only one.

[JDM]

Jesse,

You're suggesting the media is overhyping the impact a big business friendly government rule change will have on civil rights? During a Republican administration? How could that be?

[Hank]

I wasn't aware radio frequencies were a part of "civil rights".

[Ron C]

Agreed regarding the hysteria. Here are a couple of choice quotes that I noticed:

"This is the most sweeping and destructive rollback of consumer protection rules in the history of American broadcasting" - FCC Member Jonathan Adelstein

"There clearly now is going to be an orgy of mergers and acquisitions" -Sen. Byron Dorgan

"Mass deregulation of the mass communication is the end of democracy" -Code Pink activists chant during the meeting

And, of course, on the news hour the pundit somberly pointed out that one company could own three television stations, neglecting to mention that this would be possible only if 9 stations reach the market.

Too bad, because this issue could have used some honest debate.

[JDM]

Hank,

I wasn't either, but somehow tweaking a few government regulations is going to bring about the end of democracy. I had no idea it was *that* fragile.

[Xrlq]

"Mild deregulation" is a fair term. "Reregulation" is misleading, as it suggests that the resulting scheme is roughly as onerous as the one it replaced. It's kind of like those of us who were dissatisfied with Bush's "itty-bitty tax cut." It may not have been the tax cut we wanted, but it still was a tax cut.

I remain unconvinced by your statement that simplicity is a necessary component of deregulation. There are just too many instances out there where a simple statute or regulation is later found to be too onerous or ham-handed, so it is amended to provide for more alternatives under certain circumstances. The resulting statute/reg is usually longer, and often harder to read, than its predecessor. At the end of the day, however, its effect is to regulate less heavily than before.

[alkali]

But anyway, has anyone proposed a "squatter's rights" or homesteading allocation scheme? The spectrum is free to use and if an entity stakes out a frequency band and uses that frequency for a period of time, they gain "rights" to that frequency. I think the overbidding frenzy in Europe over 3G spectrum shows that getting the most money from the largest corporations is not necessarily good. A squatter's scheme would value spectrum use over big pockets, allowing smaller companies to compete with larger ones.

That's an interesting idea, but you have a serious transition problem. Any reform to broadcast communications which involves immediately disabling every AM/FM radio and TV is not going to happen.

[twistedmerkin]

Alkali, the idea would be that those existing AM/FM stations and UHF/VHF channels would be granted their spectrum. Only free, unused spectrum would be available to the squatters.

[W. S. Gates]

LET ALL THE AFOREMENTIONED BE A WARNING! A VERY DIRE AND SERIOUS WARNING!

And let's make damn sure none of this ever happens to the Internet.

We are presently encumbered with an over-lawyered bureaucratic stew, because early on, spectrum entrepreneurs immediately ran to the hired guns on the Potomac, instead of settling matters through private contractual means.

With this new medium (the Internet) let us, for a change, be a step ahead of the command-and-control freaks and other such assorted pencilnecks, who sincerely believe that without their incessant meddling, the world will be a chaotic place.

[cinquo]

"Mass deregulation of the mass communication is the end of democracy"

the left's view of democracy, out for all to see -- it says: DO WHAT I SAY OR ELSE

[Plutarck]

Amazing how so many commentators could miss the point...no, actually, it really isn't.

The whole idea of the is, efficiently, to control what people are allowed to broadcast (and, therefore, watch and/or listen to and/or participate in through certain forms of communications), and supposedly to protect consumers through ensuring competition. The problem is that the regulations that are supposed to ensure competition just...well, don't. Rather than having 1 channel saying the same damn thing all the time, instead we can have 3+ channels saying the same damn thing all the time.

It wouldn't be so bad if the FCC was even making a ham-fisted attempt at maximizing viewer choice and decentralization and variation...but it ain't, and it doesn't. It's rules seem mysteriously well suited to protecting those who are already on top, and only somewhat effective at keeping them from turning on each other and ripping each other apart until only one remains...but that's about it.

I'm just so damned glad we have the internet - and they better not fuck it up. One of the last remaining places where the stifling pressure of mindless conformity to that which you know is stupid can be so shirked - in the shadows of "not significant enough to make any difference at all", and the Internet.

[twistedmerkin]

The linked-to article in the Economist compared spectrum to land. This seems like a valid analogy, but, unlike land, there is an infinite amount of spectrum- use is limited only by technology. But anyway, has anyone proposed a "squatter's rights" or homesteading allocation scheme? The spectrum is free to use and if an entity stakes out a frequency band and uses that frequency for a period of time, they gain "rights" to that frequency. I think the overbidding frenzy in Europe over 3G spectrum shows that getting the most money from the largest corporations is not necessarily good. A squatter's scheme would value spectrum use over big pockets, allowing smaller companies to compete with larger ones.

[Anonymous]

It also compares spectrum to the sea. In the long run, that might be a more appropriate comparison.

[Bo Pogue]

Ditto Xlrq -- well-drafted legislation/rule & reg is authored so as to not end up in court, which often means closing off wormholes that the inspired mind could possibly exploit. Thus does a simple piece of legislation (idea-wise) become lengthy (page-wise). Mr. Walker obviously recognizes this fact. The employment of attorneys is probably not a bad idea, even when said law/rule seems to be incredibly simple -- strange things happen between law passage/rule implementation and the long walk to the court. Good attorneys can forsee potential pratfalls/alternative interpretations.

If Uncle Brian's comment were to become a court's interpretation of the rule, it would beg a zany, "The Producers"-style screenplay where a network unsuccessfully tries to chase off viewers. Hilarity ensues.

[Rick Barton]

What ever may be said of "tinkering" with partial deregulation, the result may well be to insulate at least some current outlets from new competition. (Might well be the real intent.) One of the keys to a true "free market" situation is access with out government constraint but as Jesse points out:

"There are more far-ranging proposals to remove the legal entry barriers new broadcasters face, but they have virtually no political capital behind them."