FCC Media Ownership NPRM Seeks Comments on Impact of Internet

September 24, 2002. The Federal Communications Commission (FCC) finally released its Notice of Proposed Rulemaking (NPRM) [68 pages in PDF] regarding its comprehensive review of the FCC's various media ownership rules. The FCC it announced this NPRM back at its September 12 meeting.

The NPRM states that the FCC "has long regulated media ownership as a means of promoting diversity, competition, and localism" pursuant to "sections 307, 308, 309(a), and 310(d) of the Communications Act, which authorize the Commission to grant and renew broadcast station licenses in the public interest."

The NPRM continues that the Telecom Act of 1996 "fundamentally changed broadcast ownership law. Section 202(h) of the 1996 Act directs the Commission to re-examine its broadcast ownership rules every two years and repeal or modify any regulation it determines to be no longer in the public interest."

The NPRM adds that the "media ownership rules must be reassessed on an ongoing basis to ensure that they are grounded in the current realities of the media marketplace. It is only through this reevaluation that the Commission can be assured that its media ownership rules actually advance, rather than undermine, our policy goals. In this regard, we recognize that the marketplace has changed dramatically over the last few decades, with both greater competition and diversity, and increasing consolidation."

The 68 pages document seeks public comment on hundreds of specific questions. One theme that runs through many of the questions is what impact does the Internet now have on achieving the FCC's goals of promoting diversity, competition, and localism in its various ownership rules.

For example, the NPRM states (at ¶ 60) that "A recent study indicated that Internet users spend approximately 25% less time watching television stations than non-Internet users. This phenomenon suggests that the Internet may compete with television for viewers, which could reduce advertising revenues for both broadcast and nonbroadcast channels. Competitive developments such as these are not reflected in past Commission evaluations of the advertising market, yet they may have a meaningful effect on broadcasters' ability to compete in today's media market. We seek comment on how trends such as these should impact our analysis."

Also, with respect to the goal of diversity, the NRPM states that "Consumers generally have access to news, public affairs, and entertainment programming from a variety of media outlets -- broadcast, cable, satellite, newspapers and the Internet. What has been the effect of this proliferation of new media outlets on the Commission's diversity goals? What effects, if any, do these outlets have on our objective of promoting diversity and the means by which we can best achieve those goals? How should these or other outlets be considered for the purposes of analyzing viewpoint diversity? Are there unique attributes of broadcasting that should lead us to define and measure diversity without reference to other media?"

The NPRM also seeks comment on whether to count the Internet as a voice in its analysis of diversity and competition. It asks (at ¶ 124): "Is the Internet now so widely accessible that it should count as a voice? Are there characteristics of the acquisition of information on the Internet, such as the need to click a hyperlink or key in a website’s Internet address, that make it different from broadcasting such that we should not count it? Or, should these characteristics of the Internet affect the significance we give the Internet? If so, should it count as one voice or many? On the Internet, how much news and how many viewpoints are original; that is, not merely re-purposed content that also is available from local and national media outlets, such as TV stations, networks, and newspapers?"

This line of inquiry continues: "Is there any instance of an Internet service provider (``ISP´´) or other entity acting as an ``Internet gatekeeper´´ by denying a subscriber access to a news source on the World Wide Web? Is the role of a gatekeeper different between the Internet and cable or DBS? We also assume that, unlike cable or DBS, the Internet has unlimited capacity such that there is no limit on the number of news sources that a user can reach. On the other hand, some ISPs feature particular news sources on their home pages. We seek comment on these assumptions and their relevance to our analysis of diversity and competition."

The NPRM also seeks comment on how the FCC's ownership rules may affect innovation. For example, it asks (at ¶ 68), "how do our broadcast ownership rules affect innovation in the form of digital television, digital cable, Internet access, and other new technologies? Do our ownership rules hinder continued innovation? Should the Commission actively seek to promote innovation through its ownership rules, or merely avoid interfering with firms’ ability to innovate?"