But when the FCC has previously allowed such “corporate capture” of communication regulation to take shape, it stifled innovation and reduced competition. For example, the Radio Corporation of America (RCA) went to great lengths to (successfully) persuade the FCC to needlessly complicate the implementation of FM radio in order to protect its AM network from competition. FM radio, which was ready in the 1930s, didn’t ultimately become widespread until the 1960s.
By contrast, history tells us that if Pai really wants to create a climate of competition and innovation, he would have upheld net neutrality. Time and again in FCC history, regulation has created such a climate.
In fact, promoting consumption and access at the expense of corporate domination is the very reason for the FCC’s existence. By fostering opportunities for new entrants, rather than promoting the interests of established corporations, FCC activism and intervention have historically benefited the media industries it regulates, and the public.
FCC chairmen do not loom large in popular memory of the media industry. Far more Americans can identify Ted Turner, Steve Jobs or Bill Paley than James Lawrence Fly, for instance. But the decisions made by these chairmen matter. Consider, for example, the role that Fly — FCC chairman in the early 1940s — played in taming corporate power in broadcasting, ultimately giving Americans the ABC network through FCC regulations.
NBC originally owned and operated two separate radio networks, named Red and Blue for colored pencil lines drawn on engineering maps. CBS and the Mutual Broadcasting System (MBS) successfully entered national broadcasting by the mid-1930s, prompting NBC executives to leverage the Blue network to prevent further competition. They inserted restrictive clauses in NBC advertising contracts limiting where and how advertisers could purchase broadcast time. They even undercut their own stated prices to monopolize new business.
Advertisers had no choice but to play along — NBC Red dominated the ratings and aired the nation’s top radio stars. Such tactics, however, frustrated everyone in the industry and limited programming choices for the public. So the FCC intervened with a ruling that denied a second station license to any network already operating one station in any American city.
NBC executives were furious. They attacked Fly by planting scurrilous articles in friendly media outlets. They sued the FCC, but ultimately lost in a landmark 1943 Supreme Court decision. Without further recourse, NBC completed the divestment of the Blue Network by selling the newly-renamed American Broadcasting Company to Edward John Noble, the Lifesavers candy magnate.
Soon competition in network broadcasting intensified and new genres of programming emerged as ABC sought to establish itself as a competitor to NBC. The first quiz show craze, for example, began as a result of ABC programming, and a new, fully-staffed network news division began independent reporting.
As new technologies developed during the 1960s, the FCC continued to play a role in encouraging diversity and access, again promoting new programs for the American consumer. In fact, there is a direct line between an FCC regulation and the creation of our modern cable news industry.
Many Americans may remember when television sets had just two dials. One was for VHF channels (1 to 13) and the other for UHF (17 to 65). Viewers rarely tuned that second dial, because UHF stations, for the most part, aired garbage. Most stations broadcast any cheap programming they could find, which included everything from old B-movies to shrieking televangelists to ridiculous exercise shows.
Then a businessman from Atlanta put his UHF signal on a satellite and sold it to cable TV operators. Ted Turner reinvested those profits in a cable news network (CNN) and built his Turner Broadcasting empire.
But Turner’s revolutionary vision depended on the All-Channel Receiving Act of 1962, a law that empowered the FCC to require that all television sets feature a UHF dial. Against the wishes of both the established television networks and much of the television set manufacturing industry, the FCC used its regulatory power to encourage program diversity and competition — not to further enshrine the interests of corporations.
Most Americans remain unaware of the role government regulation played in Turner’s success. But, as with the creation of ABC during the 1940s, American media history is filled with examples of congressional and FCC actions enhancing competition and spurring innovation to benefit consumers.
Remembering these successful examples of FCC activism in the public interest is particularly important in the wake of the net neutrality vote on Dec. 14. The decision taken by the commissioners affects all of us, because it speaks to the way we create, produce and distribute information for a democratic citizenry. It is one thing for Verizon or AT&T to demand new prices from Netflix for connectivity speed and quite another to stop Americans from accessing information from, say, a newspaper website reporting on National Security Agency spying.
Rescinding net neutrality means that the big telecoms will soon possess the power to make and enforce both of these decisions. With the emergence of Facebook, Google and Twitter, we’re already watching the Internet and Web evolve from their original incarnation as decentralized networks of exchange and connection into media that’s far more channeled and restricted. The next step of new hierarchies of service and access seem almost preordained, and the FCC vote can even be read as simply speeding up the inevitability of corporate consolidation.
The Dec. 14 vote told us much about the future of our media. The FCC could have acted in the public interest and delayed the vote, or voted to sustain net neutrality in the public interest. It could have considered alternatives, such as the possibility of regulating Internet service providers as common carriers in the future. The historical examples of the UHF dial and the birth of the ABC network show that the FCC can play a vital role in ensuring competition, entrepreneurship and fair play in American media industries.
But on Dec. 14, the three Republican commissioners showed that they lacked the courage to act as their predecessors once did.