Origins

     Contrary to popular opinion, deregulation is not new. Indeed, the basic concept that less government is best is an old shibboleth evident in most aspects of American life. There is a deep­ seated feeling that cuts across political lines (or most of them) that competition, rather than regulation, will lead to lower prices and higher-quality products or services. Nowhere is this truer than in an expanding industry with new players clamoring to enter the marketplace.

     Combining this background with the economics of government in the late 20th century created the seedbed for radio deregulation. On all levels, the government was operating at a deficit for much of the period after World War II. Federal deficits mount annually, forcing Congress and the executive branch to consider ways of cutting costs-or at least of carefully assessing the benefits of new, let alone existing, rules and regulations. Paperwork reduction became a byword after the 1970s as government sought to root out rules that were no longer needed but expensive to maintain.

     When deregulatory consideration was applied to broadcast­ ing, it involved a basic review of the practical meaning of the Communication Act's concept of "public interest, convenience or necessity," which had guided FCC decisions since 1934. As society changed, so did at least some views of what the government could or should accomplish. To varying degrees an ideo­logical battle, there was at least broad agreement that the government could no longer do everything.

     In 1972 FCC Chairman Richard Wiley initiated a search for "regulatory underbrush" that could safely be eliminated without harm to broadcasters or their audiences-and within six years the commission had dropped or modified some 800 mostly minor rules. Many concerned small technical changes, and others reduced reporting requirements. This exercise set a larger process in motion.

Radio Deregulation Proceeding: 1978-81

In 1978 the National Association of Broadcasters (NAB), always seeking ways of reducing the burden of government on ​​its member stations, petitioned the FCC to consider dropping four requirements that affected radio. These included processing guidelines (used by the commission staff to decide on the granting of new and renewal license applications) that were designed to limit on-air advertising and promote non-enter­ tainment programming. In addition, the NAB wanted the FCC to drop formal program log requirements as well as the complex process known as "ascertainment," which required licensees to learn more about their community of operation (and reflect that knowledge in their programming).

     The petition was a good example of perfect timing, for it paralleled the thinking of many staffers in the FCC's Broadcast Bureau. Prompted in part by the NAB petition for rulemaking, the staff undertook its own studies of the radio business, noting especially how many stations had taken to the air since many of the rules had been established. They also developed a somewhat complex economic policy model that served to ques­tion the continuation of the rules the NAB targeted.

     In September 1979 the commission issued a Notice of Inquiry and Proposed Rulemaking concerning the deregulation of radio. Pragmatic in tone, the long notice (80 pages in tiny Federal Register type) conceded that with the removal of the processing guidelines on programming there "will be a tendency toward program duplication and imitation" (Paragraph 144). But it also asked whether this would matter, given how many stations were now on the air, including multiple signals in all but the tiniest towns.

     Release of the notice brought forth a torrent of public reaction. In the several months allowed for public comments, some 20,000 were filed, filling shelves of notebooks in the Broadcast Bureau's public file room. They were often emotional-arguing that dropping program guidelines would lead to the elimination of religious or some other kind of minority-interest programming or that letting go of the advertising guideline would lead to a flood of commercials on the air. Some claimed that elimination of the logging requirement would remove a useful tool for those who watched closely how well stations performed. In addition, critics held that elimination of the ascertainment rules would lead to even more "plain vanilla" radio, which would sound the same no matter where a facility was located.

     The sheer amount of filed comments took the staff nearly a year to process and consider. Early in 1981, after concerted internal debate, the FCC released a Report and Order dropping the four radio rules that the NAB had originally proposed be dropped. On the very day of the order's release, the activist office of communications of the United Church of Christ filed a court appeal and requested that the rule change be stayed pending a final decision. Not surprisingly, the broadcasting industry cheered the FCC decision, restating that the rules being dropped had little to do with program quality or service to listeners.

     The U.S. Court of Appeals largely upheld the FCC rulemaking. It remanded for further action one piece of the decision­ concerning the dropping of program logs. The FCC had replaced the logging rule with a requirement that stations develop a list of community problems and programs aired that addressed those problems. The original order called for this to be done annually, and with the court's remand, the FCC made this a quarterly process, with station reports going into each station's own public files rather than being sent to Washington. The change passed muster with the appeals court.

     Looking back two decades later, it is difficult to understand the emotions this proceeding created at the time. The issues now seem small and marginal, though at the time many critics saw the FCC decision as a watershed. For if the commission no longer concerned itself with the content that radio stations provided, what was the point of regulation, and what would happen to the industry? How could licenses be issued in the public interest if there was no longer any effective measure of what the public interest was? How could people complain about and seek to improve local station practices if the prime tools they had used previously (the station's local market ascertainment study or composite logs showing a typical week's programming and advertising) were eliminated? These critics argued that the new "problems and programs" listing would not be of much use, certainly not in the way the old rules had.

Continuing Deregulation: 1980-2000

     The 1981 rulemaking applied only to commercial radio. However, in parallel rulemakings commenced in 1981, the FCC eventually dropped the same four rules for noncommercial radio in 1984, and for television stations a year later. As many had predicted and others had feared, the radio deregulation proceeding paved the way for more substantial actions in the years that followed.

     At virtually the same time, the FCC dropped its long and often complex license renewal form, replacing it with a mere postcard with a handful of easy-to-answer questions. Where stations had previously often filed a box of material, the simple postcard itself would often suffice now. Congress joined in the process, lengthening radio station licenses from three years to seven in 1981, and to eight in the 1996 Telecommunications Act. And beginning in 1982, licensees could buy and sell stations like any other property when the FCC dropped its "anti­ trafficking" rule, which had required that licenses be held for at least three years before they could be sold.

     Many rules were not as emotionally charged. Beginning in 1981 the FCC steadily reduced its former requirements on how much engineering expertise a station needed to maintain. Reversing its traditional approach, the commission argued that as long as a station was not creating interference to others, how good or how poor its own signal was would be better regulated by marketplace competition than by stiff rules. A station with poor-quality signals would rapidly lose its audience and advertisers. A boon especially to smaller stations, the relaxed rules allowed them to share engineers or merely to have one on call rather than on the premises.

     Higher on the emotional scale was the 1987 elimination of the FCC fairness doctrine. The decision made clear that licensees were the absolute authority on what issues and points of view they aired. Another shibboleth collapsed in 1992 when the FCC first allowed an owner to control more than a single station of each type (AM and FM) in a given market. This spelled the end of the long-established "duopoly" rule, created in the 1940s when there were fewer than 1,000 stations on the air.

     The 1996 Telecommunications Act included provisions making it very difficult to challenge a broadcast license (such a process had briefly become a sport in the late 1960s and early 1970s, though few stations actually lost their licenses). The FCC would now have to find the incumbent licensee undeserving of a continued license before it could even consider a possible challenger.

     The same act greatly expanded the number of stations anyone could own. In the 1940s the FCC had created de facto rules allowing ownership of no more than seven AM and seven FM stations nationally. As the industry expanded, so did pressure to raise those admittedly arbitrary limits. Finally, in 1985, the FCC increased them by five stations each-to 12 and 12. The limits rose again in 1992, to 18 and 18, and to 20 and 20 by 1994. With the 1996 Telecommunications Act, Congress eliminated any national cap on radio station ownership. By the turn of the century, the largest radio owners controlled nearly 1,200 stations.

     Did all of this deregulation change the face of radio broadcasting? Certainly the economic and structural changes concerning ownership have considerably modified what was once a business of many small groups or individual owners. But the evidence remains inconclusive that elimination of the FCC's radio license processing and content rules two decades ago made any difference that competitive pressures would not have brought about anyway.