The 1934 Communications Act and the Organization of the FCC

     The FCC is an independent regulatory government agency. It derives its powers to regulate various segments of the communications industries through the Communications Act of 1934. Government radio stations are exempt from FCC jurisdiction. Congress appropriates money to fund the agency and its activities, although recently the FCC also has raised revenues through an auction process for the frequency spectrum. Divided into titles and sections, and amended numerous times since 1934, the Communications Act enumerates the powers and responsibilities of the agency and its commissioners.

     Title I describes the administration, formation, and powers of the FCC. The 1934 Act called for a commission consisting of seven members (reduced to five in 1983) appointed by the president and approved by the Senate. The president designates one member to serve as chairperson. The chair sets the agenda for the agency and appoints bureau and department heads. Commissioners serve for a period of five years. The president cannot appoint more than three members of one political party to the commission. Title I empowers the commission to create divisions or bureaus responsible for various specific work assignments.

     Title II concerns common-carrier regulation. Common carriers are communication companies that provide facilities for transmission but do not originate messages, such as telephone and microwave providers. The act limits FCC regulation to interstate and international common carriers, although a joint federal-state board coordinates regulation between the FCC and state regulatory commissions.

     Title III of the act deals with broadcast station requirements. Many determinations regarding broadcasting regulations were made prior to 1934 by the FRC, and most provisions of the Radio Act of 1927 were subsumed into Title III of the 1934 Communications Act. Sections 303-307 define many of the powers given to the commission with respect to broadcasting. Other sections define limitations placed upon the commission. For example, section 326 within Title III prevents the commission from exercising censorship over broadcast stations. Provisions in the U.S. code also link to the Communications Act. For example, 18 U.S.C. 1464 bars individuals from uttering obscene or indecent language over a broadcast station. Section 312 mandates access to the airwaves for federal candidates, whereas section 315, known as the Equal Time Rule, requires broadcasters to afford equal opportunity to candidates seeking political office who wish to air campaign messages. Previously, section 315 also included provisions for rebuttal of controversial viewpoints under the contested fairness doctrine. However, in October 2000 the commission relaxed the political­ attack rules related to section 315.

     Title V enumerates the powers of the commission to impose fines and forfeitures.     

     Title VI describes provisions related to the cable regulation. Title VII enumerates miscellaneous provisions and powers, including the power of the president to suspend licenses and transmission during times of war.

     Many of the alterations to the Communications Act since its passage in 1934 have come in response to the numerous technological changes in communications that have taken place during the FCC's history, including the introduction of television, satellite and microwave communications, cable television, cellular telephone, digital broadcasting, and personal communications services (PCS). As a result of these and other developments, new responsibilities have been added to the commission's charge. The Communications Satellite Act of 1962, for example, gave the FCC new authority for satellite regulation. The passage of the Cable Act of 1992 and the Telecommunications Act of 1996 required similar revisions to the 1934 law. Nonetheless, it has been the flexibility incorporated into the general provisions that has allowed the agency to survive for seven decades. In 1996 the passage of the Telecommunications Act provided a congressional mandate for the FCC to develop policies that would accelerate technological innovation and competition within various segments of the communications industry.

     The FCC has broad oversight over all broadcasting regulation, The commission licenses operators for a wide variety of services and has used auctions as a means of determining who would be awarded licenses. The commission enforces various requirements for wire and wireless communication through the promulgation of rules and regulations. Major issues can come before the entire commission at monthly meetings; less important issues are "circulated" among commissioners for action. Individuals or parties of interest can challenge the legitimacy of the regulations without affecting the validity or constitutionality of the act itself. The language of the act is general enough to serve as a framework for the commission to promulgate new rules and regulations related to a wide variety of technologies and services. Although the agency has broad discretion to determine areas of interest and regulatory concern, the court, in Quincy Cable TY, Inc. v. FCC, reminded the FCC of its requirements to issue rules based on supportable facts and knowledge.

     Under Chairman Michael Powell (2001- ), the commission's bureaus were reorganized under function titles. The newly formed Media Bureau, created in 2002, combines the functions of the former Mass Media and Cable Bureaus, with the new bureau overseeing the licensing and regulation of broadcasting services and the enforcement of provisions of the Cable Act of 1992. Telephone services are split between the Wireless Telecommunications Bureau, which handles wireless and PCS services, and the Wireline Competition Bureau, which promulgates rules related to long-distance and other wireline services. The Consumer and Governmental Affairs Bureau provides linkage to consumers, states, and other governmental organizations. The Enforcement Bureau oversees the Investigations and Hearings Division and resolves complaints related to implementation of regulations promulgated by the commission. The International Bureau represents the commission in matters related to satellite and international communication. The Field Operations Bureau carries out enforcement, engineering, and public outreach programs for the commission. Ten offices within the FCC support the bureaus. The Office of Engineering and Technology provides engineering expertise and knowledge to the commission and tests equipment for compliance with FCC standards. The Office of Plans and Policy acts like the commission think tank.

The FCC and Broadcasting

     Scholars differ on whether the FCC has used its powers to enforce provisions of the Communications Act wisely. Among the broad responsibilities placed with the FCC under section 303 are the power to classify stations and prescribe services; assign frequencies and power; approve equipment and mandate standards for levels of interference; make regulations for stations with network affiliations; prescribe qualifications for station owners and operators; levy fines and forfeitures; and issue cease-and-desist orders.

     The most important powers granted to the commission are powers to license, short-license, withhold, fine, revoke, or renew broadcast licenses and construction permits. The exercise of these powers is based on the commission's own evaluation of whether the station has served in the public interest, although a provision of the Telecommunications Act of 1996 has made it more difficult for the FCC to withhold the license of a broadcast station that fulfills its minimum obligations. Historically, therefore, much of the debate over the FCC's wisdom has focused on the determination of what constitutes fulfillment of a broadcast licensee's responsibilities under the "public interest, convenience, and necessity" standard. Definitions and applications of this standard have varied considerably depending upon the composition of the commission and the mandates given by Congress. Although the FCC can wield the life-or-death sword of license revocation as a means of enforcing its regulations, the commission has rarely used this power in its 70-year history.

     Indeed, critics of the FCC argue that it has been too friendly and eager to serve the needs of large broadcast interests. Early FCC proceedings, for example, illustrate a pattern of favoring business over educational or community interests in license proceedings. And yet, the FCC has at times taken action against big broadcast interests by promulgating Duopoly, Prime-Time Access Rules (PTARs), and Syndication and Financial Interest Rules, all aimed at reducing the influence of large multiple-license owners. However, recent mergers and acquisitions allowed by the FCC, and made possible as a result of ownership changes specified in the Telecommunications Act of 1996, suggest that the Congress is interested in allowing economies of scale to work within the broadcasting and telecommunications industry.

     The commission has restated the public-interest requirements numerous times over its 70-year history. The Blue Book, the 1960 Programming Policy Statement, and the Policy Statement Concerning Comparative Hearing were examples of FCC attempts to provide licensees with guidance as to what constituted adequate public service. In the early 21st century, the FCC's reliance on "marketplace forces" to create competitive programming options for viewers reflects the belief of the congressional majority that economic competition is preferable to behavioral regulation in the broadcast industry. Implementation of the Telecommunications Act of 1996 has focused on reducing unnecessary regulation for an industry that is largely regarded as mature. A biennial review process, mandated by Congress, is used to ensure that regulation is not over-burdensome.

     Viewed over its 70-year history, FCC decision making is generally seen as ad hoc. As economic and technological conditions warranted changes in regulatory policy, the commission has issued decisions that have frequently reversed the direction of its policymaking. Before the present era of deregulation, the FCC had promulgated extremely complex and detailed technical and operating rules and regulations for broadcasters, but it also gave licensees great latitude to determine what constituted service in the public interest based on local needs under its Ascertainment Policy. Once a station was licensed, the operator was required to monitor the technical, operational, and programming aspects of the station. Files on all aspects of station operations had to be kept for several years. As of 2002, under the general guidance of the "market," filing and renewal requirements for broadcasters have been greatly reduced. Previously, when two or more applicants competed for the same license, or when a Petition to Deny challenge was mounted, the commission made a determination as to which of the competing applicants was best qualified using a comparative hearing process. In the past, license challenges and competing applications frequently dragged on for years, costing interested parties thousands of dollars in legal fees. In 1993 the courts ruled the comparative process was arbitrary and capricious, and in I 997, Congress mandated that the FCC utilize a competitive bidding process in awarding broadcast licenses.

     Reliance on "the marketplace rationale" began under Chairman Charles D. Ferris (1977-81 ), when the FCC embraced a new perspective on regulation and began licensing thousands of new stations in an effort to replace behavioral regulation with the forces of competition. Chairman Mark Fowler (1981-87) endorsed the marketplace model even more willingly than his predecessor. Still, despite the flood of new stations, the Scarcity Rationale, based on limitations of the electromagnetic spectrum, remained a primary premise for government regulation over electronic media. However, new technologies have reduced the validity of the scarcity principle in recent years, although the federal government still warehouses a large portion of the electromagnetic spectrum.

     Broadcast licensees do not enjoy the same First Amendment rights as other forms of mass media. Critics have charged that entry regulation-either through utilizing the concept of "natural monopoly" or severely limiting the number of potential licenses available-effectively uses the coercive power of government to restrict the number of parties who benefit from involvement in telecommunications. Recently, broadcasters have sought to limit the introduction of new broadcast services, such as low-power FM, citing spectrum crowding and increased competition from other nonbroadcast services. Steven Breyer and Richard Stewart note that, "Commissions operate inhostile environments, and their regulatory policies become conditional upon the acceptance of regulation by the regulated groups. In the long run, a commission is forced to come to terms with the regulated groups as a condition of survival." Critics say both the FRC and the FCC became victims of client politics, as these two regulatory agencies were captured by the industries they were created to regulate; however, recent analysis suggests political influence is also an important factor in decision making.

Broadcast Regulation and FCC Policy Decisions

     Throughout its history, a primary goal of the FCC has been to regulate the relationship between affiliated stations and broadcast networks, because the Communications Act does not grant specific powers to regulate networks. When the commission issued Chain Broadcasting regulations, the networks challenged the commission's authority to promulgate such rules and sued in National Broadcasting Co., Inc. et al. v. United States. The U.S. The Supreme Court upheld the constitutionality of the 1934 Act and the FCC's rules related to business alliances, noting the broad and elastic powers legislated by Congress. The FCC has used the network case as a precedent to ratify its broad discretionary powers in numerous other rulings.

     On another front, at various times the commission has promulgated rules to promote diversity of ownership and opinion in markets and geographical areas. The Seven-Station Rule limited the number of stations that could be owned by a single corporate entity. Multiple-ownership and cross-ownership restrictions dealt with similar problems and monitored multiple ownership of media outlets-newspapers, radio stations, television stations-in regions and locations. Rules restricting multiple ownership of cable and broadcast television were also applied in specific situations. However, as more radio and television stations were licensed, restrictions limiting owners to few stations, a limitation originally meant to protect diversity of viewpoint in the local market, made less sense to the commission. The FCC made changes to ownership rules in I 985 and again in 1992, but Congress mandated a broad relaxation of ownership rules with the passage of the Telecommunications Act of I 996. In the early 21st century, broadcasters are not limited by the number of stations they can own, although the FCC enforces a market cap that limits the number of stations that can be owned within each market. Restrictions on ascertainment, limits on commercials, ownership, anti trafficking, and syndication and financial interest rules also have been eased as well. Recent waivers with regard to ownership and duopoly rules suggest that further deregulation is likely.

     Still, it is the issue of First Amendment rights of broadcasters that has generated more public controversy in the history of the Communications Act of 1934 than any other aspect of U.S. communication law. Since the earliest days of regulation the FRC and then the FCC insisted that because of "scarcity," a licensee must operate a broadcast station in the public trust rather than promote only his or her point of view. The constitutionality of the Fairness Doctrine and Section 315 was upheld by the U.S. Supreme Court in Red Lion Broadcasting v. FCC ( I969). Broadcasters complained that the doctrine produced a "chilling effect" on speech and cited the possibility of fighting protracted legal battles in Fairness Doctrine challenges. Generally, though, the FCC determined station "fairness" based on the overall programming record of the licensee. The court reaffirmed the notion that licensees were not obligated to sell or give time to specific opposing groups to meet Fairness Doctrine requirements as long as the licensee met its public trustee obligations. However, as commissioners embraced deregulation, they began looking for ways to eliminate the Fairness Doctrine. In the I985 Fairness Report, the FCC concluded that scarcity was no longer a valid argument and the Fairness Doctrine inhibited broadcasters from airing more controversial material. Two cases gave the commission the power to eliminate the doctrine; in TRAC v. FCC ( I986), the court ruled that the doctrine was not codified as part of the 1959 Amendment to the Communications Act as previously assumed. Second, the FCC applied the Fairness Doctrine to a Syracuse, New York, television station after that station ran editorials supporting the building of a nuclear power plant. Meredith Corporation challenged the doctrine and cited the 1985 FCC report calling for the doctrine's repeal. The courts remanded the case back to the commission to determine whether the doctrine was constitutional and in the public interest. In 1987 the FCC repealed the doctrine, with the exception of the personal-attack and political-editorializing rules. Then, in 2000, the courts ordered the FCC to rescind the personal attack and political editorializing rules.

     Other First Amendment problems facing the com­mission include enforcing rules against indecent or obscene broadcasts (FCC v. Pacifica [ I978]). After Pacifica, the FCC enforced a ruling preventing broadcasters from using the "seven dirty words" enumerated in comedian George Carlin's "Filthy Words" monologue on the air. However, "shock jocks" (radio disc jockeys, such as Howard Stern, who routinely test the boundaries of language use) and increasingly suggestive musical lyrics moved the FCC to take action against several licensees in 1987. In a formal Public Notice, the FCC restated a generic definition of indecency, which was upheld by the U.S. Court of Appeals. Spurred by Congress, the commission stepped up efforts to limit the broadcast of indecent programming material, including the graphic depiction of aborted fetuses in political advertising. As of 2002, the FCC enforces a "safe harbor" restriction for broadcast material. Indecent programming is limited to times when children are not likely to be in the audience (10 P.M. until 6 A.M.).

     Other perennial areas of concern for the commission include television violence, the number of commercials broadcast in given time periods, the general banality of programming, and many issues related to children's television. Several FCC chairman and commissioners have been successful in using the "raised eyebrow" as an informal means of drawing attention to problems in industry practices. Calling television "a vast wasteland," a phrase adopted by many critics of television, FCC chairman Newton Minow (1961-63) challenged broadcasters to raise programming standards. In 1974, under Richard Wiley (1972-77), the commission issued the Children's Television Programming and Advertising Practices policy statement, thereby starting a review of industry practices. Alfred Sikes ( I989-92) called for "a commitment to the public trust" when he criticized television news coverage. William Kennard (1997-2001), the FCC's first African-American chairman, encouraged minority ownership of media and equality of services in new technologies. Chairman Michael Powell has pushed for voluntary standards as a way to speed the development of digital television.

     Interest in children's television was further renewed in 1990 by the passage of the Children's Television Act, which reinstated limits on the amount of commercial time broadcast during children's programming and required the FCC to consider programming for children by individual stations when those stations seek license renewal. Television stations must air at least three hours of prosocial programs for children every week. The commission, under Chairman Reed Hundt (1993), adopted a new Notice of Inquiry on compliance in this area. In 1996 Congress became increasingly interested in reducing the amount of violence on television. Industry representatives agreed to development of a ratings system that could be used in conjunction with V-Chip technology available in modern televisions.

     The contemporary FCC has many critics who contend that the agency is unnecessary and the Communications Act of 1934 outdated. Calls to move communication cation policymaking into the executive branch, through the National Telecommunications and Information Administration (NTIA), or to reform the FCC have been heard from both industry and government leaders. Congress has grappled with FCC reform through the legislative process in its most recent sessions. Also, the FCC has refocused its regulatory priorities as a result of the passage of the Telecommunications Act of 1996 and the Balanced Budget Act of 1997. Digital radio and television authorizations, deployment of broadband telecommunications services, and media ownership are among the items that required the FCC to promulgate new rules in order to meet its mandates. Legislative initiatives have provided the FCC with a substantial agenda of items over the past decade, and the creation of new telecommunications services through spectrum auctions has provided substantive revenues for the government. However, concerns over the growth of a "digital divide" (inequity in the deployment of telecommunications services among rural and urban users), have prompted watchdog organizations to charge the FCC with inadequate oversight and probusiness rule­ making. Convergence of telephone and broadcasting technologies could make the separate service requirements under Titles II and III difficult to reform. Whether the commission will be substantially changed in the future is uncertain, but rapid changes in communications technology are placing new burdens on the commission's resources.