__________
CONTENTS
Table of Materials....................................................................................................... xv
Copyright Permissions............................................................................................... xix
Preface ....................................................................................................................... xxi
Part One. Spectrum and Broadcast ........................................................................ 3
Chapter 1. Why Regulate............................................................................................. 5
§ 1.1 Introduction...................................................................................................... 5
§ 1.2 Defining Spectrum ........................................................................................... 6
§ 1.3 The Early History of Broadcast ..................................................................... 15
§ 1.4 Rationales for Regulation............................................................................... 30
§ 1.4.1 Scarcity/Interference ................................................................................ 31
Coase, Why Not Use the Pricing System in the Broadcast Industry? ................ 34
§ 1.4.2 Special Interest Protectionism.................................................................. 38
Hazlett, The Rationality of U.S. Regulation of the Broadcast Spectrum ........... 38
§ 1.4.3 Consumer Preferences.............................................................................. 46
Chapter 2. The FCC................................................................................................... 51
§ 2.1 Introduction.................................................................................................... 51
§ 2.2 A Regulatory Overview ................................................................................. 51
§ 2.3 The Federal Communications Commission ................................................... 57
§ 2.4 An Overview of Spectrum Management ....................................................... 62
§ 2.5 Regulatory Tradeoffs and Allotment ............................................................. 64
Chapter 3. Zoning the Spectrum ................................................................................ 67
§ 3.1 Introduction.................................................................................................... 67
§ 3.2 Command and Control................................................................................... 68
§ 3.2.1 Making Room for PCS............................................................................. 69
Redevelopment of Spectrum to Encourage Innovation in the Use of New
Technologies ................................................................................................... 69
§ 3.2.2 Authorizing Satellite Radio...................................................................... 77
Establishment of Rules and Policies for the Digital Audio
Radio Satellite Service Band........................................................................... 77
§ 3.3 Dedicating Spectrum to Unlicensed Uses ...................................................... 83
§ 3.3.1 The Spectrum Policy Task Force Report ................................................. 83
Spectrum Policy Task Force Report................................................................... 84
§ 3.3.2 Academic Commentary............................................................................ 93
Benkler, Some Economics of Wireless Communications .................................. 93
§ 3.4 Alternative Approaches................................................................................ 101
§ 3.4.1 Authorizing Additional Licensed Uses .................................................. 101
§ 3.4.2 Unlicensed Secondary Services ............................................................. 103
§ 3.4.3 Spectrum Leasing and Private Commons .............................................. 105
Promoting Efficient Use of Spectrum Through Elimination
of Barriers to the Development of Secondary Markets ................................. 107
vii
viii
CONTENTS
Chapter 4. Structuring and Assigning Licenses ....................................................... 113
§ 4.1 Introduction.................................................................................................. 113
§ 4.2 License Renewal and Transfer..................................................................... 114
§ 4.2.1 License Renewal .................................................................................... 114
§ 4.2.2 License Transfer..................................................................................... 119
Changes in the Entertainment Formats of Broadcast Stations ......................... 121
FCC v. WNCN Listeners Guild ....................................................................... 124
§ 4.3 Merit-Based Hearings .................................................................................. 126
§ 4.3.1 Uncontested Initial Assignment Hearings.............................................. 127
H.E. Studebaker ............................................................................................... 127
Charles Henry Gunthorpe, Jr............................................................................ 128
§ 4.3.2 Comparative Initial Assignment Hearings ............................................. 130
FCC Policy Statement on Comparative Broadcast Hearings ........................... 132
§ 4.3.3 Licensing Case Study............................................................................. 136
Application of Simon Geller ............................................................................ 136
§ 4.3.4 Special Considerations for Racial Minorities and Women .................... 142
Metro Broadcasting, Inc. v. FCC ..................................................................... 143
Lutheran Church Missouri Synod v. FCC........................................................ 157
§ 4.4 Transition to Lotteries, Auctions.................................................................. 164
§ 4.4.1 Reform of the Licensing Process ........................................................... 165
Prevention of Abuses of the Renewal Process ................................................. 165
§ 4.4.2 Lotteries and Auctions ........................................................................... 169
Kwerel and Felker, Using Auctions to Select FCC Licensees ......................... 170
§ 4.4.3 Initial Assignment by Auction ............................................................... 177
Implementation of Section 309(J) of the Communications
Act—Competitive Bidding for Commercial Broadcast Licenses ................. 178
§ 4.4.4 Bankruptcy and the Limits of FCC Authority........................................ 186
Nextwave Personal Communications v. FCC .................................................. 188
Chapter Five. Public Trustee Obligations ................................................................ 197
§ 5.1 Introduction.................................................................................................. 197
§ 5.2 The Fairness Doctrine and Related Obligations........................................... 198
§ 5.2.1 The Fairness Doctrine ............................................................................ 198
Miami Herald Publishing Co. v. Tornillo......................................................... 198
Red Lion Broadcasting Co. v. FCC.................................................................. 200
Fairness Doctrine Report.................................................................................. 208
Complaint of Syracuse Peace Council ............................................................. 217
§ 5.2.2 The Personal Attack and Political Editorial Rules ................................. 224
§ 5.2.3 Political Broadcasting ............................................................................ 227
Request of ABC, Inc. for Declaratory Ruling .................................................. 228
Request for Declaratory Ruling of National Association of Broadcasters Regarding Section 312(A)(7) of the Communications Act ............... 237
Petition for Reconsideration by People for the American Way
and Media Access Project of Declaratory Ruling Regarding
Section 312(A)(7) of the Communications Act............................................. 240
§ 5.2.4 The Scarcity Rationale in Other Media.................................................. 247
Time Warner Entertainment Co. v. FCC (1996) .............................................. 248
Time Warner Entertainment Co. v. FCC (1997) .............................................. 250
§ 5.3 Indecent Broadcasts ..................................................................................... 254
FCC v. Pacifica Foundation ............................................................................. 254
Action for Children’s Television v. FCC [ACT III] ......................................... 266
CONTENTS
ix
Complaints Against Various Broadcast Licensees Regarding
Their Airing of the “Golden Globe Awards” Program.................................. 286
Complaints Against Various Television Licensees Regarding
Their Broadcast on November 11, 2004 of the ABC Television
Network’s Presentation of the Film “Saving Private Ryan” ......................... 289
Complaints Regarding Various Television Broadcasts
Between February 2, 2002 and March 8, 2005 ............................................. 294
§ 5.4 Televised Violence and Blocking Unwanted Material................................. 300
§ 5.5 Children’s Television................................................................................... 306
Children’s Television Programming and Advertising Practices ...................... 307
Policies & Rules Concerning Children’s Television Programming (1991) ..... 313
Policies & Rules Concerning Children’s Television Programming (1996) ..... 316
§ 5.6 Commercialization, Ascertainment, and Other Rules .................................. 335
Deregulation of Commercial Television, Report and Order ............................ 336
Chapter Six. Digital Television ............................................................................... 347
§ 6.1 Introduction.................................................................................................. 347
§ 6.2 Making Room for HDTV............................................................................. 348
Advanced Television Systems (1991).............................................................. 349
§ 6.3 Choosing A Standard ................................................................................... 355
Advanced Television Systems (1996).............................................................. 356
§ 6.4 Rules For DTV Spectrum ............................................................................ 367
Advanced Television Systems (1997).............................................................. 367
§ 6.5 Hastening the Transition .............................................................................. 378
§ 6.6 Public Interest Obligations .......................................................................... 381
Final Report of the Advisory Committee on Public Interest
Obligations of Digital Television Broadcasters............................................. 381
Chapter Seven. Structural Limitations ..................................................................... 389
§ 7.1 Introduction.................................................................................................. 389
§ 7.2 Television Networks and Vertical Integration ............................................. 389
Schurz Communications v. FCC ...................................................................... 392
§ 7.3 Ownership Restrictions ................................................................................ 403
Prometheus Radio Project v. FCC.................................................................... 408
Part Two. The Emerging Video Marketplace .................................................... 435
Chapter Eight. Foundations ..................................................................................... 437
§ 8.1 Introduction.................................................................................................. 437
§ 8.2 The MVPD Competitive Landscape ............................................................ 438
§ 8.3 Paying for Television................................................................................... 440
Coase, Why Not Use the Pricing System in the Broadcast Industry? .............. 442
§ 8.4 Why Regulate: Natural Monopoly ............................................................... 444
§ 8.5 Why Regulate: Implications for Broadcast .................................................. 450
Besen and Crandall, The Deregulation of Cable Television ............................ 451
Home Box Office (HBO) v. FCC..................................................................... 463
§ 8.6 Who Regulates Cable Television ................................................................. 472
Time Warner Entertainment Co. v. FCC.......................................................... 476
Chapter 9. Shared Content ....................................................................................... 485
§ 9.1 Introduction.................................................................................................. 485
§ 9.2 Programs in Isolation ................................................................................... 485
§ 9.2.1 Copyright Law ....................................................................................... 485
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CONTENTS
§ 9.2.2 Syndicated Exclusivity and Network Nonduplication............................ 489
United Video v. FCC........................................................................................ 490
§ 9.2.3 Direct Broadcast Satellite....................................................................... 497
CBS Broadcasting v. Primetime 24.................................................................. 498
The Satellite Television Act of 1999................................................................ 505
§ 9.3 Programs Grouped into Signals ................................................................... 511
§ 9.3.1 First Amendment Challenges to Cable Must-Carry ............................... 514
Turner Broadcasting System Inc. v. FCC [Turner I]........................................ 514
Turner Broadcasting System Inc. v. FCC [Turner II] ...................................... 531
§ 9.3.2 First Amendment Challenges to DBS Must-Carry................................. 548
Satellite Broadcasting & Communications Ass’n v. FCC................................ 549
§ 9.3.3 Must-Carry and the Digital Transition ................................................... 561
Carriage of Digital Television Broadcast Signals,
Second Report and Order .............................................................................. 561
Chapter 10. Structural Limitations........................................................................... 569
§ 10.1 Introduction................................................................................................ 569
§ 10.2 Protecting Program Suppliers .................................................................... 570
Time Warner Entertainment Inc. v. FCC ......................................................... 571
§ 10.3 Regulation of Program Supply Contracts................................................... 585
§ 10.3.1 The Program Access Rules .................................................................. 585
Development of Competition and Diversity in Video
Programming Distribution and Carriage, First Report and Order ................. 585
§ 10.3.2 Extension of the Program Access Rules............................................... 600
Implementation of the Cable Television Consumer Protection
and Competition Act of 1992, Report and Order .......................................... 600
§ 10.3.3 Extension of the Program Access Rules to DirecTV ............................ 604
General Motors Corp. and Hughes Electronic Corp.,
Transferors, and News Corp. Ltd., Transferee .............................................. 604
Chapter 11. Emerging Issues in the Video Marketplace.......................................... 613
§ 11.1 Introduction................................................................................................ 613
§ 11.2 Choice ........................................................................................................ 614
§ 11.2.1 Is More Always Good? ........................................................................ 614
Sunstein, The First Amendment in Cyberspace .............................................. 614
Posner, Bad News ............................................................................................ 621
§ 11.2.2 The Commission on Cable à la Carte................................................... 630
Further Report on the Packaging and Sale of Video
Programming Services to the Public ............................................................. 631
§ 11.2.3 Price Discrimination............................................................................. 637
§ 11.3 Digital Copyright ....................................................................................... 639
American Library Association v. FCC............................................................. 643
Chapter 12. Indecency Revisited ............................................................................. 655
§ 12.1 Introduction................................................................................................ 655
§ 12.2 Cruz v. Ferre .............................................................................................. 655
Cruz v. Ferre ....................................................................................................... 655
§ 12.3 Denver Area ............................................................................................... 658
Denver Area Educational Telecommunications Consortium, Inc. v. FCC....... 658
§ 12.4 United States v. Playboy Entertainment Group, Inc. ................................. 678
United States v. Playboy Entertainment Group, Inc......................................... 678
CONTENTS
xi
Part Three. Telephone Regulation ...................................................................... 693
Chapter 13. An Introduction to Telephone Regulation............................................ 695
§ 13.1 Introduction................................................................................................ 695
§ 13.2 Telephone History...................................................................................... 695
§ 13.3 Infrastructure and Intuitions....................................................................... 703
§ 13.3.1 Telephone System Vocabulary............................................................. 703
§ 13.3.2 Telephone Economics .......................................................................... 704
§ 13.4 Telephone Regulation ................................................................................ 707
§ 13.4.1 Categories of Regulation...................................................................... 708
§ 13.4.2 Who Regulates ..................................................................................... 708
Chapter 14. Defining the Telephone Monopoly ...................................................... 713
§ 14.1 Introduction................................................................................................ 713
§ 14.2 Precursors to Divestiture............................................................................ 714
§ 14.2.1 Competition in CPE ............................................................................. 714
Huber, Kellogg, and Thorne, Federal Telecommunications Law .................... 714
§ 14.2.2 Competition in Long Distance Telephony ........................................... 718
§ 14.2.3 Communications and Computer Convergence..................................... 720
Robinson, The Titanic Remembered: AT&T and the
Changing World of Telecommunications ..................................................... 721
§ 14.3 Breaking up Bell: The 1984 Divestiture .................................................... 723
§ 14.3.1 The MFJ ............................................................................................... 724
United States v. American Telephone and Telegraph Co. ............................... 724
§ 14.3.2 Notes on the Government’s Theory ..................................................... 732
§ 14.3.3 Monopoly Boundaries After Divestiture.............................................. 739
Robinson, The Titanic Remembered: AT&T and the
Changing World of Telecommunications ..................................................... 739
Chapter 15. Rate Regulation and Universal Service................................................ 747
§ 15.1 Introduction................................................................................................ 747
§ 15.2 Rate Regulation.......................................................................................... 747
§ 15.2.1 Rate of Return Regulation.................................................................... 747
§ 15.2.2 Price Cap Regulation............................................................................ 750
Policy and Rules Concerning Rates for Dominant Carriers ............................. 751
§ 15.2.3 Rate Regulation as Markets become Competitive................................ 759
Robinson, The Titanic Remembered: AT&T and the
Changing World of Telecommunications ..................................................... 761
§ 15.3 Universal Service ....................................................................................... 763
§ 15.3.1 Origins............................................................................................... 763
§ 15.3.2 Ramsey Pricing ................................................................................. 765
§ 15.3.3 Universal Service After Divestiture .................................................. 768
Chapter 16. The Telecommunications Act of 1996 ................................................. 771
§ 16.1 Introduction................................................................................................ 771
§ 16.2 The Local Competition Provisions............................................................. 772
Implementation of the Local Competition Provisions of the
Telecommunications Act of 1996, First Report and Order ........................... 774
§ 16.3 Jurisdiction to Implement the 1996 Act ..................................................... 781
§ 16.3.1 Local Competition, National Regulation.............................................. 781
United States Telecom Association v. FCC (USTA II) .................................... 787
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CONTENTS
§ 16.3.2 Case Studies ......................................................................................... 788
Nixon v. Missouri Municipal League............................................................... 789
AT&T Communications of Illinois v. Illinois Bell .......................................... 793
Chapter 17. Unbundling, Interconnection, and Line-of-Business
Regulation Under the 1996 Act ........................................................... 799
§ 17.1 Introduction................................................................................................ 799
§ 17.2 Identifying UNEs ....................................................................................... 799
§ 17.2.1 Iowa Utilities Board............................................................................. 799
AT&T Corporation v. Iowa Utilities Board ..................................................... 799
§ 17.2.2 After Iowa Utilities Board ................................................................... 806
United States Telecom Association v. FCC (USTA II) .................................... 810
§ 17.2.3 In Response to USTA II........................................................................ 820
Review of the Section 251 Unbundling Obligations of
Incumbent Local Exchange Carriers ............................................................. 820
§ 17.3 Pricing Network Elements ......................................................................... 825
Verizon Communications Inc. v. FCC ............................................................ 828
Review of the Commission’s Rules Regarding the
Pricing of Unbundled Network Elements...................................................... 842
§ 17.4 Interconnection .......................................................................................... 848
Developing a Unified Intercarrier Compensation Regime (2001) ................... 851
Developing a Unified Intercarrier Compensation Regime (2005) ................... 854
§ 17.5 BOC Line of Business Restrictions............................................................ 861
Chapter 18. Universal Service and Access Charge Reform Under the 1996 Act .... 863
§ 18.1 Introduction................................................................................................ 863
§ 18.2 Universal Service Reform.......................................................................... 863
FCC News Release: Joint Board Adopts Universal Service
Recommendations ......................................................................................... 866
Federal-State Joint Board on Universal Service (1997) ................................... 868
§ 18.3 Access Charge Reform............................................................................... 881
Access Charge Reform, First Report and Order............................................... 881
Federal-State Joint Board on Universal Service (2004) ................................... 891
Part Four. The Internet and Advanced Services ................................................ 903
Chapter 19. The Internet .......................................................................................... 905
§ 19.1 Introduction................................................................................................ 905
§ 19.2 The History and Architecture of the Internet ............................................. 905
§ 19.3 Internet Regulation..................................................................................... 913
§ 19.3.1 The Principles of Internet Unregulation............................................... 915
A Framework for Global Electronic Commerce .............................................. 915
§ 19.3.2 Regulation of Indecency....................................................................... 917
Sable Communications of California, Inc. v. FCC........................................... 918
Regulations Concerning Indecent Communications by Telephone.................. 923
Reno v. ACLU ................................................................................................. 927
Ashcroft v. ACLU............................................................................................ 936
§ 19.3.3 Copyright Infringement......................................................................... 947
MGM Studios, Inc. v. Grokster........................................................................ 948
Chapter 20. Advanced Services ............................................................................... 955
§ 20.1 Introduction................................................................................................ 955
§ 20.2 Advanced Services Under Section 706 ...................................................... 955
CONTENTS
xiii
Inquiry Concerning the Deployment of Advanced Telecommunications ........ 957
Availability of Advanced Telecommunications
Capability in the United States...................................................................... 968
§ 20.3 Unbundling, Interconnection, and Advanced Services .............................. 973
Intercarrier Compensation for ISP-Bound Traffic............................................ 980
§ 20.4 Regulating DSL and Cable Modem Services.............................................. 984
AT&T v. City of Portland ................................................................................ 986
National Cable & Telecommunications Ass’n v. Brand X Internet Services... 990
Appropriate Framework for Broadband Access
to the Internet over Wireline Facilities (2002) ............................................ 1007
§ 20.5 Network Neutrality .................................................................................. 1012
Appropriate Framework for Broadband Access to
the Internet over Wireline Facilities (2005) ................................................ 1013
Atkinson and Weiser, A “Third Way” on Network Neutrality ...................... 1015
§ 20.6 Voice over Internet Protocol (VoIP) ......................................................... 1028
Petition for Declaratory Ruling that pulver.com’s Free World Dialup
is Neither Telecommunications nor a Telecommunications Service........... 1030
Petition for Declaratory Ruling that AT&T’s Phone-to-Phone IP
Telephony Services are Exempt from Access Charges, Order.................... 1035
American Council on Education v. FCC........................................................ 1041
§ 20.7 Competition in Telephony and Advanced Services .................................. 1047
Part Five. Epilogue ............................................................................................. 1053
Chapter 21. Antitrust and Merger Review in Telecommunications....................... 1055
§ 21.1 Introduction.............................................................................................. 1055
§ 21.2 Merger Enforcement and Telecommunications Regulation..................... 1055
§ 21.2.1 Background on Merger Policy ........................................................... 1056
§ 21.2.2 The SBC/Ameritech Proceeding ........................................................ 1060
Applications of Ameritech Corp., Transferor, and SBC
Communications, Inc., Transferee, for Consent to Transfer
Control of Licenses and Lines Pursuant to Sections 214 and 310(D)
of the Communications Act......................................................................... 1060
Separate Statement of Commissioner Harold Furchtgott-Roth ...................... 1071
Statement of Commissioner Michael K. Powell ............................................ 1076
§ 21.2.3 Reforming the FCC’s Merger Review Process ................................. 1078
Statement of Chairman William E. Kennard.................................................. 1078
Statement of Commissioner Harold Furchtgott-Roth..................................... 1080
§ 21.2.4 The FCC’s Own Institutional Reforms .............................................. 1081
§ 21.2.5 The Elusive Effort to Restrict Merger Review Authority .................. 1084
FCC Approves SBC/AT&T and Verizon/MCI Mergers................................ 1085
§ 21.3 Antitrust in a Regulatory Thicket............................................................ 1091
Verizon v. Law Offices of Curtis v. Trinko ................................................... 1091
Statutory Appendix................................................................................................. 1097
Conceptual Index and Telecommunications Glossary............................................ 1171